Actionable ideas for the busy trader delivered daily right up front
- Wednesday lower, low confidence.
- ES pivot 1695.42. Holding below is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1643.00.
The market moved lower on Tuesday, apparently on some remarks by some Fed head. Oddly enough, this move was predictable the night before on a technical basis in the charts. This is one reason why I like watching the futures late at night. With continuing revelations about market moving news being leaked hours before its scheduled release, you really have to wonder who knows what and when do they know it. For some reason, it often shows up in the futures. So without further ado, let's take a look once again at said futures, and a bunch of other stuff too.
The technicals (daily)
The Dow: Tuesday's 0.60% drop was the Dow's biggest loss since June 28th and it took us out of a rising RTC for a bearish setup. It also completed a bearish stochastic crossover and sent the indicators all lower off overbought. Support around 15,572 collapsed like it wasn't even there. That all adds up to continued lower for Wednesday.
The VIX: Last night I wrote "the VIX is now quite low and would seem to have more upside potential than downside risk". And that potential materialized on Tuesday as the VIX rose, for the first time in six days, up 7.43%. This jolly green candle traded entirely outside the descending RTC we were in for a bullish trigger and also set up the stochastic very near a bullish crossover. As I say so often, the VIX rarely spends more than a day or two on its BB's. In all, this chart looks ready for more upside on Wednesday. And VVIX took an even more bullish turn on Tuesday, supporting this whole theory.
Market index futures: Tonight all three futures are lower at 12:51 AM EDT with ES down by a non-trivial 0.24%. ES suffered its worst decline since June 24th on Tuesday falling out of its last short rising RTC for a bearish trigger.and convincingly completing a bearish stochastic crossover. The overnight continues to drift lower and with indicators just barely off overbought, I see nothing bullish in this chart tonight.
ES daily pivot: Tonight the pivot steps down from 1702.08 to 1695.42, ending its brief foray above 1700. We were below the old pivot all day Tuesday and remain below the new one, so this one remains bearish tonight.
Dollar index: Last night I wrote "I expect the buck to take another crack at the 200 MA on Tuesday". Well was no contest as the dollar just skipped right over the 200 MA gapping down for a 0.34% loss, now on a three day losing streak. With the 200 MA break, a bearish stochastic crossover now complete and indicators a long way from oversold, I expect another down day on Wednesday.
Euro: The euro chart is being exceptionally cantankerous lately. It did not go down on Tuesday as I thought, but rather retraced all of Monday's losses and then some to close at 1.3307. This gives us a bullish stochastic crossover but with the euro in alternating down/up mode now, where it's going Wednesday is anybody's guess. I pass.
Transportation: The trans turned in a poorer performance on Tuesday than I was expecting - much worse in fact, down 1.28%. This caused a bearish stochastic crossover with indicators still just coming off overbought. So with no support til 6477 it looks like more downside on the way here.
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 6 5 6 0 0.545 543
July 10 2 4 4 0.875 486
August 4 0 0 0 1.000 297
And the winner is...
What we're seeing tonight is a combination of bearish confirmations and continuation patterns. In fact I'm hard-pressed to find anything bullish on any charts right now and as we enter the historically weakest part of a weak month, I'm afraid the only logical call is for Wednesday lower.
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. We've ralready recouped the worst part of out losses here and while this trade may never be a winner I'm thinking there's more retracement to come.