Thursday uncertain

The Hoot 
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• Thursday uncertain.
• ES pivot 1881.83.  Breaking below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

W aell we managed to squeak out another winner on Wednesday with modest 40 point gain in the Dow.  So with a four day winning streak going, when will the reversal come?  (And it inevitably must come).  Will it be Thursday?  Silence!  Let the charts speak!

The technicals

The Dow: The bears tried to draw the Dow down right after lunch on Wednesday (as they have successfully done for a number of days recently) but this time the bulls would not be denied and they motored on to end near session highs.  So thus our three white soldiers found a new recruit.  We now have a whole squad of white soldiers marching ever higher and rappelling up the upper BB on their way to record territory.  In fact all that stopped it on Wednesday was the previous record high, which we matched within a tenth of a point.  So we ask the same question as last night - does the Dow have the mojo to continue higher?  While the indicators are now all overbought, they're still nowhere near as overbought as the last time we were at these oxygen-mask levels (12/31/13).  So I'm going to have to cautiously say, yes, we could conceivably still go higher from here.

The VIX:  Last night I wrote that with "the lower BB not til 12.79, the VIX just might want to take a look at that level on Wednesday".  Well it didn't quite make it but it got a bit closer with a 0.08% loss.  Now we're near the lower BB with a perfect spinning top and oversold indicators, so the case for a reversal becomes stronger.  But still not quite strong enough that we don't have to wait for confirmation.   VVIX isn't much help here either, implying still lower to come.  So tonight I just take a pass.

Market index futures: Tonight the futures are mixed at 12:42  EDT with ES down  0.04% but YM up just 0.01%. Call it basically flat.  After another day of gains that took ES right to its upper BB, it looks like the tide is beginning to turn.  The futures are not running higher at this hour as they have been recently, the stochastic is starting to level off in anticipation of a bearish crossover rand OBV has peaked.  I'd say after a nice four day winning streak, this chart is turning bearish.

ES daily pivot: Tonight the pivot rises once again, this time from 1872.92  to 1881.83.  Unlike recent nights, this leaves us on the bubble with ES banging down against the pivot.  This is barely bullish, and only as long as we can remain above.

Dollar index: I took a pass on the dollar last night and I'm glad of it because I wasn't expecting a 0.15% gain on Wednesday.  That puts us right back to resistance with overbought indicators.  So the best bet here is a move lower on Thursday.

Euro: On Wednesday the euro took a big dump to fall right out of its rising RTC for a bearish setup. that caused the stochastic to curve over setting up for a bearish crossover.  It appears the euros' three day winning streak may be over.

Transportation: Last night I wrote that the trans had "a bit more room to run Wednesday".  Well they took a big bit with a 0.66% gain that latched onto the upper BB in a big way.  Indicators are now overbought but the stochastic has yet to even suggest a bearish crossover might be coming.  So this one continues to look bullish.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      2       0      0           0       1.000    115 
   
     And the winner is...

Tonight we're starting to see some signs that the recent rally is running out of gas.  There are some technical topping indications but they're not outright bearish at this point.  So the best I can do is to call Thursday uncertain but with a bearish bias.  I'd certainly not be going long at these levels.  A doji day is possible.

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.