Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1408.17.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Well can you blame me for making a call of "uncertain" for Wednesday?  A day when the Dow ends by gaining all of four and a half points?  When the SPX is up 1.19?  I was right about one thing though - the market continues to tread water as we approach the end of the week, the month, and the summit on Mt. Holympus.

The technicals (daily)

The Dow: I feel a lot like I'm analyzing noise here with the Dow putting in a sliver of a doji star today as the market continues waiting for Friday's news from the Hole.  The indicators are oversold but the technicals count for very little right now.

The VIX:  I was definitely wrong about the VIX moving lower today, as it actually gained 3.46% to remain firmly inside its rising RTC.  However, its indicators have now reached overbought territory and today's close at 17.06 leaves us very close to the upper BB at 17.42.  As I've often mentioned, the VIX doesn't like to spend more than a day or two around its upper BB before backing off.  So I'm guessing we're in for a reversal if not Thursday, then even more likely on Friday.

Market index futures: Tonight all three futures are down by non-trivial amounts at 1:27 AM EDT with ES lower by 0.32%.  ES continues to put in dojis but each one is a bit lower than the previous one.  I note also that ES right now is trading lower outside my rising wedge support line that I mentioned yesterday.  Unless we can make it back to 1408 on Thursday, that would be a bearish sign.

ES daily pivot: Tonight the pivot notches up from 1407.67 to 1408.17.We moved below the pivot at the close and remain under the new value, which is a negative sign.

Dollar index: At least I did get the dollar right today, as it gained 0.22%  But the daily chart just looks like popcorn, bouncing around just above the 200 day MA like a moth around the back porch light.  There's no telling where this may go next - probably more of the same.

Euro: And the euro is also pretty jittery, moving mostly sideways in a small range for six straight sessions now.  It's looking overbought and what goes up does come down eventually, but probably not just yet.

Transportation: Finally, the trans continued their downward march today even as the major averages are trading sideways - an interesting divergence.  We remain solidly in a descending RTC that began on the 21st.  We're also three days below the 200 day MA now and the indicators have become quite oversold with RSI hitting just 4.57 today.  The stochastic is also leveling out in preparation for a bullish crossover.  I'd say the trans are setting up for a reversal higher by Friday.


Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points

April   7      9      2                    .438
May    10      7      3           2        .632  
June    8      6      6           1        .600     632
July   11      2      6           1        .857     917
August  8      6      6           1        .600     -78

     And the winner is...

This market is beyond tough.  I've looked at the charts and scratched my head.  The best I can come up with is that the TLT looks toppy right now, and lower bonds generally mean higher stocks.  But once again, we're simply on hold until after Friday so there's little point in calling anything here other than Thursday uncertain again.

In closing though I do want to note that while the daily charts are pretty foggy right now, the weekly charts are all looking  rather bearish.  Unless there's some real good news from Jackson Hole, next week could be ugly.  And recall that next week starts the ugly month of September.  Add in the ES rising wedge and I'm starting to get concerned for next month.

ES Fantasy Trader

I always preach patience in my trading and today I failed to exercise it.  The result was not just a 6 point loss, but one that could have been a profit had I only waited a few hours longer.  This is the sort of mistake I used to make but don't very much anymore.  But I did it again today.  My original instincts for this trade were correct - serves me right for trying to second-guess myself.

 Portfolio stats: the account remains for the time being at $166,250 after 60 trades (45 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we're standing aside and will continue to do so until I see some sign of this market coming off top-dead-center.

BOT    10    ES    false    SEP12 Futures     1411.75    USD    GLOBEX    AUG 29 14:24:17   

SLD    10    ES    false    SEP12 Futures     1405.75    USD    GLOBEX    AUG 28 01:08:33 

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Act accordingly.