Jobs quits, look for reflex drop Thursday, then recovery

The bottom line

Starting today, I'm going to try something new.  I know how all too well the overwhelming deluge of information that's out on the web.  And I know that as much as I love explaining how I come to my conclusions, many people just want to get to the bottom line right away.  And I also realize that I seem to be going into more and more detail with my analyses as time goes by.

So from now on, I'm going to put the Bottom Line on top.  You'll be able to get my prediction for the next day (and sometimes week or month) right away.  Of course if you want to dig deeper I'm always delighted, but from now on the actionable news is right up front.

So what's the bottom line tonight?  The Steve Jobs resignation is going to weigh on the markets Thursday with the Nasdaq (obviously) taking the brunt of it.  Look for a lower open followed by a retracement.  I'm not looking for a big advance after this news.  The ES daily pivot of 1163.75 will be key.  Above, bullish, below bearish.  Plan your trades accordingly.

Now for the gory details.

The details

Dow daily

Last night I had some mixed messages and couldn't really come up with a convincing case for either the bulls or the bears.  I had a vague feeling we might go lower today (Wednesday), mainly because I found Tuesday's rally to be less than convincing.  However, I did point out that the ES daily pivot would hold the key to today's action, and so it did.

ES briefly dipped below 1145.92 twice around 3 to 4 AM, and then it was up up and away from there.  The Dow finished up a nice 144 points.  And so here's the chart.  The double bottom is progressing nicely.  Note one of the important points for a powerful indicator is already in place - the second leg of the "W" has a higher low than the first.

The breakout (and resistance level) is 11,450 (horizontal blue line).  With a close of 11,321 today, we're within easy striking distance of that tomorrow.  Can we do it?

Technically, I think we can.  Notice how all of the indicators have now bottomed and are headed higher.  The stochastic in particular (bottom row) just finished a bullish crossover.  And once again, the regression trend channel worked to perfection.  Yesterday I noted that the Dow's action, outside the RTC was a bullish trigger.  And so today was the payoff.

Meanwhile, the VIX sagged lower today by 1% and I see nothing there to indicate a possible reversal just yet.  And the VIX futures were lower again for the second day on increasing volume.  That's all positive for stocks.

However, Steve Jobs threw a big money wrench in the works by announcing he's packing it in this evening.  Although I have never particularly liked Apple products, Jobs' influence is undeniable.  And tonight the futures are telling the tale.  NQ is now down just about a full percent at 1 AM EDT.  And that's weighing on both ES and YM, both down about a third of a percent.

So my best guess is that we're going to be in for a sell-off at the opening bell on Thursday, followed by a retracement, maybe back to break-even.  Once again, the daily pivot will be key.  Tonight watch the 1163.75 level.  Holding above or bouncing off that is bullish, breaking under and staying under is bearish.

And I do wish Steve Jobs all the best and hope he pulls through.

ES Fantasy Trader

Well last night I went short despite a gut feeling that it might be better not to.  Turns out I should have paid attention to that.  I ended up covering at 1162.25 for a 14.25 loss.  Ouch.  That's 7125 Obamabucks down the drain.  But we're still in a tidy profit position with $116,000 after five trades (3 winners, 2 losers).

SLD    10    ES    false    SEP11 Futures     1148.00   USD    GLOBEX    01:56:37

BOT    10    ES    false    SEP11 Futures     1162.25   USD    GLOBEX    11:34:37 

Tonight I'm going to take a pass.  Withe the Jobs news, there's too much uncertainty to take out an overnight ES position.