Thursday, May 1, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1874.83.  Holding above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Ho hum - it turned out to be something of a sleeper Fed pronouncement Wednesday, with Mr. Market registering just a slight knee-jerk in response to the news.  Well at least we closed out April on a positive note and the Dow finally went positive (by 0.02%) for the year.  Now we face the merry month of May.  To quote those noted market analysts The Clash, "Should I stay or should I go?"  Maybe the charts can tell us.

The technicals

The Dow: The Dow actually did quite well on Wednesday with I believe a new record close, remaining in a new rising RTC and stopping just short of resistance at 16,590.  Interestingly we got a new bullish stochastic crossover from a high level and this is a high probability play that's usually good for a day or two of further upside.

The VIX:  Last night I wrote "the candles are looking bearish" and so they were with the VIX dropping another 2.19% on Wednesday on a red bearish engulfing marubozu that followed three straight failures to recapture the 200 day MA.  This also sent RSI lower before ever reaching overbought and formed a new bearish stochastic crossover.  So with no support til 13.05, I'd say the selling isn't done here yet.

Market index futures: Tonight  the futures are mixed at 12:39 EDT with ES down 0.07% but NQ up 0.07%.  ES had a nice day on Wednesday, advancing to the 1880 resistance zone.  Unfortunately, the new overnight candle is having some problems at that lofty altitude and is currently looking like a dark cloud cover.  And while we do have a completed bullish stochastic crossover, OBV,, momentum, and RSI have all turned lower.  Only money flow continues to move higher.

ES daily pivot: Tonight the ES daily pivot rises from 1870.67 to 1874.83.  Once again we remain above the new pivot (though by less than last night).  Still, this indicator continues bullish.

Dollar index: Last night I noted the rise in the dollar but also the apparent beginnings of a bearish evening star.  Well this star Paid off in a big way on Wednesday as the dollar dunked 0.44% with a big gap-down marubozu, effectively completing the pattern.  This is bearish but there's support not too far below, so Thursday could be a bottoming day.

Euro: Ah, that pesky euro.  It fooled me big time on Wednesday.  Instead of going lower it posted a big gain all the way back to1.3870.  That took it  to overbought levels and near resistance.  So we look at the overnight for clarity, but there's not much to be found as the euro is generally just wandering sideways in the overnight.  This one is too tough to call.

Transportation: On Wednesday the trans handily outperformed the Dow motoring 0.72% higher for a bullish exit to a descending RTC and a new bullish stochastic crossover with a long way to go til overbought.  So with two white soldiers now on the march, looks like there's room left to run higher on Thursday.


With April now closed, here are my cumulative 2014 YTD trading results so far, compared to the Dow, my benchmark.  I've started including the results of my traditional IRA too.

        Trading    IRA       Dow
Jan.     0.50%             -5.30%
Feb.     3.94%             -1.94%
Mar.     6.01%    6.14%    -0.72%

Apr.     8.22%    8.46%     0.02%

 And here's a day-by-day plot of my trading account balance:
2014 trading balance, Jan. - Apr.
You can see we started off well but hit a rough spot late in January and then kind of stagnated for much of March, but April did quite well.

Again, my trading goals, in ascending order of difficulty, are:

1. Don't lose money.
2. Make money.
3. Beat the Dow.
4. Get an annual return around 30%.

So far this year we continue to do well with an annual run rate YTD of 24.66% trading, easily outperforming the benchmark.  While I'd like to see a 30% annual return, 24%+ is still not too shabby.  Even Bernie Madoff only promised his victims 20%.


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      9       3      5           0       0.750    482

     And the winner is...

Well they say to sell in May, but they never say when in May.  Right now, based on tonight's charts I don't think it's going to be the 1st.  Most of the charts are looking bullish tonight and May 1st is historically quite bullish.  The only fly in the ointment is that ES seems to be losing some steam in the wee hours.  I always hate going against the futures, but given that the rest of the evidence is bullish, I will simply nervously declare Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 short.  Tonight we stand aside.

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