Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1485.33.  Breaking below is bearish...
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1486.50.

Recap

Going with the flow sure proved to be the thing to do on Tuesday as the Dow just kept on piling on the points, up this time another 0.46%.  OK, enough of that.  Will Wednesday bring more of the same?  Let's check it out.

The technicals (daily)

The Dow: It's three straight now for the Dow, giving us a bullish three white soldiers pattern and keeping us in the rising RTC.  Indicators remain overbought-broken, so this chart is just as bullish tonight as last night.  With one exception - volume fell dramatically on Tuesday compared to Friday.  I don't know if this is just some post-holiday effect or if we're running out of buyers. at these levels.  Word to the wise...

The VIX:  The VIX once again lost ground on Tuesday but this time by just 0.24%.  And it did it on a very interesting candlestick pattern called matching lows.  We have two red candles both closing at nearly the same price with the second one smaller than the first.  This is a bullish pattern which suggests support around 12.5.  We still remain in a fairly wide descending RTC and the indicators continue to be of little use, so this one requires confirmation, but if I had to guess I'd say the VIX will be moving higher very soon.

Market index futures: Tonight the index futures are mixed at 12:54 AM EST with ES down by 0.18 %. and YM down 0.15% but NQ higher by just 0.05%.   Tuesday's impressive gain in ES keeps us in the latest rising RTC.  However, tonight's decline, the first we've seen at this hour of the night is a while now, is forming a dark cloud cover.  It's also moving the indicators off their overbought pegged levels.  RSI and OBV are .actually declining  This is not the look this chart has had lately and it's feeling a bit on the bearish side if you ask me.  Even if you don't ask me.

ES daily pivot: Tonight the pivot rises once again from 1476.83  to 1485.33.  We were above the old number all day Tuesday but with this gain and ES drifting lower in the overnight, we're now just barely over one point above the new pivot.  This puts the pivot in play.  ES appears interested in testing the new number.  If we break under, that will be a bearish sign.


Dollar index:The bearish evening star I pointed out yesterday was completed today as the dollar gapped down for a 0.18% loss. .  But wit indicators rising off oversold and a somewhat chaotic rising RTC established, it would be premature to call the dollar lower again on Wednesday.  This one could go anywhere.

Euro: Last night I didn't have much direction for the euro and I guess it didn't either, as it finished today with a perfect doji right in the middle of its recent range.  With more aimless wandering in the overnight, there continues to be little guidance here.  In the absence of any reversal signs, I'd say we're in for some more sideways movement.

Transportation:I'm just about running out of superlatives to describe the trans lately.  Yesterday's green hanging man was demolished on Tuesday as the trans gained another 1.09% on a green marubozu.  We're in record territory, we're still inside the rising RTC and the indicators are all still pegged at overbought.   So all I can do at this point ansd shrug and saywith no bearish signs on the horizon yet, we've got more upside to go here.  N.B. - the upper BB isn't til 5804.

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 final cumulative list for 2012.
 

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  27/44

 45  11/5       44         33        -     1414  27/45

 46  11/12      38         46        -     1380  27/46

 47  11/19      52         34        +     1360  28/47

 48  11/26      48         26        +     1409  29/48

 49  12/3       57         21        N     1416  29/49

 50  12/10      46         29        N     1418  29/50

 51  12/17      52         28        -     1414  29/51

 52  12/26      52         26        +     1430  30/52

 

  1  12/31      40         48        - -   1402 

  2  1/7        47         30        + +   1466

  3  1/14       52         15        + +   1472

  4  1/22       50         21        + +   1486

  

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 I voted bullish four weeks ago, so that was correct.  Therefore, as we fill in the last call for 2012, I ended the year with a score of 30 for 52 or 58%. Beginning next week, we'll just be running the 2013 numbers.  And recall that starting with 2013, I'm splitting the vote into two columns - the first is how I voted, the other is how the majority of the poll voted.

This week we see that I once again voted with the majority, and the majority remains quite bullish, though bearwish sentiment is beginning to creep up.  This bears watching.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      4      5           1       0.556     -26

     And the winner is...

I really think that ES is headed for 1500 and the Dow for 14,000, but not in a straight line.  My feeling is that Wednesday may be a small pullback day to provide the wind-up for the final assault on the next round numbers.  Meanwhile, I can't help looking at the SPX Hi-Lo indicator which is still pegged on 100.  That can't go on forever.  I'll also note that the great and awesome J-Trader is going short so who am I to argue.  So it's Wednesday lower for me.

And I'll bet anything that there are great big bunches of sell orders and short limit orders set to go off at 1500 and 14,000.  It will be interesting to see what happens when (or if) we get there.

ES Fantasy Trader

Portfolio stats: the account now drops to $93,125 after 2 trades (1 for 2 total, zero for zero longs, 1 for 2 short).  Call me crazy, but tonight we try going short again at 1486.50.