Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Thursday lower, low confidence..
• ES pivot 1973.25.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

In the face of considerable uncertainty last night, Mr. Market rejected the reversal warning and extended his latest winning streak to four.  So let's see now how this changes things for Thursday.

The technicals

The Dow: It wasn't at all clear last night but the Dow rejected Tuesday's doji star and gained a respectable 78 points on Wednesday, to close just a bit higher than its upper BB in increased volume.    The Dow lately has been respecting its upper BB quite well so even though the indicators remain just shy of overbought, we could be in for a pause here on Thursday.

The VIX: On Wednesday the VIX had a big gap down for an 8% drop on a spinning top.  The indicators have now clearly topped but are still just barely coming off overbought..  The lower BB isn't too far away now at 10.22 and before that there's decent support at 10.39.  So we've pretty much just exchanged one uncertainty for another.  We now have a gap down with a reversal candle but the indicators are still overbought.  Who will win?  Who knows.

Market index futures: Tonight all three futures are lower at 12:16 AM EDT with ES down  a non-trivial 0.22%.  On Wednesday, ES rejected Tuesday' spinning top and kept motoring higher to form most of a bullish engulfing pattern.  That also leaves it inside a new rising RTC.  However, the overnight action is disagreeing and has just formed a bearish stochastic crossover.  So overall, this one looks negative.

ES daily pivot: Tonight the ES daily pivot rises from 1967.67 to 1973.25.  Shortly after we published last night, ES moved above the pivot but now we're back below it so this indicator turns bearish.

Dollar index:  On Wednesday, the dollar took a big pop, up 0.22% for a gap-up doji that now forms 2/3 of an evening star.  It also blasted right through its 200 day MA and came close to the upper BB.  After all that, this chart just looks like now it has a lot more downside risk than upside potential.

Euro: Last night I wrote "I wouldn't be surprised to see the euro hit [the lower BB at 1.3545 on Wednesday.".  Well it not only hit it, it kept right on going to end at 1.3526.  That now leaves us right at multi-month support.  The indicators have also now gone oversold and OBV and momentum have bottomed.  So a reversal definitely looks possible from here.  The positive overnight seems to support that idea.

Transportation: The trans meanwhile continued their march into the stratosphere unabated on Wednesday, tracking the left edge of the rising RTC and closing above their upper BB.  Indicators are now quite overbought but at these levels, who knows.  There's really no bearish signs on this chart tonight.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
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       3       0      1           2       1.000    162

     And the winner is...

The charts continue to be unsettled as they have been for the past few nights, but I'm seeing a slight tilt towards the bear side tonight.  And having now hit a few resistance lines here and there in the charts, I'm going to go out on a limb and call Thursday 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.