Wednesday, January 30, 2013

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday  higher, low confidence.
  • ES pivot 1500.58.  Holding above is bullish...
  • Rest of week bias uncertain  technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night I issued one of my Famous Conditional Calls - " If we manage to stay above 1496.08 by mid-morning (say the 10-11ish area), then we'll close higher Tuesday".  Well ES did dip below the pivot in the wee hours but then rallied above it just before 10, and then after a vain attempt by the bears to knock 'em lower, the bulls recaptured the initiative at 10:20 and by 11 AM it was all over.  The rest of the day proceeded higher and the Dow finished up 72 points, just short of the 14K level.  So once again, the pivot prevails.  Now let's move on to Wednesday and see if we can figure out what the fickle finger of the Fed will write.

The technicals (daily)

The DowThe Dow gave us a reversal warning Monday but it was soundly canceled with today's 0.52% advance.  So once again, the broken record plays the same old tune: rising RTC, broken indicators maxed out at overbought, solid green candles.  If we're going to get a pullback, I'll need to see it before believing it. And right now I still don't see it.

The VIX:  Just when it looked like the VIX was pulling itself off the floor, it got KO'ed again on Tuesday for a 1.92% loss.  And it came in the form of a bearish engulfing pattern.  So right now I['d question if the VIX can manage to move higher again on Wednesday.  It's not looking good.

Market index futures:Tonight the index futures are mixes at 1:19 AM EST with ES down by 0.08%, YM down 0.06% but NQ up 0.02%.  Call it basically flat. I believe we were correct to be cautious about yesterday's doji in ES as that was rejected in a big way as ES closed above 1500 for the first time and the run that began on the 17th remains intact.  Tonight we're seeing something similar to two nights ago with a pause after a big up move.

I'll admit I was surprised we didn't see a pullback when the SPX hit 1500.  I think that that, plus ES closing above 1500 are both rather bullish signs.  Meanwhile, the upper BB has come down a bit but is still at 1509 and we're still inside the rising RTC, so once again I still can't call this chart lower yet.  This is like trying to catch the falling knife but in reverse.  What would that be - catching the rising balloon?  We're going lower eventually, but if it's happening Wednesday, ES isn't tipping its hand right now.

ES daily pivot: Tonight the pivot inches up from 1496.08  to 1500.58.  The story of the pivot remains the same - above the old number all day and still above the new level, so it remains bullish.

Dollar index: On Tuesday the dollar broke under its recent six day range but has not broken under its support at 54.68 on the $USDUPX.  With the indicators continuing to drop and a lower BB not til 54.58, there's still some more downside available, but this chart has been so squirrelly lately I'm not putting any money on that theory.

Euro: I missed this one for Wednesday.  Instead of dropping, the euro closed up to 1.3469, a level not seen since November 2011!  In fact, the euro is now closing in on its 200 week MA at 1.3521.  Breaking above that would be bullish indeed.  However, in the short term the stochastic is very close to executing a bearish crossover and the developing overnight candle is flirting with the edge of the rising RTC as the euro is unchanged since the close so far.  I'd say a move lower Wednesday is still not out of the question.

Transportation: Well it's sure looking like the trans are stalling out, with the 5880 level proving to be a hard nut to crack.  On Wednesday we got the third doji in a row, indicating that the bears are starting to exert some downward pressure we haven't seen for a while.  That said, we're still in a rising RTC and the indicators are still broken-overbought.  After this phenomenal run, we're going to need more evidence than that to call a top.  The best I can say at this point is that we're consolidating.  I'll need to see the pullback before acknowledging it.

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.  We've now completed the stats for all of 2012 so we start over with 2013.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy

  1  12/31      40         48        -      -   1402   0/1
  2  1/7        47         30        +      +   1466
  3  1/14       52         15        +      +   1472
  4  1/22       50         21        +      +   1486
  5  1/28       44         26        +      +   1503
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.  The "Poll" column is how the majority of participants 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 I voted bearish four weeks ago, so both I and the majority were wrong.   We therefore start the year off with an accuracy of 0 for 1, or 0%.  I expect that number to rise :-)

This week we see the majority remains bullish although the spread has narrowed since last week.  I'm agreeing with the majority that we still have some room to run on a monthly basis.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      6      6           3       0.538

     And the winner is...

With nothing much having changed technically for days now, and the trend remaining up, and some room left to run before hitting resistance levels, the only logical call is Wednesday higher, even though I feel a bit uneasy saying that.  One of these days, that will be the wrong call.  But I have to calls 'em like I sees 'em.

Oh, and with the Fed expected not to make any earth-shattering announcements, I'm not looking for any big moves either way on Wednesday.

ES Fantasy Trader

Portfolio stats: the account remains at $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Now I'm glad I did not go long last night, but with the doji, it didn't really make much difference anyway.  Once again, I'm just going to sit on my hands waiting for the long overdue pullback.


  1. Love your blog.... read it every morning. Thank you for all you do!

    1. Thanks! I always love to hear from my readers.


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