Thursday, August 28, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1997.00.  Holding below is bearish.
  • Friday bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

So the Dog Days of summer bark on, with another snoozer of a day on the books with teh\\he Dow up just 15 points and the SPX up all of 0.1 points.  I get the feeling that the major players are already packing for the Hamptons, or the Turks and Caicos, or wherever it is that well-heeled traders go on vacation on their Gulfstreams and Citations - not that I'd know anything about that.  But we mere plebians simply trudge on as we now contemplate the next to last day of August.

The technicals

The Dow: Last night I wrote "the only reasonable call here is bullish."  And while a 0.09% gain isn't exactly earth-shaking, it's still higher and reason prevailed.  In any case it was enough to keep us inside the rising RTC though we're now flirting with the right-hand edge.  We now have a small spinning top but it's not really enough to make me call this chart bearish.

The VIX: Last night I wrote "I have to think the next move here is higher" and whaddaya know about that - the VIX gained 1.29% on Wednesday, though with a spinning top of its own.  But this traded outside the descending RTC so that's  bullish trigger and with indicators still oversold I think there's more room to run higher here.  Unfortunately, VVIX continues lower and thus does not support that idea.

Market index futures: Tonight the futures are mixed at 12:14 AM EDT with ES down  0.03% but YM up 0.01%- basically flat.  It's been looking to me for the past few days like Mr. Market was running out of gas and Wednesday's fat  hanging man in ES may be the proof.  We closed just above the rising RTC but the overnight is now trading outside it for a bearish setup.  With indicators now starting to show some signs of coming back to life at overbought, it would appear that ES is getting ready to roll over.

ES daily pivot: Tonight the ES daily pivot dips from 1997.83 to 1997.00.  And that slight move just wasn't enough to get ES back above the new pivot, so this indicator is now bearish, though only by half a point so just like last night the pivot is again in play.

Dollar index:  On Wednesday the dollar put in a decisive end to its recent two-week run-up with a gap-down 0.28% loss that dropped it right out of its rising RTC for a bearish setup.  With indicators now having apparently peaked at extreme overbought, it sure looks to me like there's more downside to come here.

Euro: And as the dollar dropped, the euro put in a nice bullish engulfing candle on Wednesday to close at 1.3197 with a bullish RTC setup to boot.  That all spells higher in my book.

Transportation: On Tuesday we saw something of a bearish warning from the trans.  Wednesday gave us a doji with a small 0.08% gain as we continue a week-log sag out of the last rising RTC.  With indicators now clearly coming off overbought, I think there's more downside here on 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       6       4      4           3       0.692    639 August     7       7      2           2       0.563     39

     And the winner is...

Tonight we're seeing a whole bunch of reversal warnings, but coming in the form of spinning tops they require confirmation.  The VIX looks ready to move higher, though that's not supported by VVIX.  ES definitely appears to be running low on gas at this point.  And the next to last day of August is historically bearish so I'm just going to go out on a limb and call Thursday lower.  I'll be happy to be proven wrong.

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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