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- Wednesday higher, medium confidence. Bull-bear ratio is 7:1.
- ES pivot 1265.67. Remaining above is bullish.
- Rest of week bias lower..
- Monthly outlook: bias up on technicals.
- ES Fantasy Trader went long at 127050.
Last night I computed a bull-bear ratio of 6:0 but wasn't feeling all that confident about it. Nevertheless, the BBR came through and Mr. Market delivered a nice up day for us. I have now completely given up trying to figure out what anything coming out of Europe means anymore, so I will concentrate as always on the technicals. So let's spin the Wheel of Fortune and see if we can make a fortune on Wednesday.
The technicals
The Dow: Did you notice the role the Dow pivot played today? After the 10 AM reversal kicked in right one cue, the Dow declined to 12,004, almost exactly the pivot at 12,008. Then it took off and closed the day up 102. With a solid green candle, the 200 day MA breached yesterday now providing support at 11,976 and psychological support at 12K, no resistance til 12,225 and the upper BB at 12,316, I think there's still just enough gas left in the tank for one more push higher before we really get overbought, so +1 bulls.
The VIX: Last night I wrote "we're not done yet with declines in the VIX" and the VIX obliged with an almost 8% drop today that broke its support at 30. With indicators still in decline, solidly in a descending RTC and no support til the lower BB at 25.17 there's nothing here to suggest a higher VIX on Wednesday, so +1 bulls.
VIX futures: The futures chart resembles the VIX itself but is if anything even more bearish and that's good for stocks so +1 bulls.
Market index futures: As last night, all three are running in the red again at 1:07 AM EST, but not badly. ES is down now just 0.18%. The triangleI spoke of yesterday resolved nicely to the upside today with a decent green candl that blasted right through the 200 day MA. That number, 1261.70 now becomes support. And with no resistance til 1281, the upper BB at 1291 and indicators still rising but not yet overbought, what's not to like? +1 bulls.
ES daily pivot: Now 1265.67. Even though this has risen since today, we remain above and after drifting lower this evening, ES has turned around before reaching this level and is headed higher. This is a positive sign so I give it +1 bulls.
Dollar index: I wasn't feeling confident about the dollar last night and in an unusual move, it resolved its symmetrical triangle down, in the opposite of the entry, falling on a day when the market was up. This drop helped create a top in the indicators as well as breaking it out of its recent range, so look for lower again tomorrow. That would be good for stocks (assuming today was a fluke) so +1 bulls.
Oil: After clearing resistance at 94.20 two days ago, oil resumed its upward march until it ran into its 200 day MA today at 97.14. But with increased volume and remaining solidly within its rising RTC, the MA may not prove much of a barrier. But I've noticed that lately when oil gets to various "decision points" it often takes two days to make up its mind, so I'm not looking for a big reversal tomorrow - maybe another small advance and that would be +1 bulls.
Copper: I thought copper would go higher today and so it did but it put in a spinning top. However, there's no reversal sign yet in the indicators. This mixed message leads me to give no points here.
Morningstar Market Fair Value Index: Today the index remained unchanged at 0.90, so no points.
History: According to The Stock Traders Almanac,Wednesday is a down day so +1 bears.
And the winner is...
The bulls with a bull-bear ratio of 7:1. Clearly, we're approaching a short-term top here but I don't think tomorrow is it just yet, so I'm going to call for one more day of gains Wednesday, possibly a doji of indecision.
ES Fantasy Trader
Today we took a profit of 1.5 points. Portfolio stats: the account is now $173,500 after 35 trades (26 wins, 9 losses) since inception on 8/18 with $100K.
BOT 10 ES false DEC11 Futures 1252.25 USD GLOBEX NOV 8 01:33:12
Tonight we go long at 1270.50.
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