Actionable ideas for the busy trader delivered daily right up front
- Thursday uncertain, depends on Italian news.
- ES pivot 1260.08, holding under is bearish.
- Rest of week bias historically higher.
- Monthly outlook: bias up, on technicals.
- ES Fantasy Trader going long at1249.75.
Last night I thought we'd be going lower today. The only surprise to me was the size of the move. I wasn't thinking we'd get a 1.14% pullback in the Dow. But that's the sort of thing that can happen in the waning days of the year. Moving right along...
The technicals
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| Dow daily |
The VIX: Yesterday the VIX broke out of its descending RTC, a bullish setup. Today it traded entirely outside on a green candle and that is the trigger. By this system, the VIX should go higher on Thursday and that is bad for stocks.
Market index futures: The futures meanwhile are giving a completely different message from the Dow chart. All three are up at 1:30 AM EST and ES in particular is up by a significant 0.4%. In fact it has been slowly rising since the close on Wednesday. Now why would ES be going up in the overnight when the Dow chart is still looking overbought and technically bearish?
Well from what I read, today's decline was supposedly due to the pricing in of fear about Thursday's coming Italian bond auction. My guess is that the overnight ES traders know something we don't and are thinking that there's going to be some good news coming. Of course that's just speculation on my part but you do have to wonder why the futures are advancing in the face of what appears to be the end of an uptrend.
ES daily pivot: Dropped a bit from 1260.08 to 1250.67. This now puts us very close and ES in fact just made one quick stab at it at 12:40 AM. That was rejected but I expect another attempt real soon now.
Morningstar Market Fair Value Index: The index has actually been rising for four straight sessions now, hitting 0.89 yesterday. That is positive for stocks.
History: According to The Stock Traders Almanac,tomorrow is historically quite positive for the SPX, somewhat less so for the Dow.
And the winner is...
Another tough one. The Dow and the VIX are both guiding lower but the futures are looking higher. It's particularly difficult to say given the characteristics of this low-volume holiday-shortened week. I think Thursday is going to hinge on news out of Italy. Good news, we go higher, bad news lower. All in all, it looks like another good day to go on vacation. That's all, she wrote.
ES Fantasy Trader
Today we took a profit of 10.25 points. Portfolio stats: the account is now $132,375 after 47 trades (31 wins, 16 losses) since inception on 8/18 with $100K. Reminder: the portfolio will reset to $100K cash on January 1st, to make year-over-year comparisons easier. Tonight we're going out on a limb and entering a highly speculative long at 1249.75.
BOT 10 ES false MAR12 Futures 1249.25 USD GLOBEX 11:19:39
SLD 10 ES false MAR12 Futures 1259.50 USD GLOBEX DEC 27 16:46:05
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