Actionable ideas for the busy trader delivered daily right up front
- Wednesday higher, medium confidence.
- ES pivot 1340.75. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias up.
- ES Fantasy Trader goes long at 1346.75.
Last night I called for a slightly lower close today and while the market did open lower, it rallied back as we've seen so often lately through the day to close higher by 33 points, apparently on expectations that things are improving in Greece. Where to next? Let's see...
The technicals
The Dow: Today's candle was a star, and like yesterday's hanging man, it is ordinarily a sign of indecision. But all year so far, the decisions, when they come, all seem to be in the upward direction. We finally got an oversold indication from RSI today but not from the stochastic, which is generally more accurate. I do not see a top on this chart yet. We remain firmly inside the rising RTC and today's close at 12,878 finally moves us above the 12,850 resistance line and even two points above last year's intraday high. There's no resistance now until 13,000 which is both psychological and the "spring shelf" from 2008.
The VIX: The VIX finally put in a rational candle, declining 0.62% on a small red candle. With a close at 17.65, a general downtrend, and two recent stabs down to 16.10, I'm thinking there's more downside potential here on Wednesday, and that would be good for stocks.
Market index futures:Tonight all three futures are up, with ES gaining 0.15% at 1:40 AM EST. This continues the five day winning streak for ES with no sign of reversal. The indicators are all overbought but they're basically "overbought broken". The market no longer seems to care about this. Last month we were overbought for 12 straight sessions before getting a pullback. We're also still well inside the rising RTC, so no signs of a reversal here yet.
ES daily pivot: Rose again from 1336.58 to 1340.75 tonight. This brings us a bit closer to the pivot but we remain above as ES continues to drift slowly higher in the overnight. Again, I see nothing negative here.
Dollar index: The dollar broke out of an eight day trading range to the downside today on the strength of the euro. There's nothing on this chart to suggest a reversal either. So a lower dollar would be good for stocks on Wednesday.
Morningstar Market Fair Value Index: Yesterday the index remained at 0.96. The uptrend remains in place, a positive sign.
History: According to The Stock Traders Almanac, Wednesday is historically on the bearish side and the weakest day of this week.
And the winner is...
I have to say tonight it's looking like the bulls remain in control so I'll say we're closing higher on Wednesday. Although I have to think a pullback is coming soon, I just don't see it right now. And as they say, you can't fight the tape.
ES Fantasy Trader
Tonight I had enough and threw in the towel on yesterday's short. This market just refuses to go down and there's no point arguing with it, so I just took the 12.5 point loss. Ugh. Tonight we go long at 1346.75.
Portfolio stats: the account is now $108,250 after 10 trades (7 wins, 3 losses) starting from $100,000 on 1/1.
BOT 10 ES false MAR12 Futures 1346.50 USD GLOBEX 01:10:18
SLD 10 ES false MAR12 Futures 1334.00 USD GLOBEX FEB 6 01:47:03
Posts
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ReplyDeleteThanks. After running lower out the gate, the Dow is, yet again, trying to make a comeback. As I write this, we're back to 12,851. The thing to watch now is the Dow pivot at 12,855. If we can break through that, I think we just might pull out a positive close.
ReplyDeleteOf course, it's always still possible for the Greeks to torpedo this whole theory before 4 PM. We'll just have to wait & see. It's an interesting day, for sure.