Actionable ideas for the busy trader delivered daily right up front
- Thursday uncertain, top possible
- ES pivot 1453.67. Breaking below is bearish.
- Friday bias lower technically.
- Monthly outlook: bias uncertain.
- ES Fantasy Trader standing aside.
Yesterday I raised the possibility of a doji day today. I'd say today's five point gain in the Dow certainly qualifies. Of course that was helped out by some dismal numbers from IBM and Intel, and the SPX performed much better. So what to make of this divergence? The charts will tell us if there's more upside left for Thursday or not.
The technicals (daily)
The Dow: After two nice days of gains, the Dow gave us a classic hanging man, so that's at least a warning of a coming reversal, but one that requires confirmation. And for the time being, there's no confirmation from the indicators which simply continue their climb from oversold to overbought. So this is a yellow caution light, but not a clear reversal yet.
The VIX: Today the VIX continued a haphazard decline, this time down nearly a full percent on a dark cloud cover. This particular pattern is usually pretty good, so I'd say there's a possibility of a lower VIX on Thursday, particularly since the indicators are nowhere near oversold yet and we're a long way from the lower BB.
Market index futures: Tonight all three futures are mixed once again at 1:37 AM EDT with ES lower by just 0.03%, YM flat, and NQ down 0.08%. ES has now handed us a classic three white soldiers pattern and that's quite bullish. However, today' soldier stopped right at 1456, a strong resistance line that has defied all attempts to cross it for over a month now. The difference this time is that we're not quite as overbought yet so there's more gas in the tank for launching an assault and the upper BB is at 1463.68. With no reversal sign from the stochastic or the RTC right now, that means ES still has a bit more room to run.but Thursday could be the turn-around day.
ES daily pivot: Tonight the pivot rises again from 1445.08 to 1453.67. The situation is quite similar to last night - the rise in the pivot leaves us once again still above, but by much less. So the same principle applies - stay above the pivot - good, fall below - bad.
Dollar index: Yesterday the dollar gapped down big with a spinning top and today it did it again. Today's 0.51% plunge took us just below the lower BB and drove the indicators closer to, but not quite into oversold. I was premature to think the dollar might rise today, and with an identical candle tonight, I'm going to wait for the confirmation of a move higher on Thursday.
Euro: As the dollar cracked its lower BB today, the euro blasted through its upper BB, closing at 1.3132, exactly at resistance from last month's highs. And it's now drifting lower in the overnight. With indicators becoming highly overbought, this suggests the possibility of a move lower on Thursday.
Transportation: The trans continue to do very well, putting in a fourth day of solid gains made all the more impressive by the ease with which they motored through the two resistance levels I mentioned last night - the 200 day MA and the upper BB. With that now in the rear view mirror and no further resistance until 5200, I think we could make it five in a row on Thursday.
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 8 6 5 0 .571 -19
October 6 4 3 0 .600 12
And the winner is...
I know some people are going short right now. At this point I don't think that's an unreasonable stance, but I'm a bit more conservative than that. I'd like to see some confirmation of a top first and I'm not seeing it just yet. In fact the charts seem to suggest that there's still a little room left to run higher before hitting some strong resistance points. My general feeling is that Thursday may be a turn-around day. The market doesn't look really toppy quite yet, but it's starting to show some signs of it. So given all that, once again I'm going to have to punt and call Thursday uncertain.
ES Fantasy Trader
Portfolio stats: the account remains at $185,000 after 67 trades (52 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight with another uncertain forecast, we stand aside once again. But I'm anticipating going short tomorrow.
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-
ReplyDeleteContinued superb analysis!
{-Comment continued--been having problems with posts, my Google account, cross-links with my Yahoo account, etc etc--with the above as a quick test..}
ReplyDelete..For the sake of new readers of your blog, I can't think of a better way to capture the essence of how firmly and decisively uncertain you’ve been these past weeks, than to point out that when the Fed promised the moon in the sky, the stars, apple pie, and a new Fatherland for all investors, back in mid-Sept., the SPY closed at or just below 146.
When I looked out my window at the market this morning, mid-Oct., it was ranging between 146 and just below.
This is called “sideways market movement”. That’s a technical term for an “indecisive market”. But there has been no hint of indecisiveness in the steady uncertainty on the part of our Night Owl. I mean look at it-- no upside progress since the announcement! And no significant downside breaks either.
Michele, when you write “..So given all that, once again I'm going to have to punt” it makes me think of the other definition of the verb to ‘PUNT’, (preceeding the football-derived common meaning), which per Websters is “a liesurely propelling, with a long sturdy pole, of a narrow flat-bottomed boat along a still, shallow body of water...”
..As in Shakespeare’s usage, “Punting along the Thames, listening to the musicians on the shore...”
For all the upside progess the market has made since QE3, this decision to minimize transactions, and maximize punting, has been as good a strategy as any. :)
Thanks always for this superb ongoing guidance.
Oh my, I'm blushing. Thank you for the compliments. All I can say is I calls 'em like I sees 'em. Sometimes you have to think the market's going up. Other times the market's going down. And sometimes all you can do is carefully fill in the little circle marked "none of the above". We've been getting a lot of those lately.
DeleteGood catch on the "punt" too :-)
Oh my, I'm blushing. Thank you for the compliments. All I can say is I calls 'em like I sees 'em. Sometimes you have to think the market's going up. Other times the market's going down. And sometimes all you can do is carefully fill in the little circle marked "none of the above". We've been getting a lot of those lately.
DeleteGood catch on the "punt" too :-)