Wednesday, September 19, 2012

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain, consolidating.
  • ES pivot 1452.75Holding above is bullish.
  • Rest of week bias uncertain technically. 
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.

Things were looking good for a lower close until a late-afternoon rally (of sorts) closed out a blah day with all of 11.54 points higher for the Dow.  However, the Naz and SPX did close a bit lower.  There seems to be a lot of indecision in the market now that we've heard what the Fed had to say.  So let's go to the charts for some guidance.

The technicals (daily)

The Dow: Yesterday's bearish harami was followed today by a small spinning top that traded at the lower end of yesterday's candle, despite a positive close.  It's not exactly a roaring bullish sign and with the indicators still quite overbought, lower again looks like the more logical choice.  We're also ever so close to a bearish RTC setup.

The VIX:  I didn't want to commit to a direction on this one last night and after a spinning top today giving a 2.81% loss, I'm not willing to call it again.  The only ST pattern I see here is a developing symmetrical triangle of sorts.  If true, then we'd have a lower VIX later this week.

Market index futures: Tonight all three futures are up at 1:03 AM EDT with ES higher by 0.40%.  This surprises me a bit considering the bearish signs on the other charts.  After today's doji, it looks like ES want to move higher.  However, it's already back to 1459 where it found resistance for the past three days.  Unless ES can break above this number, I think it's going lower.

ES daily pivot: Tonight the pivot drops from 1454.50 to 1452.75.  We broke above the old number before midnight and are now even higher, so that's a positive sign.

Dollar index: Today the dollar moved higher as I expected, gaining 0.29% on a small gap-up hanging man.  But with the indicators now having bottomed and just coming off oversold, the dollar looks set to move higher still.  Also, today's close was right on the edge of the descending RTC - a bullish setup.

Euro: Yesterday I said this chart looked to be topping and today the euro did indeed move lower, right to the edge of its rising RTC for a bearish setup.  Although it took a small pop right at midnight,the euro will have to trade above 1.3092 to avoid a bearish trigger on Wednesday (it's 1.3078 right now).

Transportation: More divergence on the trans today as the Dow gained 0.09% but the trans fell a significant 1.12%.  As I mentioned yesterday, the trans do not respect the 200 day MA very well and today they indeed fell right through and never looked back.  We're now halfway between BB's and halfway to oversold with no sign of a reversal, so more downside is possible.

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      8           1        .600     -78
September 4      4      3           0        .500     -88

     And the winner is...

You know, instead of a top, the recent chart action is looking more like consolidation to me now.  And the last two times we had this kind of sideways movement, it resolved higher.  So that's a distinct possibility.  And yet we have a number of charts that are right on the edge of their RTC's suggesting a breakdown is possible.  This conflict should be resolved on Wednesday.

But in the meantime, the only reasonable course is to assume that the sideways motion will continue and therefore I have no choice but to call Wednesday uncertain.  Remember, as those great epistemologists Rush once said, "If you choose not to decide you still have made a choice".

ES Fantasy Trader

I was watching ES fall down its descending RTC this morning as last night's short trade gained profitability.  When ES exited the RTC around lunch time, I pulled the trigger.  Good thing too, because it rallied from there.  Anyway, we took a reasonable four point profit.

Portfolio stats: the account now rises to $180,750 after 64 trades (49 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight without a clear edge, we stand aside.

BOT    10    false    ES    DEC12 Futures     1450.75    USD    GLOBEX    12:36:32   
SLD    10    false    ES    DEC12 Futures     1454.75    USD    GLOBEX    01:26:42   

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.

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