Thursday, December 19, 2013

Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 1790.75.  Holding above is bullish.  (Now running the "H" contract).
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside

Holy moly!  The dreaded Taper took place and it turns out Mr. Market liked it.  And boy did he like it - with the Dow blasting up 293 points for its biggest gain in three months and another record high.  And my REIT's participated in the action too giving my my best day since September 18th.  Ho ho ho! Now that that's out of the way, perhaps we can return to the technicals to see where Thursday's headed.

The technicals (daily)

The Dow: You can say it was news driven, but the RTC technique played out perfectly here.  On Monday, the Dow broke out of its descending RTC for a bullish setup.  On Tuesday, it traded entirely outside and that was the trigger.  And of course, Wednesday brought the payoff.  After such a big gain and having nearly touched the upper BB, I'd say that while Thursday's not necessarily looking lower, we probably don't have much upside to go here.

The VIXAnd of course the movement of the VIX on Wednesday was just as dramatic as the Dow, only to the downside.  The VIX dropped nearly 15% in one day and crashed right through its 200 day MA, completing a bearish stochastic crossover in the process.  And even at that, we're still overbought.  So it looks like there's more downside to come.

Market index futures: Tonight all three futures are lower at 12:23 AM EST with ES down by 0.19%.  This is perhaps to be expected after ES rallied hard on Wednesday all the way to its resistance at 1805.  After a big move like this, I'd expect a pause or a bit of retracement.  But I'm also thinking ES is going to check out its upper BB, now at 1811, pretty soon.

ES daily pivot: Tonight the pivot jumps from 1781.58  to 1790.75.  Note that tonight we are switching to the 2014 "H" ES contract.  We've been above the pivot since the Fed announcement and remain well above the new pivot, so this indicator remains bullish.

Dollar index: The dollar ended up little changed on Wednesday with a spindly doji.  With no real RTC going right now and the indicators wandering around halfway between oversold and overbought, I've got no way to call this chart.

Euro: The euro put in a similar long-legged doji on Wednesday but the new overnight is gapping down big time, off 0.69%.  A lower close looks likely here on Thursday.

Transportation: After a dip on Tuesday, the trans roared upward like everything else following the Fed news on Wednesday.  That sends the indicators off oversold and on their way to overbought.  No resistance til 7228, so there's more upside left here.

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   5      5      3           0        0.500    160

     And the winner is...

With the Fed uncertainty finally out of the way, it looks like the technical signs are bullish tonight.  However after running so hard so quickly, Mr. Market may need to pause to catch his breath on Thursday.  I think we could be in for a doji day, so accordingly I'm going to call Thursday uncertain.  I'm not expecting a big move either way.

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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