Wednesday, July 31, 2013

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1683.50.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains short at 1643.00.

Well can you blame me for calling Tuesday uncertain?  The Dow finished down all of 1.38 points while the SPX was up 0.63 points.  There's no way to make a rational call on that sort of unchangedness.  So when will these summer doldrums end?  Let's see if the charts have something to say about that.

The technicals (daily)

The Dow: And the dojis just keep coming.  We now have eight reversal warning candle sin a row for the Dow.  And none of them have amounted to anything.  The Dow is sagging slightly over that timeframe but it's nothing to write home about.  Tuesday's candle was a spinning top - ho hum.  Been there, seen that.  Clearly, Mr. Market is just waiting to hear from the Fed.  And so are we.

The VIXWhile it didn't finish lower on Tuesday as I had thought, in fact ending exactly dead even, the VIX nonetheless put in a tall inverted hammer that was good for a bearish RTC trigger.  The indicators are also now closing in on overbought, so I'll claim again that it looks like a lower VIX for Wednesday.

Market index futures: Tonight all three futures are higher at 12:50 AM EDT with ES up by 0.07%.  With yet another reversal candle, this one a green spinning top on Tuesday, ES continues to hunt for direction.   Tuesday's action was entirely outside the descending RTC though so that's a bullish trigger.

ES daily pivot: Tonight the pivot inches up again from 1682.33  to 1683.50.  This chart is almost a rerun of last night's - a break above the pivot before the close and then continuing to drift higher.  That leaves us above the new pivot and is therefore bullish.

Dollar index: The dollar gained 0.19% on Tuesday to break back above its 200 day MA.  With indicators still oversold, this chart now looks fairly bullish to me.

Euro: Meanwhile, the euro put in a really long legged star on Tuesday to close virtually unchanged.  But the overnight is continuing lower and with indicators having now begun to move off overbought levels, this one could close lower on Wednesday.  And that squares with my call for a higher dollar.

Transportation: Interestingly, after Monday's tall red marubozu, the trans put in a 0.32% gain on Tuesday with a spinning top on a day the Dow was down 0.01%.  This was also a bullish RTC trigger.  And with the indicators now quite oversold and the stochastic just about ready to make a bullish crossover, I'd lay money on Wednesday going higher.

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        3      4      6           4        0.636     85

June       6      5      6           0        0.545    543

July      10      2      3           4        0.875    486

     And the winner is...

The charts are looking fairly bullish tonight.  Ordinarily, I would go ahead and call Wednesday higher on this alone but given that this is a Fed day, my policy is to always call those uncertain as I have no way of knowing what Uncle Ben may be planning.  So we will simply sit on the sidelines tonight and wait for the pronouncements from on high.  And judging from the recent string of low-volume dojis on the charts, the market in general is doing the same.  Technically at least, this market looks like it's wanting to move higher though.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we remain short at 1643.00.  I'm at the stage of not even wanting to look at this trade anymore.

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