Thursday, April 10, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1858.33Holding above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

The technicals worked out nicely on Wednesday and the Fed minutes were just the icing on the cake as the Dow had a tasty 181 point pop.  We also confirmed the SPX's support at 1850.  That's about all there is to say about that so let's move on as always to the nightly charts and see where Thursday's headed.

The technicals

The Dow: The Dow on Wednesday finished at session highs for a jolly green marubozu that confirmed Tuesday's reversal candle and more than retraced all of Monday's dive.  It also gave us a bullish setup on an admittedly short descending RTC,  The stochastic continues to move into position nicely for a bullish crossover and the indicators are still less than halfway to overbought so this chart now looks bullish.

The VIXLast night I wrote that I was going to "guess that the VIX is going lower on Wednesday."  Good guess, because the VIX fell 7.19% and sliced right back through its 200 day MA with a gap-down two black crows.  This left the stochastic ever so close to a bearish crossover with RSI and momentum continuing to decline, never even having reached overbought.  There's weak support at 13.61 and stronger support at 12.94 and I would not be surprised to see at least one of those levels hit on Thursday.

Market index futures: Tonight, all three futures are barely lower at 12:15 AM EDT, with ES down by a single tick - call it essentially flat.  Wednesday's tall green marubozu provided a bullish RTC setup as well as a bullish stochastic crossover.  However, money flow has not been rising over the past two days and the lack of pin action tonight makes me wonder if we're not in for a pause on Thursday.

ES daily pivot: Tonight the pivot jumps from 1841.58 to 1858.33.  And even that big move still leaves ES above the new pivot, just less so.  But this indicator is still bullish for Thursday.

Dollar index: ore downside is not out of the question.Last night I wrote "more downside is not out of the question" for the dollar and indeed the dollar lost another 0.35% on Wednesday.  That leaves it close to support at 54.05 and its lower BB at 54.02.  Even so, the indicators have only just gone oversold and the stochastic is nowhere near forming a bullish crossover.  The failure to even attempt filling Tuesday's gap down is also bearish.  But with support near, Thursday might be a bottoming day.

Euro: Tuesday's resistance proved futile to the euro as it just motored higher on Wednesday, and then right through the next resistance at 1.3835.  With three white soldiers now marching ahead, indicators still not overbought, and a new rising RTC established, it looks like there's more upside left on Thursday.

Transportation: I didn't want to commit to this one last night and it's too bad because the trans had their best day in over a month on Wednesday, up 1.64% with a big green marubozu that bent the stochastic around almost into a bullish crossover and gave us a bullish setup on  descending RTC exit.  So with rising indicators I have to think we're going higher again on Thursday.


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     12       3      6           0       0.800    431
April      4       0      2           0       1.000    463

     And the winner is...

Tonight, all of the charts seem to be pointing higher except for the futures, and I wonder why.  I'm always reluctant to go against the futures but with everything else lining up I guess I'll just creep out to the very end of the limb and nervously call Thursday higher.  I'm not expecting a big move like we had Wednesday though.

ES Fantasy Trader

Finally the ESFT makes a second trade in 2014 and we have a winner.  I surely left a bunch of money on the table Wednesday but I decided I didn't want to face the headline risk ahead of the Fed minutes.  I'd rather leave a little behind than watch my existing profits evaporate.  Anyway, 5.25 points overnight is nothing to sneeze at.  Reminder - I post these trades live on my Twitter feed @nightowltrader.

SLD    10    false    ES    JUN14 Futures     1851.25    USD    GLOBEX    11:54:58
BOT    10    false    ES    JUN14 Futures     1846.00    USD    GLOBEX    APR 8 19:55:11

Portfolio stats:  the account now rises to $105,625 after two trades in 2014.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

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