Wednesday, March 27, 2013

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 1554.25.  Holding above is bullish.
  • Thursday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

After a night of remarkably opaque charts, the Dow surprisingly pulled together a 112 point advance.  Actually, I would have been surprised no matter which way we went but I'm always glad to see a move to the up side.  So with that now out of the way, let's see if this move provided any new clarity to the charts for Wednesday.

The technicals (daily)

The Dow: Well the Dow contiued its recent string, now seven long of alternating up and down days.  Seems like you could make money just by changing course every day.  What was different on Tuesday was that we got another record close, finally cracking that stubborn resistance line around 14,522.  And all this recent sideways action has pulled the indicators way down from overbought.  Can the Dow now make it two in a row?  I'll admit to being a bit skeptical but it's not out of the question, as long as we don't get any more nasty surprises from Cyprus on Wednesday.

The VIXDespite three days of solid gains over the course of the last week, the VIX was unable to capitalize and has now pulled back below 13, losing 7.06% on Tuesday.  We're now back to the point where support has been coming in recently, but we're also looking at a stochastic that seems to be cycling lower.  The question now is will this support kick in again as it has the past week, or will the VIX try to fill the big upside gap it formed on the 18th.  I'm going to go out on a limb and vote for the latter.

Market index futures:Tonight all three futures are higher at 1: 12 AM EDT with ES up by 0.10%.  Hey, maybe there was something to that megaphone after all.  After a fakeout breakout on Monday that collapsed back into the cone of the phone, ES on Tuesday managed a green marubozu that managed to close above its rising upper trend line.  And we do seem to be getting some follow-through at the moment.  With indicators rising but still not yet overbought, resistance at 1556 finally broken, and the upper BB hanging tantalizingly nearby at 1570, I wouldn't be surprised to see ES head up that way over the course of the week.

ES daily pivot: Tonight the pivot rises from 1548.83   to 1554.25.  After spending all of the regular session on Tuesday above the pivot, even this gain still leaves us above the new number, and further away from it than we've been in a few days at this hour, so that's bullish sign.

Dollar index: The dollar continued its random Brownian motion across the chart on Tuesday, this time gaining all of 0.06% in a meaningless star.  There's really still nothing terribly informative here tonight..

Euro: The euro on the other hand continues to fall in a wide descending RTC, closing below its 200 day MA for the first time since last November.  Back then it signaled another week and a half of declines  I see no reason why it can't go lower again this time, particularly given all the latest trouble brewing in Europe.

Transportation: And here's a true bullish sign.  Last night I was thinking that the trans didn't have much downside left and on Tuesday they gave us a 0.78% pop after hitting oversold on the RSI.  This move also formed a bullish stochastic crossover.  We're also on the verge of exiting the descending RTC for a bullish crossover.  So a move higher again on Thursday now looks likely.

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.

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

  1  12/31      40         48        -      -   1402   0/1
  2  1/7        47         30        +      +   1466   1/2
  3  1/14       52         15        +      +   1472   2/3
  4  1/22       50         21        +      +   1486   3/4
  5  1/28       44         26        +      +   1503   4/5
  6  2/5        40         36        +      +   1513   5/6
  7  2/11       43         25        +      +   1518   6/7
  8  2/19       21         43        -      -   1520   6/8
  9  2/25       30         52        -      -   1516   6/9
 10  3/4        29         39        -      -   1518
 11  3/11       41         26        +      +   1551  
 13/18       41         37        +      +   1561
 13  3/25       31         38        +      -   1557  

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 again.   We therefore continue the year with an accuracy of 6  for 9, or 67%. 

This week we see that bearish sentiment remained about the same while bullish sentiment declined 10 points. It's also getting interesting as this marks the first time this year I have disagreed with the majority, as I voted bullish again for the third week running while 10 points worth of my fellow bulls have deserted me. I don't feel very bullish, but that's what the charts are telling me. Come back in four weeks and we'll see if I was right or not.
Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      5      5           2        0.583

     And the winner is...

The very end of March is historically not all that hot, and since we've been changing direction on a daily basis for seven straight sessions, I ought to call Thursday lower, but with an absence of any really bearish signs tonight and having gotten a few broken resistance lines, I would not be surprised at all to see Wednesday higher.  All assuming of course that  no bank officials from Transylvania announce that their euro deposits will be converted into sno-cones.  Or something.

ES Fantasy Trader

 Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13.  Tonight we stand aside because I'm not seeing a real trend developing.

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