Thursday, January 30, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1778.83.  Holding below is bearish.
  • Friday bias higher.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Huh - well that's what I get for violating my own rule of not calling Fed days.  Instead of going up, the Dow rook  a 190 point dump on Wednesday..  At least I did not commit any ESFT money to this.  But with this unexpected turn of events we now need to consult the charts to see how this may affect Thursday.

The technicals (daily)

The Dow: On Wednesday the Dow took a major reversal with a big red bearish engulfing marubozu that killed the incipient rising trend and closed below the lower BB stopping right on support at 15,727.  That puts us right back in a tight (Pearson's = 0.961) descending RTC while leaving the indicators oversold and squashing what had looked like a bullish stochastic crossover last night.  So at this point, this chart returns to bearish - and news flash - the 200 day MA is coming into view at 15,455.  Uh oh!

The VIXI have to say I was very surprised to see the VIX move up nearly 10% on Wednesday.   That leaves it back above the upper BB for the third time in four days, complete with bearish stochastic crossover, so I'm like, what the heck?  But what goes up must come down and this is still a technically bearish pattern so all I can do is claim once again that the VIX is going lower from here.  I certainly wouldn't be going long a chart like this.

Market index futures: Tonight all three futures are higher, just like last night at 1:03 AM EST with ES up by 0.17%.  Despite a tall red candle on Wednesday, ES found support once again at precisely 1771.  And the new overnight is moving higher from there, so with indicators remaining oversold that is a bullish sign.  We also now have a bullish RTC trigger though the channel was admittedly only three candles long so I'd take this one with a grain of salt.  Nonetheless I have to believe this chart looks like it has more upside potential than downside risk.

ES daily pivot: Tonight the pivot drops again from 1785,42  to 1778.83.  After a move lower early Wednesday we remai below the new pivot so this indicator is now bearish.

Dollar index: On Wednesday the dollar put in a not very interesting move that leaves the $USDUPX jittering around in a range of 54.86 to 55.04.  We're now quite oversold but this currency just refuses to get into gear, so after being wrong last night I'm just going to have to wait & see on this one..

Euro: The euro has been in a weird slow drift lower for a week now with a whole train of dojis  They nonetheless form an excellent, if shallow descending RTC.  At least I was right when I wrote last night "I see more downside to come here".  So with the overnight running lower again, I guess the only call here is for even more continued downside. 

Transportation: The trans on Wednesday put in an unusual pattern called the stick sandwich, with a green candle "sandwiched" between two red ones.  And it's a bullish reversal pattern.  Supporting this is a stochastic that remains on the verge of a bullish crossover and other indicators that are close to oversold.  My best guess here is that the next move is higher.

Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      10      5           0       0.286

     And the winner is...

Hmm - well after being badly wrong for Wenesday it's hard for me to come back and say the same thing again, but most of the signs I see tonight are technically bullish so that's how I'm calling it - Thursday higher.  That's all, she wrote.

ES Fantasy Trader

Portfolio stats:  the account rises to $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside.

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