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- Thursday uncertain.
- ES pivot 1922.92. Holding above is bullish.
- Friday bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1920.25..
This is like deja vu all over again. Once again, the Dow took a dive out the gate, only to recover as the day went on. Only this time, it managed to get back above water, thus killing my call for a lower close on Wednesday, though only by 12 points. Foo - will the charts yield any better direction tonight? Let's take a peek.
The Dow: We now have four reversal candles in a row from the Dow - three hanging men and a spinning top - and still no reversal. The bears keep tugging away at it but it always manages to claw its way back to its starting point, but no further. Meanwhile the indicators are slowly sliding off extreme overbought levels, suggesting a move lower. But we've seen this before and it hasn't happened. And we're still well within a rising RTC. So the best I can say at this point is that we require confirmation of any move lower. Fool me once, fool me twice, etc..
The VIX: And the bizzaro May monkey motions continue with the VIX again rising on a day the market is up. I've lost track of how many times this has happened - I think it's like four in the last month. Anyway, Wednesday's 1.77% advance came on a spinning top that pushed the VIX overbought. So we have a suggestion of a move lower here but like the Dow, I'm going to want to see confirmation before calling the VIX lower. Interestingly though, VVIX is already falling, so we just might get a lower VIX Thursday.
Market index futures: Tonight all three futures are slightly lower at 12:26 AM EDT with ES down 0.04%. On Wednesday ES posted a small gain but on a hanging man, following two doji stars in a row. Just what does it take to get this chart to move lower, an engraved invitation? The indicators remain pegged on overbought but still no break lower. This can't go on forever. But I've been seeing signs of a reversal for several days now and it just doesn't want to happen.
ES daily pivot: Tonight the ES daily pivot rises once again from 1920.50 to 1922.92. We remain above the new pivot so this indicator continues bullish.
Dollar index: Last night I just gave up on the dollar which is just as well because I dont' see how you could have predicted the 0.14% gain on Wednesday that took it right back above its 200 day MA. This did though also give us a bullish stochastic crossover from a high level and those are usually good for a day or two of higher action, so I'll guess that the dollar can extend its gains on Thursday.
Euro: And meanwhile the euro continued in its week-long consolidation, dropping right back to the lower end at 1.3599 on Wednesday. With this sort of horizontal motion, there's just no calling this chart. I think it will finally start moving after we hear from the ECB on Thursday.
Transportation: In a bit of bearish divergence, on Wednesday the trans lost 0.02% on a day the Dow was up 0.09%. The candle was basically bearish engulfing and it dropped the trans out of their rising RTC for a bearish setup. With indicators now falling off overbought and a completed bearish stochastic crossover this chart looks lower for Thursday.
And the winner is...
Well just like last night and the night before, the market once again technically looks to be topping. But it's all starting to remind me of that scene in The Pirates of Penzance when the policemen sing "We go, we go!" to which the exasperated Maj. General Stanley replies, "Yes but you don't go!". So I'm just going to call Thursday uncertain until Mr. Market decides to go, one way or the other. Oh and this ECB announcement business has me wondering too.
ES Fantasy Trader
Portfolio stats: the account remains at $121,500 after five trades in 2014, starting with $100,000. We are now 4 for 5 total, 2 for 2 long, 2 for 2 short, and one push. Tonight we hang on to our short at 1920.25,in the hope of eventual redemption.