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- Thursday lower.
- ES pivot 2132.83. Holding below is bearish..
- Friday bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: short at 17,670.
The Dow warily wobbled its way through Wednesday ahead of the Fed minutes. Those gave it a brief boost but it was short-lived and the bell rang with a gain of just 16 points on a small doji, not quite a star but too skinny to be a spinning top (in my book anyway). At least my thesis about support at 18,090 held, with about the same story on the SPX. It kind of felt like a meh day but I think that the support holding up was important. We now trudge tiredly towards Thursday with a careful check of the charts.
The VIX: This was one of those unusual days when both the VIX and the rest of the market rose. However, just like Tuesday, the VIX was stymied by its 200 day MA, bouncing off it for the second day in a row. The resulting overbought gap-up spinning top is a decent reversal sign.
Market index futures: Tonight, all three futures are lower at 1:11 AM EDT with ES down 0.56%.
ES daily pivot: Tonight the ES daily pivot rises from 2139.00 to 2132.83. That leaves ES below its new pivot so this indicator continues bearish.
Transportation: Hmmm - Tuesday's dark cloud cover was confirmed Wednesday with a second red candle for some bearish divergence on a day the Dow rose..
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 4 5 6 0 0.444 -59 October 3 1 3 1 0.800 48
And the winner is...
The bears were unable to capitalize on Tuesday's big dump on Wednesday, though the resulting candles were only signs of indecision rather than outright reversal. I also note a huge VVIX spike on Wednesday and these are typically followed by a move higher in the market within a day or two - but not necessarily on Thursday.
In short, I find Wednesday's brief rally attempt as unconvincing as Tuesday's decline. With the futures sagging in the overnight, there seems to be a possibility we may break the previously mentioned support levels on Thursday. Things are looking more on the bearish side tonight so I'm going to go ahead and call Thursday lower.
YM Futures Trader
No trade tonight.