Thursday, September 11, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1990.92.  Holding above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well I did say last night that I thought  Wednesday might be a hammer day.  And although I also thought we'd end lower (but didn't), the Dow did in fact put in a fat hammer that ended 55 points higher.  Unfortunately, that sort of throws a monkey wrench in my downtrend thesis so let's see if maybe the charts for Thursday can help sort this all out.

The technicals

The Dow:  Things were looking good for my call lower early on but come 11 AM the Dow rallied back hard to finish up 0.32% retracing half of Tuesday's losses.  That leaves us in a quandary because the descending RTC is now totally invalidated, and RSI is rising while the stochastic is falling.  This isn't a pattern I'm familiar with so we'd best just let it go at that.  No call here.

The VIX:  Last night I wrote "I'd lay better than even odds that the VIX actually goes lower on Wednesday" and I feel sorry for the sucker who took that bet because the VIX did in fact fall 4.59% on Wednesday on a big bearish inside harami after a brief retest of the 200 day MA (which failed).  That also dropped us out of the rising RTC fore a bearish setup and with indicators still oversold, this chart looks good for more downside on Thursday.

Market index futures: Tonight all three futures are slightly lower at 12:20 AM EDT with ES down  0.08%.  On Wednesday ES gave us a stubby hammer that almost (but not quite) bumped out of the descending RTC.  Indicators are wandering about in No Man's Land (between overbought and oversold).  So we have a reversal warning, but one which requires confirmation.

ES daily pivot: Tonight the ES daily pivot dips from 1992.00 to 1990.92.  That was enough to put ES back above the new pivot so this indicator now turns bullish.

Dollar index:  Last night I said of the dollar, "I'll believe it goes lower when I see it and not before".  Good thing too, because the dollar rose another 0.02% on Wednesday.  We do now have two spinning tops in a row, with Wednesday's a bit lower than Tuesday's.  It's also hanging right on the edge of the rising RTC.  The indicators remain broken at overbought so once again I'm skeptical that this uptrend is over..

Euro: The euro made a vain attempt to rally on Wednesday, ending about where it began, at 1.2902 which is becoming new support.  Meanwhile we remain in a long-running descending RTC and I still see no sign of that ending.

Transportation: I missed this call too (though not by that much), with the trans actually rising 0.08% on Wednesday.  And we did get a classic hammer here, though the indicators are still just off overbought and the stochastic is coming off a bearish crossover.  But I'll go with the candle here and claim that the trans look ready to move higher 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     8       7      2           2       0.588     81
September  1       3      1           0       0.250    -14

     And the winner is...

Tonight there are several signs of a possible reversal on Thursday, specifically from the VIX, the futures and the trans.  The conservative approach would be to wait for confirmat4ion, but I'm feeling wild and crazy so I'll just go ahead and 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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