Actionable ideas for the busy trader delivered daily right up front
- Wednesday uncertain, pending Fed comments.
- ES pivot 1647.83. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1600.25.
My apologies for the recent disruption in publication. After another plane ride yesterday that was in some ways worse than the previous trip on that miserable airline, Southwest, the Night Owl is home again and we can get back to our usual schedule. Tuesday's action was interestng and we review it below.
The technicals (daily)
The Dow: Tuesday's big run in the Dow broke right through resistance at 15,255 to keep us in a sharply rising RTC. It also confirmed a bullish stochastic crossover from a high level last Friday. Those are usually good for a few more days of upside before overboughtedness kicks in. And not to be overlooked is a pretty clear bullish inverse head and shoulders pattern. So this chart continues to look strong.
The VIX: After some big swings last week, the VIX is settling down, posting just a 1.13% loss on a small range spinning top. The problem with this chart now is its lack of direction. There's not RTC, no BB extremes, no nearby S/R lines, and the indicators are wandering aimlessly. This may reflect a certain existential malaise ahead of the Fed. In any case, I'm drawing a blank tonight which is a shame because I think the VIX is so important. >shrug<
Market index futures: Tonight the futures are mixed at 1:08 AM EDT with ES down by 0.12%, YM down 0.08% but NQ flat. The double bottom from the Dow is quite in evidence here. However, we'll need to break the resistance at 1653 and the candle developing in the overnight is a dark cloud cover. But, from half-baked candles come half-baked results, so I'm not reading too much into the slight decline at this hour.
ES daily pivot: Tonight the pivot rises from 1636.83 to 1647.83. Although a slight decline set in this evening and ES made one attempt to break through the new pivot, that was rejected so this indicator remains bullish for now.
Dollar index: The dollar's decline continued on Tuesday, down another 0.27%. The only thing that's changed here is that the rate of fall has slowed over the past week. If this continues, we could conceivably see a bullish exit to this long-running descending RTC in as little as a day or two. But for now, there's still no sign of a reversal.
Euro: And of course as the dollar falls, the euro's climb continues unabated in a rising RTC that's been overbought since June 5th. But here too, the rate of increase has begun slowing down so I'm starting to think there's a chance we could see an end to this trend by the end of the week. But for now at least, it's still intact.
Transportation: After two days in the dumps the trans rebounded nicely on Tuesday breaking through resistance at 6345. The indicators are not yet overbought and the upper BB isn't til 6492 so with no reversal signs there appears to be some room to run yet.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
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 3 4 6 4 0.636 85
June 1 5 3 0 0.167 -256
And the winner is...
All the charts appear to be set up for at least some additional gains on Wednesday. However, this is of course a triple-witching week and more importantly, we're going to be hearing some new pronouncements (or maybe not new) from Uncle Ben. So I am not going to try to fight the Fed or even second-guess them and will therefore be pulling up a chair to see which way the action falls before making my move. Judging by the shape of the VIX, I think I'm not alone. So the official call is simply Wednesday uncertain. My personal bias is for a move higher though.
2 AM Update - ES took off just before the Asian close, so it's looking more optimistic for Wednesday.
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 remain short at 1600.25. It's a shame I was traveling and unable to manage this dog.