The Hoot
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- Thursday lower.
- ES pivot 2049.92. Holding below is bearish.
- Friday bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: no trade.
So Wednesday turned out to be a lot of sound and fury signifying nothing on the Street. I was worried early on for my call for a lower close at the market rose right out the gate but the Fed minutes came to the rescue at 2 PM and made short work of that. Though once that snit was done, they tried to knock 'em higher with a weird double bottom affair and by the time the bell rang, it was with a loss of just three points. So with that excitement out of the way we move on to Thursday.
The technicals
The Dow: Huh - well so much for the vaunted bullish stick sandwich. Wednesday's real body traded entirely below three day support for a long-legged doji resulting in a virtual wash. But now we do at least have a real reversal candle, though the indicators are still not voersold and the lower BB continues to drop away. And with the stochastic threaded out, I'm afraid this one will require confirmation first.
The VIX: Ah, El-Vixmo, my favorite chart. Last night I wrote that "there's more upside from here" and wouldn't you know it, the VIX gained 2.44% on Wednesday, but like the Dow on a long-legged doji. This one just exactly touched its upper BB, a point I call the thrid rail of the VIX. Once it hits that, it generally goes lower in a day or two. And with the gap-up candle and indicators nearly overbought, I'd not be surprised to see the VIX go lower next.
Market index futures: Tonight, all three futures are lower at 12:51 AM EDT with ES down 0.28%. ES was a carbon copy of the Dow on Wednesday with a doji that left the indicators oversold. It's a reversal sign that needs confirmation but we're getting more like a big non-confirmation in the new overnight as ES continues to sag.
ES daily pivot: Tonight the ES daily pivot falls again from 2049.92 to 2043.33. ES.remains below its new pivot so this indicator simply continues bearish.
Dollar Index: Last night despite a red hanging man after three days of stalling out, I refused to call the dollar lower. Good thing too since it broke out on Wednesday for a big 0.56% gain to continue a two-week rising RTC. That sent the indicators back to overbought but at this strage that means little. Of more concern is that we're at month-long resistance. So I'm just chicken enough to refuse to call the dollar any higher from here.
Euro: Meanwhile the euro had me scratching my head last night. In the end it extended its two-week long slump back down to 1.12375 on a tall red near-marubozu that came close to its lower BB. That leaves the indicators all oversold, though surprisingly not extremely so, and the stochastic threaded out on the floor. So it's impossible to call the euro higher at this point.
Transportation: Last night I wrote that "I'm guessing there's more upside here". good guess too becaue the trans gained 0.30% on a second green inverted hammer in a row. Real body-wise that makes three white soldiers plus indicators rising off oversold and a fresh bullish stochastic crossover. So overall, this one is cautiously optimistic.
While we do have a few reversal signs for a move higher tonight, they require confirmation and at this point we're not getting it. I think the Fed has it dead wrong and the market is in for a rough time. In any case, I'm calling Thursday lower.
YM Futures Trader
No trade tonight..