No Bearish Signs In The Charts

The Hoot
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• Thursday higher.
• ES pivot 1910.75. Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader:sold ES position at 16,450. .

After a big two-day run I was worried that the market might not be able to make it three in a row. Turns out there was nothing to be afraid of as Mr. Market just kept right on partying like it was 2003, or 1999, or one of those years. That makes the first time this year we've managed three in a row higher and establishes a new rising RTC.

The technicals

The Dow: The Dow rang the gong on Wednesday with another tall green marubozu that was stopped only by its upper BB. The indicators all continue to march higher towards overbought but are not there yet. The only note of caution here is that we're now right at resistance from last months' highs. Can the Dow push past that? Give that we're a lot less overbought now than then, it wouldn't surprise me. I will add briefly that the Dow daily chart now looks to have put in a nice double bottom.

The VIX: Meanwhile, the VIX continued in as steep a descending RTC as I've ever seen (Pearson (L:PSON)'s = 0.999) with its third gap-down day in a row, this one good for another 7.476% lower. And that still only leaves the indicators halfway between overbought and oversold so there are no bullish signs at all on this chart tonight.

Market index futures: Tonight, all three futures are higher at 12:16 AM EST with ES up 0.26%. ES had another stellar day on Wednesday climbing back up to 1922.75 in a tall green near-marubozu to make it three up in a row for the first time since last December. That leaves it just short of January resistance at 1931 with indicators that have now gone overbought. But the new overnight just continues motoring higher so with the upper BB now at 1945.52, it's not out of the question that we test that level or near it on Thursday.

ES daily pivot: Tonight the ES daily pivot rises again from 1882.17 to 1910.75. Once again, ES remains above its new pivot so this indicator continues bullish.

Dollar Index: Last night I said we should "[l]ook for a retest of the 200 MA on Wednesday." And that's just what the dollar did, trading right up to that level before falling back. The result was an inverted hammer and a bearish dark cloud cover. Though indicators are only recently off oversold, this chart now looks more bearish than bullish, despite a recent descending RTC exit. Check it out:

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Euro: After a big drop Tuesday the euro found support at 1.1146 on Wednesday with a small doji star. But the indicators still aren't oversold and the new overnight has resumed the downtrend making it look like there's a chance of another down day for the euro on Thursday.

Transportation: And finally on Wednesday the trans pretty much copied the Dow but did even better by trading entirely above their upper BB for a 1.62% pop. That sent them overbought though there's still no sign of a bearish stochastic crossover. So this is only a yellow caution light. I can't call this chart lower form here just yet.

For the first time this year we have a trending market. And as nervous as it makes me because it seems that any attempts at a rally have fallen flat lately, I see no bearish signs in the charts tonight. And we're not even sufficiently overbought to make a bearish call on that basis. So I guess all that leaves is to call Thursday higher. This is, after all, a technical blog.

YM Futures Trader

Tonight we finally exit this trade at 16,450 for s scant 16 point profit. This was a good example of using the BASH algorithm - Buy Anywhere, Sell Higher. I had bad timing entering it, and after a short pop watched it sink relentlessly until I was way underwater on this trade. But rather than giving all my money to the bots I held on and took the heat. And whadaya know about that - it eventually came back and we didn't have to take a massive loss after all. And yes yes, I know all the arguments - you put your money at risk for a long time for a small reward, etc. But that's better than taking a big loss after a short time, no? Now it's still possible YM could move higher still in the short term, but I'm now tired of this particular trade and after three big up-days I don't want to press my luck so I'm just cutting it free.

SLD 1 false YM MAR16 Futures 16450 USD ECBOT 20:24:53

Written By: The Night Owl Trader