Wednesday looking lower

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

• Wednesday lower, low confidence. 
• ES pivot 1250.08.  Holding below is bearish.
• Rest of week bias uncertain, depends entirely on Europe.
• Monthly outlook: bias up on technicals and seasonality.
• ES Fantasy Trader remains long from last Thursday.

Recap

Europe explained, by M.C. Escher

In a great comment to last night's post, reader Daniel corroborates my feelings that TA is failing us lately.  He also notes that the Italian and Greek situation is very complex, which is about all I've been able to figure out myself.  As far as I'm concerned, it's beyond merely complex; it's positively baffling and incomprehensible.

So tonight I'm bringing back a metaphor I first used on September 14th, also about this very topic.  Since then nothing much seems to have changed.  The players are pretty much all still walking upside down sideways up the down staircase.  Just what exactly is going on over there in Europe anyway?

The technicals

Dow daily

The Dow: Last night was the first time in a long time I just threw up my hands and couldn't make a call.  Turns out not making a call was actually a pretty good call as the Dow put in an extraordinary long symmetrical doji that ended up a mere 17 points after a whole day of bobbing and weaving.  Things don't get any more indecisive than this.

Just look at it: the upper bound was limited by the exact same resistance that stopped us four of the last five sessions (blue line) and the lower bound was just above the 200 day MA.

The other interesting point here is that you can see a developing triangle here too. In his comment, Daniel opines that another move up is in the cards and I tend to agree.  The only question is when.

VIX weekly

The VIX: As an example of how screwy this market is, today the major averages were up and the VIX was also up.  That's quite unusual.  And since the daily charts are such a tough read, I'm once again backing out to the weekly chart.

And look at this: yet another symmetrical triangle on the weekly chart.  These things seem to be popping up everywhere lately.  And since this one was entered from above, one would expect the resolution to be lower, and that would be quite bullish for stocks.

Japanese candlesticks, Dow 2011 style

Due to the recent technical uncertainty, tonight I'm going to take a pass on the rest of the Usual Suspects.  At this point I think we're just dabbling in noise and they're confusing the issue more than they are clarifying it.  The only real guidance I'm seeing tonight is from the futures and they're all headed south.


     And the winner is...

Well we'll still nominate a winner for Wednesday.  Even without computing the bull-bear ratio, the overall impression I'm getting is that technically we're due for a lower close Wednesday.  But I'm also expecting some upward movement pretty soon, maybe by the end of this week.  I guess we'll just have to see if the new leader of Italy can deliver the full Monti.

ES Fantasy Trader

We still continue to hold the long position from last week.. Portfolio stats: the account still remains $173,500 after 35 trades (26 wins, 9 losses) since inception on 8/18 with $100K.