Actionable ideas for the busy trader delivered daily right up front
- Wednesday higher, medium confidence. Bull-bear ratio is 5:3.
- ES pivot 1227.00. Holding above is bullish..
- Rest of week bias uncertain, rebound possible by Friday.
- Monthly outlook: bias up on technicals.
- ES Fantasy Trader went long at 1227.25.
Well I thought we were going lower again and we sure did, with the Dow dumping another 297 points to open November with a big fizzle, thanks to those freakin' Greeks and their referendum. But whining, like hope, is not an investment strategy. Not like reading the charts which is what we do here, so let's get right to it and see which way they're pointing for Wednesday.
The technicals
The Dow: Ugh, another big dump that not only broke support at 11,694 but played entirely under the 200 day MA and closed on the day's lows. Indicators are all declining but still a good ways from oversold, though it should be noted that support exists at 11,640, just shy of today's close at 11,657.. Still, it's just an ugly chart that's +1 bears.
The VIX: I was talking about gaps in the VIX last night - well holy moly, after closing yesterday at 29.96, we opened today at 36.03 - that's one heck of a gap up. And that made a spinning top doji centered right in the 35-36 resistance zone and just short of the upper BB at 38.6. The pattern lately has been to fill these sorts of gaps the next day, so I'd look for the VIX to move lower Wednesday and that's +1 bulls.
VIX futures: Here we got a giant abandoned baby that's a really good reversal indicator. No matter what the chart, they have trouble advancing after a doji like this, so I'm calling the futures lower Wednesday and that's +1 bulls.
Market index futures: Finally, all three are running in the green for once. ES is up 0.37% at 2 AM EDT. And its looking exactly like the VIX futures chart so the same comments apply and that's also +1 bulls.
ES daily pivot: Now is 1227.00. ES has been trending up since 7 PM and broke through the pivot just past midnight. Then it made a quick retest that was successful and resumed climbing. I like the looks of this sort of action, so +1 bulls.
Dollar index: The dollar rocketed up once again today, even more than I expected. While this might look like a bullish continuation, I note that the peak of the day was right at the 54.61 resistance level, from which it retreated. While the indicators are not technically oversold, they are at the same level they were at the last peak on October 20th. So I'd have to say the dollar may be in line to run lower soon, if not tomorrow then even more likely Thursday. On that basis I'm giving this +1 bulls.
Oil: I mentioned the double hanging man last night and oil indeed sank lower today - and put in a third hanging man, a long spindly one at that. But after three straight down days, I have to wonder if this isn't now a hammer instead. The indicators are kind of confused and so am I. I'm not feeling the love from this chart, so no call and no points.
Copper: The Doc took a big gap down today to end with a hammer in the Twilight Zone, that spooky region halfway between Bollinger bands. All we're left with are indicators still more overbought than oversold and having now peaked, so that's worth +1 bears.
Morningstar Market Fair Value Index: Today the index dropped to 0.77. But all the previous numbers on the chart oddly seem to have changed too, so I don't get it. However, it remains a pattern in decline, so that's +1 bears.
History: According to The Stock Traders Almanac,there isn't much to the second day of November, so no points.
And the winner is...
The bulls, somewhat surprisingly given all the negativity I've been reading today, by a bull-bear ratio of 5:3. So I'm cautiously optimistic we might see a turn-around on Wednesday after two big days of declines mostly based on European rumors and non-news. So the Night Owl is moving about half-way out on the limb ad calling Wednesday higher.
ES Fantasy Trader
Today we took a profit of 22 points. Portfolio stats: the account is now $172,500 after 31 trades (23 wins, 8 losses) since inception on 8/18 with $100K
BOT 10 ES false DEC11 Futures 1216.25 USD GLOBEX 11:48:29
Tonight we go long at 1227.25..
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