Wednesday, May 16, 2012

Wednesday lower still

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower - medium confidence..
  • ES pivot 1333.58Breaking above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader remains long at 1365.00.

I thought I was finally going to be vindicated when I woke up this morning to find the markets actually up for a change.  No such luck as all the gains went pfft after lunch and left us with a sour 63 point loss in the Dow.  Is this ever going to end?  I'll check the charts as I do every night, though I'm starting to wonder why I bother.

The technicals

The Dow: Today the Dow extended its losing streak to 9 out of the last 10.  This is really starting to get up there in terms of streak length, implying some sort of rally must be coming soon.  On the negative side, we broke through another support level today at 12,710 and are still firmly inside the descending RTC.  Until I see this change, there's no reason to call a reversal.  The indicators are now all useless, stuck on broken oversold.

The VIX:  The one bright spot I can find in an otherwise bleak landscape is the VIX, which today managed only a small 0.46% gain in the form of a spinning top centered about yesterday's action and closing just above the upper BB.    It is notable that despite all the jitters over Greek elections, or whatever their latest problems are, the VIX did not rocket up into the mid 20's as we were seeing last spring.  This one is looking to me to be ready to come back down and that would be good for stocks.

Market index futures: Yesterday's loss in ES was followed by more losses today and the overnight is moving lower still.  At 1:42 AM EDT all three futures are once again in the red, with ES now down a disturbing half a percent.  Of greater concern is that we exited a descending RTC four days ago but the bullish setup totally failed.  That is quite rare.  We're now in another descending RTC with seemingly no turnaround in sight.

ES daily pivot: Tonight the pivot drops yet again from 1339.42 to 1333.58.  And with ES doing nothing but drifting lower, we're just as far below the pivot now as we were in the evening hours.  Another negative sign.

Dollar index: After putting in what technically looked like a good bet for a peak yesterday, the dollar instead rocketed even higher, up a whopping 0.78% on the day.  Technicals no longer matter here - the dollar is now being driven by the euro which sank to a level not seen since mid-January today, in a 12 day run to the basement.  And neither the dollar nor the euro are near any S/R lines right now.  This one looks bad, folks.

Transportation: The trans today actually gained 0.13% while the rest of the market marched lower.  Leading indicator?  Perhaps, but here too we remain stuck in a descending RTC here too.  I'm tired of trying to catch one falling knife after another here, so now I'm going to wait for an RTC exit before sounding the all-clear.

History: According to The Stock Traders Almanac, Wednesday is historically slightly bullish.

Month right  wrong  no call  conditional
April   7      9      2
May     5      4      1           1

     And the winner is...

I really hate to be the bearer of bad news, but it's not looking good at all tonight.  The only positive I see is the VIX, but even that could spend another day around its current levels before heading lower.  I see nothing on the other charts indicating an end to the carnage so I just have to call Wednesday lower.  I'm just not feeling the love.  Not one bit.

ES Fantasy Trader

Portfolio stats:  the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1  Tonight we're once again still holding on to this long at 1365.00We're just so oversold now I really hate to throw in the towel at this late stage in the game.

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