Thursday, December 12, 2013

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1789.33.  Holding below is bearish.
  • Friday bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside

Last night I wimped out in the face of mostly bearish signs because not all the stars were in alignment.  The conservative approach in this case proved to be wrong as the Dow suffered it biggest drop in a month.  Oh well - no harm done.  No let's see if we can be more decisive for Friday.

The technicals (daily)

The Dow: The accelerating losses in the Dow on Wednesday gave us a new bearish RTC crossover before ever hitting overbought indicators.  Some support at 15,815 but more downside looks likely from here.

The VIXA huge (and unexpected, by me anyway) 11% spike in the VIX, its biggest since October 15th, popped it right back up over its 200 day MA and formed a bullish stochastic crossover.  In fact it closed above its upper BB and right on resistance at 15.42.  While more upside is not impossible from here, I always say the VIX rarely spends more than a couple of days at its upper BB so I think any move higher is limited.

Market index futures: Tonight all three futures are lower at 1:40 AM EST with ES down by 0.81%.  Like the other charts, ES had a big red marubozu on Wednesday.  This one knocked it right out of its rising RTC - that trend is now over - and gave us a bearish stochastic crossover.  But the overnight has exactly hit the lower BB and bounced off, so there may be some support here on Friday.  I'd say further downside is now limited.

ES daily pivot: Tonight the pivot drops from 1805.17  to 1789.33.  We remain below the new pivot so this indicator remains bearish.

Dollar index: The dollar continued lower on Wednesday putting in a second hammer and driving the indicators highly oversold as we continue riding the lower BB downward.  Not really any sign this one is over either.

Euro: The euro just keeps moving higher though indicators are now extremely overbought (RSI=98.5) as we continue climbing the upper BB.  But that resistance at 1.3800 remains intact and with a developing doji in the overnight, it's not clear the euro has any gas left in the tank.  I'd say a move lower is coming very soon.

Transportation: The trans took a big 1.60% hit on Wednesday in a move that looks like it's going negative exponential.  It was enough to form a bearish stochastic crossover, drive the indicators oversold and hit the lower BB all in one.  Still, this big red marubozu is hardly a reversal candle, so there could be more downside to follow.

Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July      10      2      4           4        0.875    486
August    11      3      6           2        0.813    687
September  8      3      3           3        0.800    485
October    7      5      8           2        0.643    674

November   6      6      2           1        0.538    123

December   3      3      2           0        0.500    178

     And the winner is...

Wednesday's sell-off looks overdone to me but in the absence of any bullish reversal signs the only logical course is to call Thursday lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17  total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside.again.

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