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- Wednesday uncertain.
- ES pivot 1445.08. Breaking below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias uncertain.
- ES Fantasy Trader standing aside.
We got a second very nice run up for the Dow today with all of the technicals working out nicely. Let's see if the charts will continue to deliver the goods for Wednesday.
The technicals (daily)
The Dow: Today's big 128 point run was very helpful in moving us back into the long term rising RTC that we very nearly hit last Friday. The indicators are all rising smoothly now off oversold. And today's big green marubozu gives us a bullish RTC trigger. So everything's looking up on this chart for Wednesday.
The VIX: Moved lower today as expected, but just barely on a green hammer. This is a potential reversal sign, but the stochastic is sitll in descending mode and the VIX is in no-man's land halfway between the BB's, so this chart's too tough to call right now.
Market index futures: Tonight all three futures are down at 1:40 AM EDT with ES lower by 0.14% on what I assume is a Presidential debate induced drop off. The insta-pundits are claiming Obama won this one, which would be about right since ES jumped after the first debate which Romney won. I'll take their word for it. The Night Owl has better things to do than watch two politicians lie to each other for 90 minutes. In any event, this move is sort of putting the kabosh on what was a nicely developing rally since the indicators are still only about halfway to overbought and the upper BB is at 1462. After two big days of gains, it's possible ES may take a break on Wednesday.
ES daily pivot: Tonight the pivot jumps from 1429.50 to 1445.08. This gain combined with the overnight drop in ES now leaves us just two points above the new pivot. That's barely bullish and we need to watch for any attempts to break under - that would be basically bearish.
Dollar index: The dollar took a big gap down today right back to its recent support around 54.75 on the $USDUPX. This alone suggests a chance at a move higher on Wednesday. The stochastic has declined enough that this would not be out of the question.
Euro: After a big gain today that took the euro right up to its upper BB, it blew right through with a gap up in the after hours but the developing candle is looking like a gravestone doji. The stochastic is not yet in bearish reversal mode but with a candle pattern like this, I'd be looking for a lower euro, possibly as soon as Wednesday.
Transportation: The trans soared 1.05% today all the way to their upper BB and and stopped just short of the 200 day MA at 5139. With the indicators about to enter overbought territory and two resistance lines now dead ahead, the trans may have some trouble advancing further on Wednesday.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
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 5 4 3 0 .556 12
And the winner is...
We had some nice momentum going, but it's looking like Emperor Nerobama may have poured cold water on it with whatever he said in his debate tonight - I can basically summarize it as "blah blah blah". Unfortunately, this injects just enough caution into the mix that the market may use it as an excuse to take a break after rallying hard for two days. Since this suggests the possibility of a doji day tomorrow, the only choice I have is to call Wednesday 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. We left a lot on the table today by not going long last night, but oh well - no one ever went broke by not trading. Tonight with an uncertain forecast, we stand aside.
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.