Actionable ideas for the busy trader delivered daily right up front
- Monday higher, low confidence.
- ES pivot 1414.00 . Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader going long at 1408.50..
Last Thursday night, it looked to me like we could go higher unless the jobs reports were bad. Well the numbers didn't come out particularly poor, but we went down anyway, with the Dow essentially erasing all of Thursday's gains with a 139 point dump. With the Presidential election coming up in two days, it's sure to be a, shall we say interesting week on Wall St. Let's see if there are any clues in the charts.
The technicals (daily)
The Dow:The Dow just seems to love that 13,100 level. We've started or ended there for the last seven sessions in a row now. Friday's action left us right back there once again. The good news is that we're back to oversold and the excursions from this level have been more to the up side than down. With no real bearish signs here, I'd say this chart looks positive right now.
The VIX: On Friday the VIX posted its biggest gain in nine days, but even that was just 5.39% - not enough to escape the admittedly short descending RTC as the index continues to see saw its way lower. With indicators more oversold than overbought and the 200 day MA just above at 17.76 providing some resistance, I'd say the VIX could go lower on Monday.
Market index futures: Tonight all three futures are up at 1:18 AM EDT with ES higher by 0.21%. Like the Dow, ES has been wanting to return to the 1407 level, here for nine straight days. If you look at that line, you'll see that the excursions have been wider to the up side than the down side. All this back-and-forth has left the indicators totally confused but there's really nothing in the candles right now suggesting a major dump in the works.
ES daily pivot: Tonight the pivot drops from 1415.58 to 1414.00 even. Even with ES drifting a bit higher, we remain below the new number, so that's bearish.
Dollar index: Friday the dollar gapped up out of its recent ping pong trading range to gain 0.68% and close a bit above its upper BB. This brought the indicators back to quite overbought levels but also caused a bullish stochastic crossover from a high level. This chart isn't 100% clear, but it's possible the dollar could still go higher on Monday.
Euro: The euro remains in a descending RTC back to October 17th and on Friday took a big dump to close at 1.2831, just below its 200 day MA at 1.2842. This keeps it oversold and in the overnight, it appears to be staging something of a comeback, now back up to 1.2837. If it can break back over the 200 MA, now `1.2841, I think it has a good shot at posting some gains Monday.
Transportation: The trans which were looking so good on Thursday, blasting through their 200 day MA, blasted right back down on Friday giving up 1.11% However, that wasn't enough to drop out of the rising RTC and it kept us out of overbought territory. I don't consider this to be a reversal lower warning and think that the trans could go higher on Monday.
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 8 5 8 0 .615 208 November 0 1 1 0 .000 0
Here are my performance stats for the first ten months of 2012. The first two columns are for my trading account. The next, "ESFT", is the ES Fantasy Trader. Following that I've now added the results for my IRA. The last is the Dow, my reference benchmark that I try to beat or at least match.
Date Trading, Month Tr. YTD ESFT YTD IRA YTD Dow YTD
1/31/12 7.41% 7.41% -0.50% 6.18% 3.41%
2/29/12 3.67% 11.35% 7.88% 9.02% 6.02%3/31/12 1.76% 13.31% 29.88% 10.05% 8.16%
4/30/12 2.35% 15.97% 41.75% 10.90% 8.17%
5/31/12 -1.92% 14.23% 26.63% 4.91% 1.45%
6/30/12 4.33% 19.17% 40.38% 2.80% 5.44%
7/31/12 2.96% 22.69% 76.00% 10.98% 6.49%
8/31/12 2.75% 25.64% 66.25% 13.16% 7.17%
9/28/12 3.59% 30.15% 80.88% 15.37% 9.98%
10/31/12 -2.59% 26.77% 93.88% 14.04% 7.21%This month we see that I was handed only my second losing month this year so far, mainly because I did very little trading in the face of so much market uncertainty. The results therefore reflect the hit I took on my base net long positions (which I maintain to avoid running afoul of the SEC PDT rules) - and that's even after doing some successful hedging. My IRA, which is more conservatively invested, also lost money, but only half as much as my trading account. In any event, both are still outperforming the Dow nicely. But all things considered, I'm not sad to see October done and gone.
And the winner is...
I'm going to go out on a limb and call, once again for a higher close on Monday. but mostly because I don't see all that much downward pressure right now. The current situation reminds me a bit of what we had going in the overnight into last Thursday. It wasn't looking all that promising, but we were at the lower end of the recent range where some support existed, and the market rallied the next day. Of course this time we've got the election coming up in two days so that could change things a bit. We'll see.
ES Fantasy Trader
Portfolio stats: the account remains at $193,875 after 68 trades (53 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we cross our fingers and go long at 1408.50. This trade is somewhat speculative but the odds are more favorable than not it would appear.