Wednesday, May 22, 2013

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1666.25.  Holding above is bullish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Open wide, Seymour!
Holy moly, I feel like I got run over by a truck with that whole wisdom tooth business yesterday.  It's the first time I've ever had that done and I sure hope it's the last.  In the meantime, nothing much seems to have changed in Marketland with the Dow up yet another 52 points as the CNBC talking heads were all over the fact that we're now up 19 Tuesdays in a row.  Today's advance was propelled by more Fed guys (how many of them are there anyway?) this time talking about how maybe things aren't all that great after all.  Now that I'm feeling a little better we march on to Wednesday.  Will this rally never end?  Let's figure it out.

The technicals (daily)

The Dow: We've had three strong rising RTC's this year and the Dow is now well into the third one.  this one began April 22nd and has a strong Pearson's of 0.957.  And we're still tracking it right up the middle.  So as the upper BB continues to rise away, I see no reversal signs on this chart.  The only pattern is that lately we've been getting one up day followed by one doji day, but that's not really much to go on.

The VIXOn Tuesday the VIX put in a bullish one white solider pattern with a 2.69% gain for our highest close since May 2nd.  It also (finally) retraced 50% of the downside gap created on May 3rd, broke out above its recent consolidation top of 13.25-ish and turned the indicators back northward.  So I think this one's looking higher on Wednesday.

Market index futures: Tonight all three futures are higher at 1:20 AM EDT with ES up by 0.06%.  We've now seen a pair of spinning tops on the ES daily, but all reversal signs have been notoriously unreliable this year so far.  We also remain firmly inside a rising RTC and with ES drifting higher in the overnight, it doesn't seem to be heralding any imminent correction.  With the recent pattern of big up days followed by two or three days sideways, Wednesday could be yet another spinning top.

ES daily pivot: Tonight the pivot inches up from 1665.00  to 1666.25.  With ES just meandering in the overnight, we broke under the new pivot at midnight, but ES has just punched back through as I write this, and that's always a bullish sign.

Dollar index: Sunday night (recall that Monday was pretty much a lost day for me) I didn't want to believe the clear bearish evening star the dollar was showing.  Too bad too, because it fell sharply on Monday and then put in a second red candle on Tuesday, though sitting a bit higher for a 0.13% gain.  Still, this chart now looks decidedly bearish.  We have a completed bearish stochastic crossover and a bearish RTC trigger.  Taken together, these are usually good predictors of a move lower.

Euro: And the euro on Tuesday gave us a complementary bullish RTC trigger with a second consecutive up day.  And the overnight is up again, and the indicators are coming off oversold.  So I'd say the euro's looking higher on Wednesday which squares with my call for a lower dollar.

Transportation: After a stellar run, the trans have underperformed the Dow for two days running now.  Tuesday's doji left us on the edge of the latest rising RTC too.  So we're technically still in an uptrend but the momentum is clearly fading.  If the trans are going to stay alive, Wednesday is do or die.  But we've seen this movie before - I'm going to need some confirmation before I believe we're going seriously 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      5      7      5           2        0.500    121 

April      7      5      5           3        0.667    328

May        1      4      5           4        0.556    -30

     And the winner is...

Unlike Sunday night (and who knows what happened to Monday night) we're finally seeing a few bearish signs but nothing too convincing.  But it's all moot because Wednesday's going to be a big day, news-wise  We've got Uncle Ben talking, home sale numbers, and Fed minutes.  Any one of these could jerk the market around.  So since Wednesday will be news-driven,  can only call the close as uncertain.  My guess is that we won't see any big moves either way.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside with yet another "uncertain" call.


  1. I am glad your up 10.4% for this year although side stepping all these big moves up has played havoc with your potential gains. I, on the other hand, have lost 50% of my gains over the last 10 trading days due to stupid decisions. I hope we either correct (although I will never gain back all of my loss) or I get smart enough to go long.
    Good luck to you Michele and thanks for your musings!!

    1. Thanks, and good luck to you too. It always sucks watching your profits melt away.

      For the record, as of yesterday's close my trading account was up 14.66% YTD. However, I consider this a failure as my benchmark to beat is the Dow, which was up 17.41%. I figure if I can't beat an index ETF, I must be doing something wrong. I've been remiss in posting my quarterly results this year. I'll have to catch up on that.

      Still, I can't complain - a 15% move is a nice result for a whole year. Maybe I should just go to cash and take the rest of the year off.

    2. Definitely would make for a low stress rest of the year...

      Some selling coming into the markets this afternoon, so I guess maybe there is some normalcy out there?!?!

    3. Well you should be cheered by an SPX down 0.83% day at least. FWIW, my quick early guess is that there's more downside to come...


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