Thursday, March 20, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1861.25.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well I sure wasn't expecting a triple digit dive from the Dow after Wednesday's Fed meeting.   What Aunt Janet had to say honestly didn't sound all that bad to me.  But Mr. Market clearly doesn't care what I think and he took a petulant tumble in the wake of the 2 PM announcement.  Go figure.  This is why I make it my policy to never call Fed days, and this is exactly what I get for breaking my own rules.  Doh.  At least we're still here to enjoy another revolution around the planet, so let's take advantage of that to call Thursday.

The technicals (daily)

The Dow: What a difference a day makes.  Our two white soldiers beat a hasty retreat on Wednesday and are now hunkered down in a foxhole as a 114 point drop in the Dow formed a bearish dark cloud cover.  So now this chart looks bearish.

The VIXAfter breaking down through its 200 day MA, the VIX just as quickly broke back above on Wednesday, its sixth trip in eight days now.  The candle is vaguely bullish harami but interestingly VVIX was lower on Wednesday, albeit on a  long-legged doji.  So overall this one is too hard to call.

Market index futures: Tonight all three futures are lower at 12:41 AM EDT with ES down by 0.31%.  Like the Dow, the pattern in ES has suddenly turned bearish and the overnight is confirming this.  What looked like a nice bullish stochastic crossover last night actually seems ready to fold over into a bearish one.  So this chart too looks bearish now.

ES daily pivot: Tonight the pivot drops from 1865.75  to 1861.25.  We fell below the pivot Wednesday afternoon and remain below the new number as ES continues drifting lower in the overnight so this indicator is now bearish.

Dollar index: The dollar had a Fed-induced spike on Wednesday, jumping 0.74% to pop out of its long-running descending RTC for a bullish setup.  Indicators are now rising and nowhere near overbought so there still plenty of room to run here..

Euro: And of course the euro took a corresponding dump on Monday though it narrowly missed falling out of its descending RTC.  The overnight seems to have found some support, so we could see a DCB or relief rally here on Thursday.

Transportation: The trans weren't hurt as much as the Dow on Wednesday with a vague harami but also a bullish stochastic crossover remaining intact.  So this one is also too tough to call.

Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
February   5       2      2           1       0.750    107

March      9       2      2           0       0.818    374

     And the winner is...

This is why I despise Fed days.  One short speech and my entire technical thesis flew out the window.  And there doesn't seem to have been much in the way of second thoughts in the wake of Wednesday afernoon's announcement so I'm going to guess that the selling is not over yet and that we close Thursday lower.  Being net long, I'll be happy to be proven wrong.

ES Fantasy Trader

Portfolio stats:  the account remains at $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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