Wednesday, March 20, 2013

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1541.75.  Breaking above is bullish.
  • Rest of the week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Interesting day, Tuesday was.  First it looked like we were going higher, then we spent most of the afternoon underwater, and by the time the bell rang and all the shouting was over, the Dow finished  all of 3.75 points higher than it opened.  Pre-Fed jitters I suppose.  So with the understanding that Wednesday is Fed day, let's see what sort of backdrop the charts might provide.

The technicals (daily)

The Dow: Technically, the Dow gave us a textbook doji on Tuesday,  Coming after two days of losses, and remembering what I said the other day about the Dow not having had more than two consecutive down days since December, this one is worth paying some attention to.  On the other hand, today's action provided a bearish RTC trigger, meaning the long-running uptrend that began on February 26th is now over.  And the indicators continue to look bearish, so there's no clear path here.

The VIXInstead of filling Monday's big gap up, on Tuesday the VIX took an even bigger jump (intraday at least) to end 7,71% higher.  This provided a bullish RTC trigger.  So along with rising indicators, there's no reason why the VIX could not continue higher on Wednesday.  Well, there is one reason - the VIX is now quite extended from its pivot at 13.19.  Whenever this happens, very often it will try to revert towards the pivot the next day.  So another chart with contradictory messages.

Market index futures:Tonight the futures are mixed at 1:00 AM EDT with ES down by 0.08%, YM down 0.03% but NQ up 0.02%..  ES formed a bearish engulfing pattern on Tuesday and gave us a new descending RTC beginning from 3/14.  That said, the indicators have now traveled most of the way from overbought to oversold so it's not clear how much downside is left here.

ES daily pivot: Tonight the pivot inches down from 1542.92  to 1541.75.   ES has been drifting higher all evening long, and although we remain below the new pivot, it's only by one point.  ES has already investigated the pivot shortly after midnight and I'd expect a few more tries to break above before dawn.

Dollar index: The dollar posted some strong gains on Tuesday, up 0.38% in a move that seems to have negated the recent bearish RTC trigger.  Indeed, we instead got a bullish stochastic crossover and with three rising candles in a row, the dollar could move higher again on Wednesday..

Euro: Last night I proposed that the euro wanted to take a look at its 200 day MA.  Well on Tuesday it did just that, breaking below intraday before recovering to close just above it at 1.2884.  It continues to flirt with it in the overnight, and with a lack of any serious bullish indications, it just might punch through the 200 MA on Wednesday.

Transportation: The trans continued drifting ever so slightly lower on Tuesday, down 0.19% on another doji.  The indicators remain overbought but are now moving lower.  However, we are still inside a rising RTC, so it's still too eaerly to call this uptrend over.  But a close below 6220 on Wednesday could do 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.

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
 10  3/4        29         39        -      -   1518
 11  3/11       41         26        +      +   1551  
 13/18       41         37        +      +   1561

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 continue the year with an accuracy of 6  for 8, or 75%. 

This week we see that bullish sentiment remained exactly unchanged while bearish sentiment rose 11 points.  No doubt some people are seeing signs of a top   But despite a lackluster performance the past few days, it's still not registering on the monthly SPX chart, so I'm going to have to continue to vote on the positive side.
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      4      3           0        0.556    270

     And the winner is...

Tonight, the technicals are painting a fairly confusing picture full of mixed messages.  This no doubt reflects market uncertainty ahead of the Fed and renewed worries about Europe.  Because of this, I am simply going to declare Wednesday uncertain.  One can only do so much crystal ball gazing before one's eyeball begin to glaze over.  My unofficial guess though is that unless the Fed makes some pronouncement the market hates, we just might close higher.

ES Fantasy Trader

Last night's short trade worked out OK to the tune of 2.75 points.  Not a home run perhaps, and I did get out a tad too soon, but I'll take it nonetheless.

 Portfolio stats: the account rises to $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 westand aside.  We never trade ahead of Fed days.

BOT    10    false    ES    JUN13 Futures     1544.75    USD    GLOBEX    10:51:09   
SLD    10    false    ES    JUN13 Futures     1547.50    USD    GLOBEX    02:13:26     

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