Actionable ideas for the busy trader delivered daily right up front
- Wednesday lower, low confidence.
- ES pivot 1373.42. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader going short at 1373.50.
Today the Dow lost 64 points amid signs that we may have put in a short-term top. With pronouncements due on Wednesday from the Fed, let's check the charts to see what may be in store for us.
The technicals (daily)
The Dow: Today's solid red candle confirmed yesterday's doji as a reversal making it look like the top is in on this chart. And volume, while lower than average, was higher than Monday. In addition, today's loss took us right out the rising RTC and that's a bearish setup. And finally, the stochastic is just about to execute a bearish crossover. This chart looks ready to go lower.
The VIX: As I suspected, the VIX did indeed move higher today, gaining 5% on a gap up green candle. With a stochastic just forming a bullish crossover now, there's a good chance to go higher Wednesday here again, a negative for stocks.
Market index futures: The futures are mixed tonight, with NQ and YM up a bit but ES down just a tick at 1:45 AM EDT, although it's been drifting higher since 10:30 PM, retracing about half its decline in the final hour of regular trading today. The picture here is similar to the Dow: doji followed by a red candle lower, RTC exit, and overbought indicators. And here the bearish stochastic crossover is now complete. This chart really looks ready for more downside action on Wednesday.
ES daily pivot: Tonight the pivot drops from 1381.25 to 1377.33. With ES just about unchanged as I write this, we're still below the new level, so that's bearish.
Dollar index: Another doji today, this one from the dollar which has shown support right around 57 on the USDUPX. Its stochastic is just about to form a bullish crossover suggesting a move higher on Wednesday.
Euro: The euro moved higher today, continuing what is now a three day consolidation in the range of 1.2273 to 1.2322. While the euro has now entered overbought territory, there's no sign right now that this consolidation will break on Wednesday.
Transportation: The trans dropped 0.47% today on a red candle stopped only by the 200 day MA at 5088. Three of the last four times this happened, the trans ended the next day below the MA.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
average points trade
April 7 9 2 .438
May 10 7 3 2 .632
June 8 6 6 1 .600 632 +$330
July 11 2 6 1 .857 917
And the winner is...
With the rumor mill not expecting a dramatic announcement from the Fed on Wednesday and all the charts looking about ready to roll over, I'm going to have to give this one to the bears and call for a lower close Wednesday. I note also that while the first trading day of the month is usually positive, that's not been the case for the 1st of August.
ES Fantasy Trader
Portfolio stats: with no trade last night the account the account remains at $172,625 after 54 trades (42 wins, 12 losses) starting from $100,000 on 1/1/12. Tonight we go short at 1373.50. I'm a bit nervous about doing this in the face of upcoming Fed news, but we'll see. The technicals really look like we're ready to move lower.
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.
Posts
Michele-
ReplyDeleteThanks so much for continuing your nightly analysis, even through the Olympics, despite the original plans. This is very appreciated, during this spiky and hard-to-navigate stretch of seasonal extremes, earnings, and ‘event risks’.
This is actually YOUR Olympics, as you spin like a top, and swoop like an owl, and pull back wisely and cogitate, and then hoot. You are a world class hooter, and while you can WATCH the Olympics, which is kind of fun, human spirit and all that, here you can be a participant at the highest level. Not just a spectator.
You do this because it challenges you, because it creates an endlessly self-surpassing ‘personal best’, which ultimately leads to a “summating life”. (Psychological term, based exactly on the mathematical term). But for your readers, this is not a matter of entertainment or amusement; I for one am guided in bottom line decisions by your blog. Absent your analysis I find the financial markets significantly more confusing. I can clearly see the things you point out, but only after you’ve pointed them out. Kind of like old Doctor Watson, as he listens to detective Holmes.
So hopefully there will be no more talk of vacations in the future.
:)
Interesting note on the Transports from the Stockcharts.com blog-- in addition to the obvious price weakness, the On Balance Volume level is even weaker than price-- kind of like a super-confirmation of this weakness.
Dr. Copper is saying he is seriously thinking of touching his/her lower BB again... and in the process today gave several short term momentum sell signals...
LOL - thanks for the compliments. I've been thinking that I'm not really wasting my time watching the Olympics as there are some good lessons for traders in there.
ReplyDeleteThe great Dr. Brett Steenbarger frequently noted that trading was a "performance activity", like sports. I'm thinking of writing a post on this idea (after the Olympics are over of course). It is interesting to see how the athletes execute, and what differentiates the winners from the losers.
And I am going to petition the IOC to make "hooting" an official Olympic sport in 2016. Meanwhile, I'll just continue going for the gold (literally) right here.
And yes, I did note, but did not write, that Dr. C. is looking pretty toppy himself and about to execute a bearish stochastic crossover. He also nudged out of his rising RTC for a bearish setup today.
Meanwhile the TLT is about to make a bullish crossover. I really think more downside is possible tomorrow. I also didn't mention that I took out a hedging position in SDS yesterday at 15.16.