Actionable ideas for the busy trader delivered daily right up front
- Thursday higher, low confidence.
- ES pivot 1872.42. Holding below is bearish.
- Friday bias uncertain technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
Huh - well Wednesday was the day I was expecting on Tuesday as the market retraced all of its losses plus a bit. These kinds of move just mystify me. But this one did provide a bit more clarity and we'll elaborate as we run down the usual suspects in search of Thursday's close.
The Dow: On Wednesday the Dow posted a 159 point gain that made Tuesday just vanish. It also sent the indicators higher just barely before they were to go oversold. And it gave us a decent bullish stochastic crossover.. And taking a broad RTC back to May 13th, we got a bullish setup too so this chart now looks bullish, especially after bouncing off the lower BB on Tuesday.
The VIX: So much for the bullish harami - this chart surprised me by losing a big 8.10% on Wednesday, busting support at 12.45 and 12.13, and not stopping until it hit the lower BB at 11.79. And that was enough to form a bearish stochastic crossover from a mid-level. We now have to go to the weekly chart to fins and support and that's not til the end of July of last year. And on a broader monthly view, we're at levels not seen since early 2007! There now seems to be a lot more upside potential than downside risk to the VIX but I'm not sure that's happening on Thursday. We'll need to see a reversal candle first and Wednesday was not it.
Market index futures: Tonight all three futures are higher at 1:52 AM EDT with ES up 0.19%. Wednesday saw a big retracement, bullish-engulfingly of Tuesday's dump. That confirmed support at 1866 and cleared the way to the upper BB at 1893. Will we see that on Thursday? I doubt it, but there's a fair amount of gas in the tank from these levels so this chart looks bullish to me from here.
ES daily pivot: Tonight the ES daily pivot rises from 1872.42 to 1879.33. But even that gain still leaves ES above the new pivot so this indicator now turns bullish.
Dollar index: On Wednesday the dollar gained a meager 0.07% but did it on a giant inverted hammer. With the indicators continuing to fall off overbought, this one looks lower for Friday.
Euro:And on Wednesday the euro broke its support at 1.3693 with a long-legged doji lower to close at 1.3678. That caused the stochastic to narrow up in preparation for a bearish crossover just as RSI came off oversold. This chart now looks lower and the overnight seems to support that idea, down 0.10% already.
Transportation: After an up/down/up move, the trans just don't know which way they want to go. The operative thing here is three days of lower highs. Combined with support at 7833, we've got a descending triangle forming. That suggests lower to come so I'm not optimistic for Friday.
And the winner is...
What a difference a day makes. Tonight the picture is looking fairly bullish, and I do see enough positive signs in the charts to call Thursday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $121,500 after four trades in 2014, starting with $100,000. We are now 4 for 4 total, 2 for 2 long, 2 for 2 short. Tonight we stand aside.