Thursday, August 7, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1913.75.  Holding above is bullish.
  • Friday bias higher technically.
  • Monthly outlook: bias neutral.
  • ES Fantasy Trader standing aside.

Wednesday's action was significant not so much because ti went up even by just a little as the fact that it simply didn't continue going lower.  And ES broke above its pivot just in my mid-morning timeframe and we closed higher.  This play doesn't always work, but it does often enough to be worth remembering.  Now let's figure out where Thursday is headed.  To the charts!

The technicals

The Dow: As per recent tradition of going down right out the gate, the Dow moved lower right out the gate on Wednesday.  But then something different happened.  Instead of continuing lower, it recovered enough to end the day up 14 points.  The net result was a perfectly symmetrical green spinning top that combined with oversold indicators of long-standing, is a good reversal warning.  But one that requires confirmation, especially in the current dismal environment.  So it looks like we're ready to move higher, but hte Missouri in me says "show me".

The VIX:  Once again the upper BB proved to be anathema to the VIX which bounced off it for a nearly 3% decline and a textbook dark cloud cover.  With indicators remaining quite oversold, this all suggests lower again on Thursday..

Market index futures: Tonight all three futures are higher at 12:19 AM EDT with ES up 0.09%.  On Wednesday, ES [rpduced a long-legged doji at the bottom of Tuesday's big dump, strongly suggesting a reversal.  And with indicators remaining extremely oversold, the overnight seems to be confirming that so far, so this chart now looks bullish for Thursday.

ES daily pivot: Tonight the ES daily pivot drops again from 1917.92  to 1913.75.  This time though it was finally enough to bring ES above the new pivot for the first time in a while.  That now turns this indicator bullish.

Dollar index:  Last night I mentioned an incipient evening star here.  Well on Wednesday the dollar did move lower by 0.13%, though it was more bearish engulfing than gap-down evening star.  Either way, with indicators still overbought this one looks ready to move lower again on Thursday.

Euro: And on Wednesday the euro put in a classic hammer at the lower end of Tuesday's meltdown.  This also traded outside the descending RTC for a bullish setup.  And the overnight is moving higher still for a bullish trigger that confirms the candle.  So I'd venture to say that the euro is going higher on Thursday.

Transportation: In a bit of bearish divergence, the trans continued lower on Wednesday even as everything else moved higher, dropping another 0.62% to remain firmly in a long-running descending RTC.  The only hope here is nearby support at 7986.  But with a fat hammer on Wednesday, there's at least a hint of a reversal for Thursday, but one which requires confirmation.


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       6       4      4           3       0.692    639 August     1       2      0           1       0.500   -134

     And the winner is...

Tonight is one of those "dojis galore" nights.  There are reversal warnings aplenty across the charts.  And after a brief two day rise the SPX Hi-Lo index has dropped back down to 33 which is well within reversal territory.  Given the overwhelming negativity of the recent action over the past two weeks, I almost hesitate to go contrarian, but there are enough reversal signs on the charts tonight for me to call Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

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