Thursday, September 15, 2016

Thursday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 2126.75.  Holding below is bearish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias lower.
  • YM futures trader: short at 17,670.

Last night I bet on insanity by calling the Dow higher on Wednesday in the face of bearish candles.  And it nearly worked too as the Dow did indeed move higher out the gate only to sag into the rest of the day ending off all of 32 points.  The Nasdaq did manage to finish higher but that's the Nasdaq.  At least the damage was limited.  I've got the feeling it;s going to be threading a minefield between now and next week's Fed announcement.  We'll look at the charts anyway because hey, I'm retired and have nothing better to do with my time.

The technicals

ES, daily
Market index futures: Tonight, all three futures are essentially unchanged at 12:21 AM EDT with ES up just one tick. But take a look at the ES daily chart.  This sure looks like a classical descending triangle to me, don't you think?  And if it holds true, the outcome isn't looking very pretty.  Is this presaging next week's Fed announcement?  Hmmmm...

ES daily pivot: Tonight the ES daily pivot falls from 2135.08 to 2126.75.  But that still leaves ES below its new pivot so this indicator continues bearish.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      8      6       6           1       0.600     222
April      6      4       8           2       0.667     416

May        9      3       4           4       0.813     756
June       8      5       7           1       0.643    1393
July       5      6       6           2       0.539    -304
August     1      3       8           0       0.250     120
September  1      1       1           0       0.500     -14

     And the winner is...

Tonight we're seeing a number of signs of a move higher on Thursday such as spinning tops in the Dow and the trans, a bullish stochastic crossover in the Dow and a bearish stochastic crossover in the VIX.  But given the recent nervous behavior of the market I'm reluctant to go with that without participation from the futures in the overnight and right now I'm not seeing that.  On the other hand, there are no overtly bearish signs on the charts right now either so I guess all that leaves is a call of Thursday uncertain.  We may very well continue to see this sort of stuff right up until the Fed next week.

YM Futures Trader

No trade tonight.


  1. Indeed, it seems like a descending triangle, but the outcome is less obvious. Bulkovski thinks is just a continuation pattern and the breakout can be in any direction being downward 64% of the time when in a bearish trend, which - it seems to me - is not the case. Autochartist predicts it will be upward because the RSI is below 40, but Larry Connors would say: wait till the RSI (2 period) is below 10 and better 5. And my agent just called to say to brace myself for some volatility next week with good probability of a 10% drop! Well as you often say, in trading there is no rule that obliges to trade. Trading is a science of uncertainty and an art of probability.

    1. You are of course absolutely right. This brings up a philosophical question about the Night Owl. I have wrestled with how much detail or background I should go into when I make my pronouncements. I need to strike a balance between too much and too little detail. Lately I've been under a lot of time pressure elsewhere so I've just been giving out conclusions and not so much the reasons here.

      One thing tht seems clear to me is that this is going to be a Brexit-like event next week. If the Fed does decide to raise rates (which I still think is a very bad idea), we're going down hard.


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.