Thursday, November 8, 2012

Thursday uncertain, bias lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain, bias lower.
  • ES pivot 1401.58Holding below is bearish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader standing aside.

Today was a good day to be short.  Unfortunately, I wasn't.  And thanks to a tag team smackdown by Mario "what a" Draghi and Emperor Nerobama deciding to inflict himself on us for another four years, I took my worst loss today in over a year.  An entire month's worth of profits gone just like that, pffft!  Ugh.  But the Night Owl is nothing if not resilient and tonight we pick ourselves up, unruffle our feathers, and participate in the Running of the Charts, same as every night.

The technicals (daily)

The Dow: Today the Dow fell down and couldn't get up.  And no one to call for help.  We broke through the recent support line at 13,100.  Then we broke through the psychological 13K support.  Then the 200 day MA at 12,992.  And finally the lower BB at 12,907 before reclaiming a few dozen points to end an awful, ugly day.  And this dump wasn't even enough to send the indicators oversold.

If anything, the stochastic appears to be setting up a bearish crossover from a low level.  About the only hope here is for a DCB after such a big one-day move.  Oh yes, and recall that the last time we broke under the 200 day MA was only last June.  And three days later we were right back above it.  So a 200 MA breach is not necessarily instantly fatal.

The VIX:  What's interesting though is that the VIX was up "only" 8.53%  I'd have thought it would go higher than this.  But it was still the highest close since last July.  And even that wasn't enough to send it to overbought levels or hit the upper BB.  This chart still has some easy room to run higher, I'm afraid.

Market index futures: Tonight all three futures are actually up at 1:00 AM EST with ES higher by 0.29%.  Whether this is a sign of an impending rally or just a DCB, at least the carnage seems to be over - for now.  Still, I'm concerned that we gave up the psychological 1400 level today.  ES right now is sitting on the next support level at 1392.  We'll need to see this one hold up by morning or we're headed lower.  Next support is the lower BB at 1382, then the 200 day MA at 1369.

ES daily pivot: Tonight the pivot plummets from 1421.42 to 1401.58.  While that still leaves us below the pivot, at least now we're a lot closer.  But not close enough to be encouraging just yet.  Still, I'd want to check this out early Thursday morning for signs of an attack on the pivot.

Dollar index: I missed this one badly.  The evening star failed to produce and the dollar instead gained 0.19% today.  But it did that one  red candle sitting on the upper BB and just managed to cause a bearish stochastic crossover.  I still think there's more downside to come here.

Euro: Meanwhile, nothing new in euro-land.  The move lower continued again today as the euro kept right on sliding down its descending RTC all the way back from October 17th.And the overnight is just continuing the trend, now down to 1.2757.  And there's no support in sight until 1.2700.  The weekly chart's not looking any better either.  Even the monthly chart, which was looking pretty good at the end of October, now has a bearish engulfing pattern going.  I don't see any short-term move higher here.

Transportation: Along with everything else, the trans cratered today, diving 1.92% in a move that crashed right back under the 200 day MA, dropped out of the rising RTC for a bearish setup, and confirmed the bearish stochastic crossover along with overbought indicators.  Things are looking pretty grim in trans-land.

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    8      5      8           0        .615     208 

November   2      1      2           0        .667     193

     And the winner is...

The futures seem to be suggesting a bounce might be in order tomorrow, but this is one falling knife I'm definitely not interested in catching, since none of the charts are particularly bullish and some are downright bearish right now.  On the other hand, after such a big run lower, I'm wary of going short for fear of getting whipsawed.  Therefore, I'm just going to call Thursday uncertain with a bias lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $194,250 after 69 trades (54 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside again, for reasons described above.  The big move happened, we missed the bus, oh well.  That's better than getting caught on the wrong side of that kind of action.

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