Actionable ideas for the busy trader delivered daily right up front
- Thursday uncertain, medium probability. Bull-bear ratio is 4:3
- ES pivot 1187.50. Staying above is bullish, falling below, bearish..
- Friday bias uncertain, depends on Bernanke and Obama speeches.
- Monthly outlook: bias down, regardless of Fed action in September
- ES Fantasy Trader standing aside. No trade tonight.
Today we got a welcome 276 point gain in the Dow. After a big jump out the gate, the market pretty much trended higher the rest of the day, finishing off with a curious little 28 point boost in the closing minutes.
The technicals
The Dow: Today's Dow action on a solid green candle took it outside of its recent descending regression trend channel. That is a bullish setup. +1 bulls. Dow indicators have put in a bottom and hooked upward. +1 again. And since today's gain serves as confirmation of yesterday's hammer, that's another +1. But today's volume however was lower than yesterday's; so -1 bulls. Total: +2 bulls.
The VIX As I predicted last night, the VIX dropped again today. It is now close to the lower end of its recent range, but not quite there yet. The candle does not suggest a move higher tomorrow but its indicators are still just coming off oversold levels. That makes it a tie.
VIX futures: The futures gapped down today to put in a second solid red candle. Coupled with indicators that are just peaking at overbought, this one is +1 for the bulls.
Market futures:At 1 AM, all three futures (ES, NQ, and YM) are trading down, ES by 0.27%. After a big push up into the close, it sort of ran out of steam around 7:15 PM and has been drifting lower ever since. This is of concern, because recently whenever ES had a big up day, the next day was either down equally big or a small range doji, with one exception (8/23-8/24). And at it's current level, ES has hit a resistance point.
On the other hand, the ES indicators are not in bad shape. The short stochastic just executed a bullish crossover. So these factors have a slight bearish bias and I'm giving this point to the bears..
ES daily pivot: The new pivot is 1187.50. Currently, ES is sitting within striking distance at 1195.75. If ES falls through the pivot, that will be bearish. Holding above is bullish. Since it's too early to tell yet, no points awarded.
Dollar index: Today the dollar was unable to push past yesterday's high and dropped, as I thought last night, putting in a dark cloud cover. With indicators that have just now peaked at overbought levels, this portends a lower dollar tomorrow. This is also bullish for stocks. +1 bulls.
Oil: Oil took a big pop today to the top of its recent trading range. However its stochastic appears to be executing a bullish crossover. Those two cancel each other out, so no points here.
Morningstar Market Fair Value Index: Last night they said the index was 0.76. Somehow today that number became 0.85 and today's value dropped to 0.84. Any negative movement here is bearish for stocks. (if this number is to be believed). If I can't get reliable numbers here, I'm going to have to drop this measure. Anyway, for now, +1 bears.
History: The third day after Labor Day is historically negative for the Dow, according to The Stock Traders Almanac. +1 bears.
And the winner is...
Technically it's still the bulls, but just bearly (nyuk nyuk) with a bull-bear ratio of 4:3. And we're going to throw a flag, in the form of Bernanke speaking tomorrow followed by our illustrious Empty Suit giving a talk about jobs later on.
I get the distinct impression that the job he's most concerned about is his own, but nonetheless I expect the markets are going to be mainly in wait and see mode on Thursday. Right now, I'll be surprised to see any big moves out the gate. So I'm not going to call tomorrow either way right now. Thursday is basically going to be another pivot-key day.
Speaking of war...
I'm not actively looking for this stuff, I swear, but it just seems to keep popping up. Here's an excellent analysis of the War on Terrorism courtesy of the equally excellent Stratfor: 9/11 and the Successful War
And here's a brief post yesterday titled "It's War" from the ever eloquent Bruce Krasting In it, Krasting takes on Switzerland and the Swiss National Bank. War with Switzerland? Holy moly! Definitely worth the click.
ES Fantasy Trader
The ESFT closed out last night's trade today at 1187.25 for a 21.25 point profit, or $10,625. Account total now $138,375 since inception with $100K on 8/18 after 10 trades; 7 wins, 3 losses.
SLD 10 ES false SEP11 Futures 1187.25 USD GLOBEX 11:35:06
Because of the uncertainty, there is no ESFT trade tonight.
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