- Thursday bias lower, bull-bear ratio now 1:1; pivots will be key.
- ES pivot 1216.25. Going under is bearish; Dow pivot around 11,540, SPX pivot around 1210.
- Rest of week still uncertain, market looking toppy.
- Monthly outlook: bias up, all depends on Fed action in September
- ES Fantasy Trader holding onto underwater short position.
Recap
Well the Night Owl definitely laid an egg today with my call for a lower close today. The Dow defied my 2:1 bear to bull advantage from Tuesday night and went up 54 points. I can only console myself in that from what I read today, I was not the only the one caught by surprise. Anyway, let's see if we can do better tonight for Thursday.
The bull case
The market went up today in the face of some compelling reasons not to. You can chalk this up to end of the month window dressing or maybe someone knows something I don't (not entirely unlikely), but either way, that strengthens the bull case. +1
The double bottom breakout is confirmed today. This is generally a good bullish sign. +1. And still no resistance until 11,893. +1.
Tomorrow is the first day of the month and that is historically bullish. +1.
The bear case
All of the factors in place last night remain today, only more so. What was overbought then is even more overbought today. The Dow stochastic, one of my best indicators, is rolling over the top. This one rarely fails. +1 for the bears.
The VIX moved lower today but did it with a green candle. Today makes the second daily doji in a row. +1.
And the VIX futures, now definitely looking oversold, put in a bullish engulfing pattern on a solid green candle, again implying a higher VIX. +1.
And the winnder is...
Another tie! 3 to 3. So the deciding vote has to go to the market futures. Last night I called the market lower technically in the face of rising futures. Obviously the overnight players knew something I didn't. While I still think we're now overdue for a pullback, it's somewhat less clear if it will happen tomorrow. Once again, like last night, all three market futures are up, but not by much. ES is up 0.1% at 1:30 AM.
What's different is that unlike last night when ES was in a rising trend in the overnight hours, tonight it peaked around 9:30 PM and actually started declining at 11:40 PM. At 1218.50 it is now just 2 1/4 points above the new daily pivot of 1216.25. This number is critical for tomorrow.
Since the market did not behave today the way I was expecting, rather than make a definitive call I'm going to punt and claim that if ES bounces off its pivot (which should be in an hour or so at the rate its going) then we have a shot at some more gains Thursday.
If we fall through it, we may see the reversal I thought was coming today. Watch that number and watch the Dow daily pivot too. Today's was 11,540; Thursday's should be close to that. If the Dow does not bounce off that level and falls below, look for a lower close.
ES Fantasy Trader
The ESFT did not cover its short today which remains more than 10 points underwater (glub glub). This market simply does not look like a buy to me at these overbought levels so I will just take the heat (easy to do when you're playing with worthless Obamabux rather than real money), stick to my guns, and wait for lower.
Posts
I find it real interesting that the markets seem to be on the verge of a small re-tracement, but the bulls keep trudging along. In this environment, bad news has no effect and good news creates gains... I am confused.
ReplyDeleteNow this morning, new job claims in line with expectations is causing a gain...
What is going to be the catalyst for this much needed re-tracement???
Patience, my friend. Notice how the big gain out of the gate this morning so quickly retraced. The Dow is now osciallting tightly about its new pivot (11,618). SPX and TNA are now actually below their pivots. ES keeping bouncing off its pivot but is unable to make any headway.
ReplyDeleteThe intraday charts are forming a symmetrical triangle suggesting a break coming soon. The daily charts seem to suggest that this break will be to the downside. I'm willing to wait another day for this. I still think it would be unwise to go long in this environment.
But is it just as unwise to be short in this environment?
ReplyDeleteI don't think so, at least not as a swing trade. I think there's more room on the downside that up right now. Friday's economic numbers are going to have to be stellar to overcome the now outgoing tide. That's always possible, but what have we been seeing lately - mostly bad news. Personally, I just took on a small SDS position right before the close.
ReplyDelete