Wednesday, November 21, 2012

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower, low confidence.
  • ES pivot 1382.58Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias up.
  • ES Fantasy Trader standing aside.
Recap

Last night I called today as "uncertain" because I was expecting a doji.  With the Dow finishing down 7, and the SPX up less than one point, I'd say that qualifies as a doji.  Nothing to see here, so moving right along we turn our attention to what Wednesday might have in store.

The technicals (daily)

The Dow: Today's candle was a dragonfly doji and after Monday's big move, this could signal a reversal.  But it requires confirmation so I'm not making too much out of today's action here.

The VIX:  And as the Dow made a dragonfly doji, the VIX did the opposite with a gravestone doji, posting its second close in a row below its lower BB.  The VIX rarely spends more than two days at levels like this and its indicators are also quite oversold now, so I'd say it is likely to move higher on Wednesday.

Market index futures: Tonight all three futures are down at 1:00 AM EST with ES lower by a significant 0.36%, a move largely in response to the news out of Euope about Greece.  While ES was the best performing chart of the day, managing to actually post some small gains, it's given it all back in the overnight so far on a developing bearish engulfing pattern.  ES is really looking pretty much out of gas right now.

ES daily pivot: Tonight the pivot rises from 1375.83 to 1382.58.  That move, plus the decline in ES caused it to break under the new pivot right at midnight, a bearish sign.

Dollar index: The dollar gained 0.10% today on a bullish piercing pattern.  However, its indicators are not yet oversold and its stochastic is nowhere near forming a bullish crossover.  So I'd say this chart is also giving us a warning of a reversal but not an exact date.

Euro: And for the second day in a row the euro was unable to break resistance at its 200 day mA, now at 1.2817, putting in a spinning top.  But the news here is the overnight action, no doubt in response to the Euro-ministers can-kicking on Greece.  The euro tumbled this evening from 1.2813 to 1.2755 right now, a move that is bringing RSI down off overbought and moving the stochastic into position for a bearish crossover.  I'll be looking for lower here on Wednesday.

Transportation: And you can add the trans to the list of dojis today, dropping just 0.77 points and reflecting the indecision elsewhere.  Another chart that requires confirmation.

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  26/43
 44  10/29      36         43        -     1412
 45  11/5       44         33        -     1414
 46  11/12      38         46        -     1380 
 47  11/19      52         34        +     1360

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 10/22 was right, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with just five weeks to go in 2012, I'm 26 for 43 or 60%.

For the record, I switched my vote from bearish to bullish, staying in sync with the majority for the second week in a row.  In fact, this week saw the highest bullish reading since October 8th.  No doubt people are counting on the Santa Calus rally to kick in along with some kind of resolution to the fiscal cliff.


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   6      3      4           0        .667     249


     And the winner is...

While I wasn't seeing any real bearish signs in the charts last night, tonight I am.  We ended up with a lot of dojis singaling uncertainty.  And tonight's news out of Europe may be the push the markets need to roll over.  With Wednesday being the day before Thanksgiving, market participation is likely to be below average, so we might see some exaggerated moves.  In any event, right now I'm not feeling the love, so I'm calling Wednesday lower.

And with the markets closed on Thursday plus half of Friday, let me wish a Happy Thanksgiving to all my readers.  See you again on Sunday night.

ES Fantasy Trader

Portfolio stats:  the account remains at $197,750 after 71 trades (56 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside because of the impending holiday.  I don't want to risk getting trapped on the wrong side of a trade potentially until next week.


2 comments:

  1. We are "step-in-step" this week. I'm standing aside too. I do think that if there is a big bump today, that it will be wiped out on Friday......and visa versa.

    Rjm

    ReplyDelete
    Replies
    1. Thanks for the agreement. I just don't like the oft-times squirrely behvior of Mr. Market just before a holiday or during half-day sessions.

      I will note though that Rob Hanna just posted this observation:

      "Both the Wednesday before and the Friday after have exhibited bullish tendencies"

      The day's still young, but so far it appears that he's right and I'm wrong. And the failure of today's action (so far) to confirm yesterday's bearish doji could be viewed as a bullish sign for next week.

      As for me, I have a turkey waiting patiently in the fridge.

      Delete

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