Thursday, October 23, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1929.67.  Holding below is bearish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Well I am certainly glad I called Wednesday as uncertain because of the odd way things turned out.  While it is certainly tragic for anyone to get shot on the job in Canada, and I don't mean to sound cold about it, but it doesn't seem to warrant a nearly full percent drop in the Dow.  Or blame it on AT&T earnings but Mr. Market sure seems to be be a nervous Nellie.  Will he find his Valium stash in time for Thursday?  Let's check it out, as they say down at the public library.

The technicals

The Dow: It wasn't quite the doji I envisioned, but the Dow was indeed unable to press forward on Wednesday and after breaking above its 200 day MA Tuesday it just folded with a big bearish dark cloud cover to collapse right back below it.  That was also good for a rising RTC bearish setup. even though we're still not quite yet overbought.  Either way, this one no longer looks bullish..

The VIX:  It didn' take much to spook Mr. Market with the VIX jumping 11.13% Tuesday just as it seemed ready to visit its 200 day MA.  The resulting bullish engulfing candle now makes this chart look bullish.  Oh and a bullish exit of a descending RTC too..

Market index futures: Tonight the futures are mixed  at 12:20 AM EDT with ES up 0.04% but NQ down 0.03%. ES put in a dark cloud coverish affair on Wednesday with overbought indicators and its stochastic is now curving around preparing for a bearish crossover.  Wednesday felt like it took the wind out of ES's sails though we do remain in a rising RTC for now at least.

ES daily pivot: Tonight the ES daily pivot ticks up from 1921.17 to 1929.67.  We've now crossed under the new pivot so this indicator turns bearish.

Dollar index:  Big gap-up breakout here on Wednesday right up to resistance.  But with indicators not yet overbought, more upside possible.

Euro: Last night I wrote that the euro  "looks lower Wednesday" and so it was, falling back to 1.2648, in a month-long congestion zone.  But with indicators still not yet oversold and no reversal candle, more lower here still possible.

Transportation: Tuesday's resistance was the key to Wednesday's trans as they sank over 2%.  Also hit oversold, also exited the rising RTC for a bearish setup, also the stochastic is now near s bearish crossover, all of which makes this chart now suddenly look negative.


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  6       6      5           2       0.571    376 October    5       5      4           1       0.545    293

     And the winner is...

This is a difficult call because it's hard to tell how much of Wednesday's decline was technical and how much was knee-jerk news reaction.  I guess in the absence of any better information, I'm just going to have to once again 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 at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside.

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