Thursday, July 24, 2014

Thursday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher if ES remains above pivot, else lower.
  • ES pivot 1979.00.  Holding above is bullish.
  • Friday bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well I still think my VIX idea for calling Wednesday higher was a good one, and the SPX did in fact gain 0.18%.  Unfortunately, I base my calls on the Dow and that closed down 0.16%, so that counts as a miss, though only by 27 points.  So we just move on to the closing week of July and see what Thursday may bring.

The technicals

The Dow: On Wednesday the Dow took a dump out the gate and never recovered, though the damage was limited.  The resulting fat hanging man reinforces the week-long resistance just above 17K.    And that's about all the guidance we get since the indicators remain completely opaque.  If anything, there's now a slight bias lower, but that remains to be seen.

The VIX:  My whole thesis last night was posited on the assumption that the VIX would go lower on Wednesday and surprise - it did!  Down almost 6% on a spindly gap-down star.  That's a reversal candle right there but with the odd randomness of the charts lately, it's hard to tell.  Still, I think there's a chance of a move higher on Thursday.

Market index futures: Tonight ES and YM are lower at 1:11 AM EDT with ES down  0.06%.  ES had a decent day on Wednesday, just touching its upper BB before falling back a bit.  But that may have been the third rail and the overnight is making no further headway.  Indicators continue indecisive.  The new candle is forming as a bearish inverted hammer, but again, it's only half-baked.  So all in all, another ambiguous night.

ES daily pivot: Tonight the ES daily pivot rises from 1973.58 to 1979.00.  After bumping along just below the new pivot, ES seems to be making an attempt as I write to break above.  That would be bullish.

Dollar index:  Darn - I was sure the dollar was going higher on Wednesday but it had other ideas - down 0.096%on a stubby little candle that crawled up the upper BB.  Indicators remain extremely overbought but without a reversal candle or RTC exit, you just can't call this one lower yet.

Euro: At least I got this one right last night, and I did say I had more confidence in this than my dollar forecast.  The euro continued lower from Tuesday's dump, closing below its lower BB at 1.3459 as the indicators reach extreme oversold.  So the selling appears to be getting played out and the overnight seems to support that idea.  I'd look for a move higher pretty soon.

Transportation: Well here's some bullish divergence, Dow theory-size - maybe.  The trans gained 0.16% on a day the Dow was down by the same amount.  But the candle was a fat hanging man high above Tuesday's close.  With indicators now overbought, this doesn't inspire a lot of confidence for Thursday.


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        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132

July       4       1      3           3       0.875    296

     And the winner is...

Mr. Market seems to be suffering a sort of existential malaise at the moment.  The charts are in the doldrums and there' still not much to go on.  With ES hugging the new pivot though, that give me the opportunity to make one of my famous patented conditional calls: if ES stays above the pivot by mid-morning Thursday, we close higher.  Otherwise, we close lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

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