Wednesday, February 6, 2013

Wednesday higher if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher if ES pivot holds, else lower.
  • ES pivot 1503.58..  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
 [ES pivot value corrected, 12:47 PM EST, 2//6/13]


Last night I called for the day to end higher if the ES pivot was crossed.  Well turns out that did happen around 3:45 AM while I was snoozing and we never looked back.  The pivot was never threatened again and we closed higher.  In this case, you snooze, you win.  And so the Dow won 99 points to claw its way almost back to 14K.  But that move sets up an interesting pattern, one that only the charts can resolve.  And since I love a mystery, let's get right to it.

The technicals (daily)

The Dow: You know, most of the time the market is either going up or down.  But sometimes it gets into these schizophrenic moods where it can't decide which way to go.  I scanned back through the daily Dow and oddly enough the last time we had this sort of pattern was back in February 2012 and then also February 2011.  Maybe it has something to do with February.  But in any case we are now clearly in  the Brownian Motion Zone, that down-up-down-up never-never land where logic and reason fly right out the window.  FWIW, we now have a developing bullish stochastic crossover here.  But with what looks like a new channel developing, I'd say we're just as likely to go lower.  Who knows, who cares?  None of this makes any sense.  One interesting point for the bears is that the Dow crossed 14K intraday but was unable to hold onto it.

The VIXI sort of outsmarted myself on the VIX.  I always like to say that the VIX never spends more than a day or two at its upper BB before reversing but for some reason I was willing to give it a pass for Tuesday.  Bad move, as the VIX bounced off that BB like a triple score rocker in a pinball machine, losing 6.48% to close right back out of its rising RTC for a second bearish setup in three days..  I'd like now to call it lower again, but this chart has all the earmarks of just getting jerked around by unseen forces - maybe it's Planet X at work again.  Homey don't play that game, so we'll just take a pass on this one tonight.

Market index futures:Tonight all three futures are higher at 1:07 AM EST with ES up by 0.12%.  ES is definitely consolidating now, stuck in a range between 1492 and 1507.  We're at the upper end of that right now, so recent experience would suggest we go lower from here.  But with so much bullish momentum at work lately I'm reluctant to say that on that basis alone.  The prudent course is to just wait for the break, either up or down.

ES daily pivot: Tonight the pivot rises from 1497.42  to 1503.58.   We were above all day and remain above the new pivot.  I can't stress enough the importance of this number.  I don't know why it works (probably because it's programmed into all the HFT bots) but it does.  So as long as we stay above this line, it's bullish.

Dollar index:Last night's evening star was neither confirmed nor rejected on Tuesday as the dollar lost just 0.05% on a fat little inverted hammer.  So unfortunately, there's still not much direction on this chart.  The indicators suggest higher, but they haven't been all that reliable lately. .

Euro: After a big dump on Monday, I though we were in for more downside action Tuesday.  Bzzzt!  Thanks for playing our game.  The euro retraced half of those losses in a nice bullish piercing pattern.  It's giving some of that back though in the new candle overnight.  Looks like something's up here, as the euro is falling out of bed as I write - down from 1.3581 to 1.3566 in just 15 minutes on a big spike in volume.  I checked the news wires but see no reason for this.  It may just not have hit the peon news feed that I get, or it may just be some overnight trading shenanigans.  Either way, it's possible the euro could actually move higher on Wednesday.  We'll have to see if Tuesday's move has any legs.

Transportation:After a fair bit of indecision on this chart like the rest, the trans took off to the upside on Tuesday  to close above their recent resistance of 5876.  This move also gives us a new rising RTC and a bullish stochastic crossover.  So unlike last night there does seem to be something of a pattern developing here, and it's to the upside.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3       0.533

February   1      0      1           1       1.000     149
     And the winner is...

With the Dow unable to put in more than two days in a row of the same direction in the last seven, recent history would suggest that Wednesday's going lower.  But that's kind of flimsy reasoning.  The indicators  seem to have stalled out in their descent from overbought and look like they're heading back up again - a bullish sign.  And the TLT continues to drift lower.  So while it's not out of the question that we could get whipsawed some more on Wednesday, I'm going to apply the ES pivot again and claim that as long as we remain above the pivot by mid-morning, we'll close higher Wednesday.  A decisive punch through under and we're closing lower.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again.


  1. Thank you so much for your daily work. Its really appreciated for the small investor trying to get a foot in the door.

    Two question:

    1. My pivot point shows 1503.58. I am using think or swim. Just curious where 1507.75 is from?

    2. What means HFT bots? Is this the traders with systems setup already?

    Thanks for the good work.

    1. That's funny - you're right. I take my number right off of Esignal. I could have sworn it was showing me 1507.75 early this morning (like 1:30 AM) when I created the post. I even made a mistake with this recently so I've been paying extra attention to get the pivot numbers correct lately.

      But you're right - I just checked again and now eSignal is also showing 1503.58. I'm going to have to look into that. I'll correct the post too. Thanks for bringing it to my attention.

    2. LOL, its ok. It happens to me too. i mix up the colors of the pivots sometime. lol

      thanks and enjoy the day.


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