Thursday, March 19, 2015

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher.
  • ES pivot 2089.58.  Holding above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a buy.

There goes the patient!
Wow.  The Night Owl is astonished!  We've been hearing the talking heads blathering on for weeks about whether Wednesday's Fed statement would contain the P word.  Well in a truly masterful sleight of hand worthy of Houdini himself, Janet Yellin managed to remove the patient before the doctor even realized he was gone.

And Mr. Market, clearly impressed with such artful wizardry, responded enthusiastically by jacking up the Dow a handy 227 points, and that was after being down over 100 before lunch.  And it left all the shorts who were expecting a rate hike  red-faced with, uh, their pants down.

It was a day trader's dream, that's for sure, but unfortunately nothing we could capitalize on as swing traders.  I decided to just skip all the hoop-la based on the risk involved but was rewarded anyway simply by virtue of the pure theatrics.  Have you ever seen so many people hanging on a single word, "patient"?  Yessirree - that was a hot one, Moe!  You don't see that every day.

OK, OK, let me catch my breath and get back to business here as we see what impact this sudden turn of events might have on Thursday.

The technicals

The Dow:  Last night I said Wednesday would be news-driven and to the complete surprise of absolutely no one, it was, as the Fed's re3moval of the word "patient" sent the Dow shooting up 1.27% the instant the news came out.  After factoring out the excitement though, we're left with 11 of the last 12 sessions reversing direction.  On that basis alone, Thursday will be lower.  There's also the buyer's regret function at work.  The last two big up-candles have been followed by a down day.  And now the indicators are nearly overbought.  But in the absence of an actual bearish reversal sign, this one is too tough to call.

The VIX:  Auntie Janet let a lot of hot air out of the VIX on Wednesday as it deflated a big 10.79% gap-down to crash right through its 200 day MA dragging all the indicators along for a ride towards oversold.  There's nothing bullish about this chart tonight.

Market index futures: Tonight, all three futures are higher at 1:25 AM EDT with ES up  0.17%  ES had a great day Thursday courtesy of Ms. Yellin enough to drive the indicators overbought but not enough to fold over the stochastic for a bearish crossover.  There's still a bit of room to run to the next resistance line at 2115 too and I'd expect ES to touch it before taking a leg down.

ES daily pivot: Tonight the ES daily pivot jumps from 2072.50  to 2089.58.  We remain well above the new pivot so this indicator continues bullish.

Dollar index:  On Wednesday the dollar - gasp - fell, and it fell hard, down 1.177% for its worst one day performance since, oh I don't know - since the left hand edge of my daily chart and I'm too lazy to scroll back looking for it.  A good while anyway.  And that established a new descending RTC, meaning last month's uptrend is now officially over.  Is this the exponential blow-off top in the dollar we've all been waiting for?  Too soon to tell yet, but given the frenetic pace of the year-long run-up, it might be.

Euro:  Wow - we're just full of surprise today, aren't we.  The euro took off like a rocket to close at 1.0753.  And the overnight is gapping even higher, exiting the latest descending RTC and effectively derailing my call for parity by the end of March.  With a new rising RTC in place, ain't gonna happen just yet.  On the other hand, it remains to be seen if this mini-rally has any legs and judging by the overnight action, that's in some doubt too.

Transportation:  The trans on Wednesday was up like everything else but with a hanging man.  We're still in a rising RTC though and the indicators aren't quite yet overbought so it's still to early to calla  top here.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   6      4       5           3       0.692    183

March      3      4       3           3       0.600    471

     And the winner is...

Ordinarily I'd say that after such a sudden large one-day move we'd be due for a pause and perhaps some profit-taking.  But given that it's not Friday yet and there's no bearish signs to speak of on the charts, I think they're going to knock 'em higher again Thursday to (possibly) do profit-taking on Friday.  So it's Thursday higher for me.

Single Stock Trader

After a nice pop Wednesday like everything else, VZ is hard up against YTD resistance with nearly overbought indicators.  It's been cycling nicely so far this year so I'd wait for the next pullback before getting back on this bus.


  1. Excellent as usual, though I don't believe today will be higher. But it doesn’t matter whether you (or probably me) are right or wrong, losses will be contained, winners allowed to fly. Anyway thanks a million for this smile, great work.

    1. Well yes, at this point I'd have to agree with you. It looks like the recent up/down pattern will prevail today. It's always a fine balancing act between the pure technical aspect of the charts and market psychology. ANyway, thanks for reading!


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