Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1552.58.  No guidance.  Switching to M contract on Wednesday..
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

A late afternoon rally on Tuesday saved the day for the Dow, ending with a win of just under three points.  And while the SPX did end the day lower my call was for the Dow, so that's a miss though not by much.  Too bad the session didn't end three minutes sooner.  I think the basic premise was correct though.  ES dropped below the pivot at 11 AM and was unable to regain it for the rest of the session.  Now let's move on as we continue to wend our way through op-ex week.

The technicals (daily)

The Dow: It was a bumpy small range day on Tuesday that left the Dow's winning streak unbroken, just barely, now at eight straight.  But the resulting doji was the first reversal sign we've seen since February 28th.  That one flopped, but this time we are much more overbought so although we remain solidly inside a rising RTC, I'd pay some attention to this one.  With an RSI at 100 for two days running now, this chart is now looking a bit toppy.

The VIX:  On Tuesday the VIX recovered some of its losses from Monday to close at 12.27.  And while it remains quite oversold, it now faces resistance at 12.3.  And as long as we remain in a descending RTC, it's too early to call the VIX higher.

Market index futures:Tonight all three futures are barely lower at 12:55 AM EDT with ES down by 0.03%.  On Tuesday ES gave us a red hanging man but one that remained inside the rising RTC.  The overnight action is teetering on the edge of this RTC, so we may or may not get a bearish setup on Wednesday.  Just eyeballing it though, this chart, like the Dow, is starting to look toppy to me.

Reminder - I will be switching to the "M" futures contracts on Wednesday, so the numbers will change.

ES daily pivot: Tonight the pivot just barely ticks down from 1552.92  to 1552.58..  After a brief and failed effort to break over the pivot earlier Tuesday evening, we're back below the new number, though just barely.  This is one of those cases where ES is just threading about the pivot looking for a direction.  In situations like this there really isn't any guidance.

Dollar index: Like many other charts on Tuesday, the dollar gave us a doji with a tiny 0.02% gain.  That took it right to the edge of its rising RTC.  One more day of sideways action will give us a bearish setup. With the indicators having peaked at overbought and momentum slowing, it looks like the dollar is poised to move lower too..

Euro: Last night I had nothing really to say about this chart and that's just what the euro delivered on Tuesday - a real yawner as the currency remains range-bound between 1.3000 and 1.3050.  With the overnight action smack in the middle of that range, once again, there's nothing to see here.

Transportation: After Monday's small green spinning top, the trans on Tuesday gave us a bigger red spinning top.  As we remain quite overbought and having now exited the rising RTC, the trans are looking ready to move lower.


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      4      3      1           0        0.571    212

     And the winner is...

According to The Stock Traders Alamanc, March op-ex week is historically strong, and improves as the week goes on.  However, the charts are starting to look a bit toppy to me  But we've seen so many of these one-day declines come to naught so far this year that I'm unwilling to call the market lower on that basis alone.  So with a pretty wishy-washy environment and in the absence of any definitive read one way or another, I'm going to just declare Wednesday uncertain.  My vague guess is that we might see a bit of  down day Wednesday followed by a stronger finish to the rest of the week.

ES Fantasy Trader


Portfolio stats: the account remains at $92,625 after 8 trades (6 for 8 total, 3 for 3 longs, 3 for 5 short) starting from $100,000 on 1/1/13.  Tonight we stand aside in the absence of any apparent good overnight trend..