Thursday, March 27, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, medium confidence..
  • ES pivot 1850.92Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

So the pattern continues - with the Dow going from the upper edge of its recent trading range to the lower in one day.  It's actually oddly reminiscent of the pattern we were seeing exactly one year ago.  That one didn't end until Aprils 1st with a break higher.  We now consult the charts for a clue to Thursday as March grinds on to a close.

The technicals (daily)

The Dow: Last night I wrote "from recent experience, the only thing you can think is that Wednesday will move lower".  Well I guess never discount the power of experience as the Dow did indeed move lower on Wednesday by a good 99 points.  And with a bearish engulfing pattern at that.  That was also enough to finally complete the bearish stochastic crossover too.  And with indicators now moving lower and money flow (which Dr. Steenbarger just recently mentioned again - that's where I first learned about this) moving lower, this chart now looks bearish.

The VIXLast night I wrote of the VIX "the next logical move would seem to be higher.".  So never discount the power of logic either as the VIX also rose a solid 6.5% on Wednesday.  And moved right back through its 200 day MA yet again for the 11th visit in 13 days.  This time though we're still oversold with an new bullish stochastic crossover so there seems to be some gas in the tank for continued higher on Thursday.  A nice bullish engulfing pattern in VVIX supports this idea.

Market index futures: Tonight all three futures are higher at 12:57 AM EDT with ES up by 0.15%.  ON Wednesday ES put in a red candle that broke support at 1850 and also gave us a bearish RTC setup.  And even at that we're not yet oversold so it's not clear what significance to attach to the overnight gain.  It may simply be a reaction to the sell off that began at 3 PM Wednesday.  In any case, this chart is now looking bearish.  Note also that money flow has been declining three straight days now, another bearish sign.

ES daily pivot: Tonight the pivot drops from 1857.25  to 1850.92. Despite this, we are still below the new pivot by a good five points so this indicator remains bearish.

Dollar index: On Wednesday the dollar put in a funny red hanging man that actually was a 0.10% gain..  But the overall gestalt here remains bearish.

Euro: Last night I wrote that the euro chart seemed to "suggest lower for Wednesday".  And it was a good suggestion as the euro fell to 1.3789, its third straight day of lower highs.  That also formed a bearish stochastic crossover from an oversold position and that's a bearish sign indeed.  So the selling may not be over yet.  And the pin action in the overnight in fact continues lower.

Transportation: Last night I refused to guess on this chart which is good since the trans took a 1.58% dive on Wednesday that I wasn't expecting.  That was enough to send the indicators oversold but not enough to even start a bullish stochastic crossover.  But because of the magnitude of this drop, a DCB or at least a doji is possible on Thursday here.

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     10       3      5           0       0.759    291

     And the winner is...

Unlike the past few days when it was hard to get a clear reading on the charts, tonight we're seeing a number of bearish signs, enough in fact to call Thursday lower.

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.


  1. What are you waiting for?One trader just placed a 200mil bet on S&P 1992 May 1 puts..and Soros has a mutibillion bet on S&P there something you see to the upside?

    1. Their timeframes are longer than mine. But in any event, we are approaching "Sell in May" season anyway, which sometimes begins in April. This may be one of those years.

      But what I'm waiting for at the moment is an indication that we have exited the weekly rising regression trend channel that began last December. So far that still has not yet happened. This strategy pretty much guarantees I will miss the top, but it also helps prevent exiting prematurely on a local minimum.

  2. Today market report is NIFTY OPEN 11.70 POINT UP @ 6613.10 , SENSEX OPEN 20.90 POINT UP @ 22116 and BANK NIFTY OPEN 42.55 POINT UP @ 12560.

    1. Indeed. I don't think we've seen the break yet - either higher or lower.


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