Wednesday looking lower on politics

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday lower, medium confidence.
• ES pivot 1187.00.  Holding below is bearish.
• Rest of week bias lower, on US & EU politics.
• Monthly outlook: bias uncertain on politics.
• ES Fantasy Trader remains stuck long.

Recap

Another miserable day on the Street today.  It looked for a while like the ECB might come to my rescue and make the day finish higher as I was calling for but that rally attempt fizzled right after lunch and back down we went for another 54 points lower in the Dow.

The technicals

The Dow: Today's drop took us to quite oversold levels and made two days we're bumping along the lower BB.  The last two times that happened lately, we rallied the next day.  Unfortunately, the time before that was the giant summer swoon from July through August, when the Dow spent a full eleven sessions hugging a lower Bollinger band that kept falling away from the market.  Let's hope this isn't turning into that.  And uh oh, I used the "h" word, something I normally avoid.  When you start pinning your strategy on hope, you're in trouble.  And this market sure looks like it's in trouble right now.

Of course part of the problem is the thin trading due to the holiday week. Volume has been declining for the last three sessions as all the "banksters" pack up and head for the Hamptons to gobble their turkeys.

The VIX: One thing I did get right last night was to call for a lower VIX and sure enough, it went down 2.86% today.  Given the leading indicator qualities of the VIX, this is about the one bright spot I can find in the charts as a lower VIX should mean higher stocks.

ES daily

Market index futures: This is the Chart of the Day, and a thing of beauty it is not.  Nothing but down for almost eight straight sessions now (the 15th saw a puny 2.5 point gain, so that might as well be down).  At this point, it's time to start talking about streaks again.  This down streak is now longer than anything from the waterfall crash back in July and the market is as oversold now as it was after that.  And yet this chart is looking like the market that has fallen and can't get up.  The candles are locked into that descending RTC like a train on rails.

The only good thing here is that 1169 is another support level and that seems to have held in the overnight, so far at least (at 2 AM EDT).  But with all three futures down about a full percent, Wednesday's not looking good.

ES daily pivot: Now 1187.00 but even as the pivot comes down, ES seems to just fall away from it.  We're not going to catch a reversal this way.  Ugh.

     And the winner is...

Europe.  Not the bulls, not the bears, it's all about Europe and the Pain in Spain, which causes no one's gain.  Until we get a hint of good news out of Europe, you can just fuggedabout it.  Technically, we're overdue for a bounce any day now, but it simply doesn't seem to want to happen.

I'm not going to the Hamptons, but I am completely sick and tired of this nonsense.  I'm taking the rest of the week off.  The only good thing here is that eventually, there may be some bargains around but I'll leave the falling knife to the turkey, thank you very much.

ES Fantasy Trader

The ESFT is now underwater in the same way as the Trieste exploring the Marianas Trench.  I can only assume that eventually it will have to come up for air.  In the meantime, well, I'm on vacation.