Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday higher, low confidence.
• ES pivot 1374.33.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going long at 1376.25.

Recap

Today continued a recent pattern now six days long of early gains evaporating into the close as the market continues to search for reasons to move higher while the bears continue having problems pushing it lower.  Which way will this tug-o-war resolve?  We bring out the loupe and pore over  the charts for clues.

The technicals (daily)

The Dow: The Dow lost 59 today, giving up its recent support around 12,815.  But it also gave us an inverted hammer and that makes three reversal candles in a row now.  But today's was different - it traded entirely outside the descending RTC fore a bullish setup.  If the Dow closes above 12,556 on Wednesday (which seems likely) then it will be a bullish trigger.  Today's loss did delay the bullish stochastic crossover, but the indicators are still pretty oversold.  So despite  another losing day, I'm starting to see signs of a bounce here.

The VIX:  Once again we got the unusual situation of the VIX declining along with the major averages, this time dropping 0.18%.  The VIX now has support right at today's close of 16.65 but the indicators are only halfway from overbought to oversold so I'd say that there's a good chance for still lower from here on Wednesday.

Market index futures: Tonight all three futures are up at 1:20 AM EDT with ES higher by 0.38%.  It tested its 200 day MA today for the second time in three days and passed the test, though just barely, closing just one point above it.  The gap-up gains in the overnight are encouraging though and the indicators remain oversold.

ES daily pivot: Tonight the pivot drops from 1377.50 to 1374.33.  This, coupled with the evening climb in ES sent us back above the pivot right at midnight, so this becomes a positive sign.

Dollar index: Today the $USDUPX climbed above its 200 day MA intraday before dropping back exactly to it with a 0.04% gain on a weak looking red spinning top.  This doesn't look like the sort of move that will power higher above the MA and with the indicators remaining quite oversold, I'm going to again call for the dollar to move lower on Wednesday now.

Euro: After getting hammered relentlessly for nearly a month now, the euro appears like it may be putting in a bottom with a small doji on Monday and a taller one today that kept it above the 1.2700 level.  And it's actually rising in the overnight, now at 1.2721.  This is enough to put it very close to the edge of that long descending RTC.  If the euro can manage a close above 1.2732 on Wednesday, that will be a bullish setup.

Transportation: I was expecting a move higher here on Tuesday but instead the trans dropped 0.07% on a long spindly doji.  But I think the bullish stochastic crossover that just completed is more significant so I'll go ahead and guess that we ight see the trans move higher on Wednesday.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398  12/15

 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353  16/20

 21  5/21       30         52        -     1295  16/21

 22  5/29       35         42        -     1318  16/22

 23  6/4        32         48        -     1278  16/23

 24  6/11       28         40        -     1326  16/24

 25  6/18       39         26        -     1343  16/25

 26  6/25       38         46        -     1335  16/26

 27  7/2        41         40        -     1362  16/27

 28  7/9        42         38        -     1355  16/28

 29  7/16       44         32        -     1357  16/29

 30  7/23       33         42        -     1363  16/30

 31  7/30       43         22        +     1386  17/31

 32  8/6        52         28        +     1391  18/32

 33  8/13       43         21        +     1406  19/33

 34  8/20       46         31        +     1418  20/34

 35  8/27       39         29        +     1411  21/35

 36  9/4        31         38        +     1407  22/36

 37  9/10       54         29        +     1438  23/37

 38  9/17       63         22        +     1466  23/38

 39  9/24       52         30        +     1460  23/39

 40  10/1       39         39        -     1441  24/40

 41  10/8       52         34        +     1461  24/41

 42  10/15      41         32        -     1429  25/42

 43  10/22      38         41        -     1433

 44  10/29      36         43        -     1412

 45  11/5       44         33        -     1414

 46  11/12      38         46        -     1380

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that my bearish call on 10/15 was right, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with 7 weeks to go in 2012, I'm 25 for 42 or 60%.

For the record, once again I voted bearish based on my reading of the weekly and monthly SPX charts.


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   3      2      4           0        .600     197

     And the winner is...

Despite today's modest losses, the charts continue to look poised for some gains, with dojis abounding.  And tonight we're not riding a negative wave in the futures.  Also, the currencies (and copper too) are looking like they may be finding a bottom.  And Wednesday is historically the strongest day of a historically bullish week.  So I think I'm going to go out on a limb and call for Wednesday higher.

ES Fantasy Trader


Mindful of the market's recent tendency for early gains to evaporate as the day goes on, I decided to ring the register on last night's long trade just before lunch today for a respectable 6.25 point profit.  Turns out it was a good move as it was all downhill from there. Portfolio stats:  the account now rises to $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we go long at 1376.25.

Reminder: you can track these trades live on Twitter @nightowltrader.

SLD    11    false    ES    DEC12 Futures     1384.50    USD    GLOBEX    11:22:45 
BOT    10    false    ES    DEC12 Futures     1378.25    USD    GLOBEX    NOV 12 01:28:17