Thursday, April 24, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1873.75Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Well that's really odd, my entire post for Wednesday seems to have simply vanished into the ether without a trace.  When I hit "Publish" I kind of expect something to happen.  Oh well.  For the record, my call was for Wednesday as uncertain, which proved to be about right as the Dow lost just 13 points.  I also mentioned how the market was feeling toppy.  So let's see now if that's still the case or if we can motor higher on Thursday.  Assuming I can actually get this stuff out onto the web.  Thanks a lot Google - you big dorks.

The technicals

The Dow: OK, so this looks like an "ah-choo" market now.  You know how it is when you need to sneeze but maybe you don't and you just go "ah... ah... ah..." and everyone is waiting for the "choo"?  Well that's what this is.  We exited the rising RTC on Wednesday - unless you redraw it to account for Monday's gains, in which case we're now still inside.  Doh!  Meanwhile RSI keeps going higher, now up to 94.55.  And the stochastic has just crossover to bearish - if you can call a %K of 92.07 vs. a %D of 92.37 a crossover.  We are now literally teetering on the edge of a trend reversal but the break just doesn't seem to want to happen.

The VIX:  The VIX is no help resolving this mess either.  It did gain 0.61% on Wednesday but did it with a big gravestone doji.  We're near support and the indicators are all oversold but there is still no clear reversal here.

Market index futures: Tonight  all three futures are higher at 1:06 AM EDT with ES up 0.28%.  A perfect doji star for ES on Wednesday warns of a reversal, a notion supported by extremely overbought indicators and a stochastic that's ready to do a bearish crossover (but hasn't yet).  But the new overnight is not confirming the reversal and we do remain in a rising RTC so it is premature to calla  top right here, particularly with no resistance til 1884.

ES daily pivot: Tonight the ES daily pivot rises from 1871.17 to 1873.75.  We remain above the new pivot so this indicator is still bullish.

Dollar index: The dollar continues its weird antics, this time by losing 0.07% for a third consecutive loss on three consecutive green candles.  I don't even know the candlestick name for this - three white soldiers marching backwards?  In any event, there's a now-completed bearish stochastic crossover and indicators having peaked at overbought so let's just say this chart now looks officially bearish.

Euro: And the euro, which earlier this week looked ready to break down, climbed right back into its tight range about 1.3816.  There is though a completed bullish stochastic crossover and indicators just barely off oversold, so it looks bullish for Thursday.

Transportation: And finally in an interesting bit of bullish divergence, the trans on Wednesday gained 0.10% to the Dow's 0.08% loss.  However, that came on a spinning top that left RSI at 100 - it doesn't get any more overbought than that.  We also have a stochastic that just barely squeaked out a bearish crossover.  But both OBV and money flow continue to rise.  So this chart is somewhat conflicted but I'd say we have a good warning of a move lower now.


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      7       2      4           0       0.778    342

     And the winner is...

Tonight we're once again seeing some classical reversal signs but Mr. Market is having none of it.  It may be a case where positive economic news just keeps on propping up the market enough to stave off the pullback that seems overdue.  So having learned my lesson about fighting trends, I'm just going to go way out on a limb and call Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside because we had a big pop right at the close on Wednesday.  That was the time to open a trade, not late at night.  The timing was just off on this one.

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