Thursday, December 18, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 2001.33.  Holding above is bullish.
  • Friday bias higher technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night I was seeing a lot of indications that we were due for a reversal but I wasn't willing to commit to it because it had been such a losing play recently and of course because Wednesday was a Fed day and I always call those uncertain.  Too bad too because the Dow put in a big 288 point pop and that changes the picture.  So let's take a look at how as we continue to count down the waning days of 2014.

The technicals

The Dow:  The Dow was already on a decent technical rally on Wednesday when the Fed announcement hit and after that it was up up and away to finish the day with  a 1.69% gain, the first in four days and the biggest in over a year.  This had the eff3ect of finally forcing a bullish stochastic crossover, causing a bottom in RSI (though it's still oversold) and finally unsticking us form the lower BB - all bullish signs.  We're still in the descending RTC but just barely.  Everything else being equal (which it rarely is) this chart now looks bullish.

VIX daily
The VIX:  Last night I wrote "I still have to think that the VIX is going lower on Wednesday" and hey presto so it did, down a big 17.52% off highly overbought indicators with a big red marubozu.  We now have a bearish stochastic crossover in place andwe've finally broken away from the rising upper BB.  The pattern looks amazingly similar to what we saw back in October.  See if you don't agree:  Compare the action on the left side of this chart to the right.  If this holds up, we should be in for more declines on Thursday.

Market index futures: Tonight, all three futures are lower at 12: AM EST with ES down 0.16%. ES had a spectacular day on Wednesday with a giant green marubozu that broke away from the lower BB and managed to just exit the descending RTC for a bullish setup and confirm Tuesday's inverted hammer.  The bullish stochastic crossover is now complete and all the indicators have started to rise (finally) off oversold so technically this chart now looks bullish

ES daily pivot: Tonight the ES daily pivot jumps from 1985.92 to 2001.33.   That puts us back above the new pivot for the first time in a while so this indicator now turns bullish.

Dollar index: The dollar had its best day since June 2013 with a 1.17%  green marubozu that confirmed a bullish stochastic crossover, brought the indicators off oversold and formed something of a big morning star,.  This all looks bullish to me.

Euro: Meanwhile the euro had its biggest drop since September 4th, to close at 1.2337.  That ends its recent rally, confirms the bearish stochastic crossover and send all the indicators down off overbought.  The euro though has shown a propensity for DCB's following big losses though so I'm not touching this one tonight.

Transportation: The story was pretty much the same on Wednesday with the trans which put in a 0.84^ gain on a big hammer that caused a bullish stochastic crossover and bottomed all the indicators on increased volume.  Now this looks like a reversal to me.


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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       2      5           1       0.667   -192

     And the winner is...

Technically the charts all suddenly look bullish.  My only concerns at this point are that this is an op-ex week and Friday is quadruple witching.  And we're not seeing any positive pin action in the overnight futures.  It's also not uncommon to see the market take a pause after such a big one day gain.  But all in all, I think it's not unreasonable to call Thursday higher.  Of course if there's more chicanery around oil on Thursday all bets are off.  But I'm not expecting a triple digit loss.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

1 comment:

  1. Even I feel the same that if there's more chicanery around oil on Thursday all bets are off.


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.