Thursday, May 22, 2014

Thurssday higher

The Hoot 
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 technicals

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.


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        4       6      4           0       0.400   -122

     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.

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