Thursday, May 15, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1888.25.  Holding below is bearish.
  • Friday bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader goes short at 1885.00.

Well I sure picked the wrong day to be wrong as the Dow took a 101 point dump on Wednesday.  It's not like we didn't have any warning of a reversal though - it was just one that required confirmation, and we got that in a big way.  So the question becomes whither Thursday.  Let's see if we can get one right for a change.

The technicals

The Dow: Wednesday's dive sent the Dow out of its rising RTC for a bearish setup.  It also peaked the indicators at overbought and formed a bearish stochastic crossover.  So we go from a reversal warning to an out-and-out bearish chart..

The VIX: Somewhat surprisingly considering the sharp reversal in the market, on Wednesday the VIX was up only 0.33% - and it did that on a red candle, the sixth in six days.  We once again touched the lower BB and it looks like support is holding just above 12.  The three-day pattern isn't one I officially recognize, but it has the flavor of a morning star, so with oversold indicators I'm going with that - I say the VIX looks higher from here.  A big jump in VVIX supports that idea.

Market index futures: Tonight all three futures are mixed at 12:15 AM EDT with ES flat, NQ up 0.08% but YM down just one pip.  Call it basically unchanged.  On Wednesday ES confirmed Tuesday's doji in a big way, bouncing right off the upper BB to form a bearish stochastic crossover.  With the overnight pin action going nowhere, this chart continues to look bearish.

ES daily pivot: Tonight the ES daily pivot drops from 1894.92 to 1888.25.  After falling below the pivot early Wednesday we remain below the new number so this indicator is now bearish.

Dollar index:  Last night I wrote "I'd not be going long the dollar on Wednesday" and good thing too because the dollar took a small gap down for a 0.10% loss.  But that was enough to leave us hanging on the edge of a bearish RTC setup and a bearish stochastic crossover.  With a bearish evening star pattern going, and a fair amount of gap from last week still needing retracing, the dollar looks lower on Thursday.

Euro:After a week of big losses, the euro took a breather on Wednesday, ending with a tiny gain that still left it pretty oversold.  A gap up move higher in the overnight suggests that the selling may be over and I'd be looking for a higher euro on Thursday.

Transportation: Ah, that upper BB gets 'em every time.  On Wednesday the trans dropped 0.87% and like the Dow formed a bearish stochastic crossover with indicators that have now peaked at overbought.  And we also have a bearish RTC setup so this chart is looking just plain ugly tonight.


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 

May        2       4      3           0       0.333   -127

     And the winner is...

Last night I made a bullish call mostly on the absence of any overtly bearish signs.  Well tonight we've got them, pretty much all over the place.  Hence, I am calling Thursday lower.

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 go short at 1885.00.


  1. I would call Thursday uncertain. You’re right, no doubt there are signs of a pull-back, but also some signs of strength, maybe, pointing to what Wycloff called a LPSY, Last Point of Supply. Anyway it’s not so much the market environment that is uncertain, it’s our own mind.

  2. You were Right, I was wrong. Men to the left because women and Night Owls are (almost) always right.

    1. Ha ha - don't feel bad. I'm wrong plenty of the time. That's what's nice about the market though - it's like baseball. You can strike out two thirds of the time and still be considered really good.

      While there's never any such thing as a sure thing, the preponderence of evidence just seemed to be suggesting lower to me last night. Thanks for reading.

  3. Greattttttt Job. Well done!!!!! And down it went!

    1. Thanks :-) I was definitely happy with that one.


Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.