Wednesday uncertain

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

• Wednesday uncertain.
• ES pivot 1871.17.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

I guess it could have gone either way.  An "uncertain" call seemed logical last night though in retrospect there were certainly signs of a move higher.  But then again everyone has 20./20 hindsight.  So nothing ventured, nothing lost and we simply move on to Wednesday.

The technicals

The Dow: Frustratingly enough, we seem to be in the same spot here as last night - right on the very edge of a rising RTC.  Only now the indicators are even more overbought and the stochastic is pinching in for a bearish crossover Real Soon Now.  With a vague inverted hammer candle at this point I have to think a move lower is coming soon.

The VIX:  Last night I wrote "I'd say the VIX is going to take a peek at [13] on Tuesday."  Well a low of 12.90 and a close of 13.19 sure qualifies as a peek in my book.  The resulting doji leaves the indicators oversold and the stochastic flattening out for a bullish crossover.  We also bounced off support at 12.91.  It still requires confirmation, but I think there's a move higher in the offing here.

Market index futures: Tonight the futures are mixed at 1:19 EDT, with ES down just one tick buy YM up 0.02%. Call it basically flat.  After a nice run on Tuesday, tonight ES is sitting right on the ragged edge of its rising RTC for a bearish setup, a theory that is supported by a very overbought RSI of 99.2.  The stochastic is moving into position for a bearish crossover and OBV already looks to have rolled over.  The upper BB is at 1893 but it's looking to me like we're about out of gas right here.  And yet as we've seen in the past year, the market can get very overbought and still go up.

ES daily pivot: Tonight the ES daily pivot rises again from 1862.17 to 1871.17. And once again we remain above the new pivot so this indicator continues to be bullish.

Dollar index: Last night I thought we were going higher - well the candle was green but the net effect on Tuesday was a modest 0.04% loss.  It now looks like the overbought indicators and the stochastic about to form a bearish crossover are asserting themselves.  So I'm changing my prediction to bearish here.

Euro: At least I got the euro right when I said a reversal was coming as the euro put in a green candle to close at 1.3801 on Tuesday. With a spinning top in place, oversold indicators and a stochastic about to form a bullish crossover, I'm now claiming the euro goes higher on Wednesday.

Transportation: The trans have been on fire-o, with a now six day winning streak that outperformed the Dow on Tuesday and busted right through resistance at 7700 like it wasn't even there.  We remain in a rising RTC but having just touched the upper BB and with a stochastic that is >< that close to forming a bearish crossover, I think we're overdue for a move lower here.


Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      7       2      4           0       0.778    342


     And the winner is...

After a long winning streak like this I get nervous trying to call a top, and yet I'm starting to see some bearish signs in the charts.  I certainly wouldn't be going long right here.  But we also don't have enough evidence to just go out and out short.  I do think we're right on the cusp of a reversal lower but I'm going to content myself with another call for Wednesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside again with another uncertain call.