Thursday, February 16, 2017

Thursday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 2344.42  Holding above is bullish..
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • YM futures trader: no trade tonight.

Last night I was worried about the short-term overboughtedness of the market but with a solid four day win streak going I didn't want to stand in front of that buss so I called Wednesday higher.  Good thing too because the Dow just kept on chugging, making it six in a row now (including the small doji that started this all off on the eighth).  We are now in one of the steepest rising RTC's I've ever seen, with a Pearson's of 0.991.  Now as we near op-ex on Friday and our penultimate market call, we're just looking for signs that this rally might be over and done.  Let's see what the charts have to say about it.

The technicals

VIX, daily
The VIX:  In what was perhaps my worst prediction of the year (or all time) last night I said of the VIX that "I see nothing bullish about this chart."  Well I still don't, but that didn't prevent the VIX from posting a giant 11.45% gain on Wednesday, its biggest since last November 3rd.  It was most peculiar since the rest of the market also moved higher.  I've never seen such a large disconnect between the VIX, which is usually inversely correlated, and the market as a whole.  Just look at this chart.  What to make of this giant green marubozu that erased two weeks worth of losses in one day?  I'm really not sure.  All I know is that we're now close to overbought while the stochastic just completed a bullish crossover.  This is really odd.

Market index futures: Tonight, all three futures are mixed at 12:27 AM EST with ES down 0.07% but NQ up 0.05%.

ES daily pivot: Tonight the ES daily pivot rises again from 2331.50 to 2344.42. So ES continues above its new pivot (though not by much at this point) and this indicator continues bullish.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January   10      2       7           1       0.846    595
February   5      0       6           0       1.000    626

     And the winner is...

That big jump in the VIX on Wednesday can't just mean nothing.  And the market is getting extremely short-term overbought, with the Dow's RSI at 94 and the SPX hitting 100.  Unfortunately, that's about all I've got in the bear department.  The trans continue to outperform and the cup & handle I noted in IBM two days ago is paying off nicely.  But this winning streak is getting pretty old in the tooth and with op-ex coming right up, things could get a bit wacky.  Right now I'm wanting to call the market lower but I really can't without some good old fashioned bearish candles.  So once again I'll have to settle for Thursday uncertain.  Such is life.

YM Futures Trader

No trade tonight.


  1. Well, we finally got to the NightOwlTrader op/ex. I hope it's not goodbye, but just a while until we listen again the hoots of the night owl on twitter?
    Meanwhile here are some thoughts picked from the editor of The Stock Trader’s Almanac:
    The Stock Trader’s Almanac 2017, points out Presidents’ Day as the poorest performing holiday of the eight holidays that are tracked. Unlike the others, the trading day before and the trading day after this three-day holiday weekend are both down on average over the past 34 years (that's tomorrow and next tuesday!).
    A long holiday weekend could be just the excuse traders need to trim long positions and book some profits.
    Using a 20% decline as the definition of a bear market, there have been 11 bull markets including the current one and 10 bear markets since 1949. The previous ten bull markets lasted an average of 1770 calendar days and produced gains of 161.4%. Within these 11 bull markets there were 23 corrections ranging from 10% to 19.9% for an average of just slightly more than two corrections per bull market. The current bull market, at 2898 days old and 244.1% gain is above average in duration, magnitude and number of corrections. However, there have been longer bull markets with even more corrections.
    The longest the S&P 500 went without a 10% correction was 2553 calendar days from October 1990 until October 1997. The second longest streak without a correction occurred in the last bull market that ended in 2007 when the S&P 500 went 1673 days.
    The S&P 500’s current streak of 368 days is less than the average amount of time between corrections and is not of major concern. The previous streak lasted 1326 calendar days and ended with the S&P 500 sliding 14.2% over 266 days. Past bullish periods were often devoid of corrections. Low volatility and extended age do not kill bull markets, crumbling economic data and/or geopolitical/exogenous events do.
    Farewell NightOwlTrader...

    1. Indeed. I'm mentioned and recommended The Stock Traders Almanac often, and it's on my Book List. Everyone should own a copy.

      It looks like it's going to be an interesting year and I'm sorry in a way I won't be doing the Night Owl, but it's just taking up too much of my time and I think that after six years, I've made my point anyway.

      But you know the old saying, never say never. Dr. Brett Steenbarger claimed to be ending his wonderful TraderFeed blog but that came back too. But for now at least, it looks like this is it for me. Thanks for reading and happy trading.


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