Thursday, July 31, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence..
  • ES pivot 1965.25.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well that was interesting.  A lot of people were selling the rumor that Auntie Janet was going to sound more hawkish than she actually did Wednesday afternoon.  That cheered up Mr. Market, but just a bit as the Dow finished lower anyway, thought both the SPX and Nasdaq managed to end in the green.  So that takes care of one bit of news, but wait there's more.  We'll now check on how the charts sort out tonight heading into Thursday.

The technicals

The Dow:  The indecision in the Dow on Wednesday as reflected in a textbook spinning top.  However, it's sitting just off the lower BB, the indicators have now gone oversold, and the stochastic is flattening out in preparation for a bullish crossover.  So right now I'm leaning towards this candle as a valid reversal sign.

The VIX:  After a bullish engulfing candle on Tuesday, the VIX did indeed move higher on Wednesday - by all of 0.38% as it tested both its 200 day MA and upper BB and was rejected on both counts.  As the indicators continue higher, this is forming a roof on the VIX making any further headway problematic.  Nonetheless, I expect the VIX to take another stab at the MA (now at 13.57) on Thursday.

Market index futures: Tonight all three futures are lower at 12:18 AM EDT with ES down  a non-trivial 0.15%.  On Wednesday, ES put in a long-legged doji near the bottom of Tuesday's big drop.  That also drove the indicators to nearly oversold and traded just outside a steep descending RTC for a bullish setup.  That said, ES seems to be non-confirming the doji in the overnight and continues to sag lower, so I can't really call a reversal here just yet.

ES daily pivot: Tonight the ES daily pivot drops from 1968.17 to 1965.25.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  The dollar has been on fire-o all month long and continued its escalator ride up the upper BB on Wednesday with another 0.25% gain that kept it in a tight rising RTC.  RSI remains pegged at 100 for the third day in a row, but there's really no sign that the dollar is ready to roll over just yet.

Euro:  And so of course the euro continued it ride down to the bargain basement on Wednesday, dribbling down its lower BB in a tight descending RTC.  This action was significant because on Wednesday the euro broke under its 200 week MA and now has no support until 1.3359.  There's just no sign of a reversal here either.

Transportation: Much has been made in the press lately about the trans' swan dive this past week.  But no one seems to have noticed the reverse exponential shape of the curve.  These moves always end by reversing  Always.  And Wednesday may have been the start of that with a 0.72% gain on an inside harami.  The indicators are now oversold and the stochastic is maybe a day or two from a bullish crossover.  I have to think the selling is about done here for now.


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       5       4      4           3       0.667    322

     And the winner is...

I hate to say it because I want the market to go higher, but although I'm starting to see some signs of the selling abating, I'm not seeing enough good reversal signs to be able to call Thursday higher.  Accordingly, I guess the only other direction we can go is Thursday lower.  I'll be happy to be proven wrong.

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.

No comments:

Post a Comment

Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.