Wednesday, August 14, 2013

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1688.17..  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader remains short at 1643.00.

Blogspot's spell-checker seems to be on strike tonight, so I apologize in advance for any typos in this post.

Last night the market was indicating that it wanted to go higher and despite an early morning sag, that's what ended up happening on Tuesday.  With just small gains though, the dog days of summer roll on.  So let's see now if we can sniff out Wednesday's direction - woof woof!

Southwest Airlines: Round 2

You may recall that back in June, the Night Owl got suckered by Southwest Airlines which advertised Business class service but delivered steerage class.  I disputed the charge with Visa and requested a partial refund, which Visa granted.  Just as I was about to declare victory, one day before the deadline, Southwest filed a response with Visa to my complaint about their deceptive practice of advertising a fare called "Business Select", which in fact is nothing but the same old Coach class.  One would have thought that they'd have had enough sense to leave well enough alone.

The documentation they provided to Visa was two fuzzy copies of their internal journal ledger that showed that the ticket had been used (I never disputed that) and that the fare class was "Standard", which itself is a non-standard term but which in any case was not disclosed at any point during the ticketing process.

But Visa left the door open and allowed me to file a rebuttal, which I did.  So it's not over yet.  We'll just have to see if Southwest can get away with their phony monkey Business Class scam or not.  In any case, I welcome Southwest to my short but growing list of airlines I'm boycotting and will never ever set foot on again as long as I live.  (The others are United and US Air).

The technicals (daily)

The Dow: So anyway, on Monday the Dow presented us with a doji and on Tuesday we got the confirmation with a 31 point gain in the form of a spinning top, itself another reversal candle.  This one also traded outside the descending RTC for a bullish setup  RSI is now oversol and the stochastic is flat like pancake.  So while it still isn't a raging bull, this chart is now looking more positive than last night.

The VIXLast night I wrote "I have to think the VIX will be moving lower on Tuesday."  And sure enough, the VIX fell another 3.90% - gotta love that bearish engulfing pattern.  It also exited its rising RTC for a bearish setup and the stochastic formed a bearish crossover.  With VVIX hitting its upper BB and looking toppy, and no VIX support until 11.83, odds seem good that the VIX is going lower again on Wednesday.

Market index futures: Tonight all three futures are lower at 1:07 AM EDT with ES down by 0.13%.  After two days of small gains on long-legged dojis, the new candle is forming as a dark cloud cover.  Going back a week, the trading is pretty directionless as ES continues to move about the 1690 area.  So this chart is conflicted, with an oversold RSI and bullish stochastic crossover, but no overnight follow-through and no RTC exit.  This one is too tough to call tonight.

ES daily pivot: Tonight the pivot steps up from 1683.58  to 1688.17.  After being above hte old number most of Tuesday, this rise made ES run smack into the new pivot right at midnight as it drifted lower.  As I write, ES is threading about the pivot, trying to decide which side of this fence it wants to come down on.  So there's no guidance here at the moment, but the ultimate decision will be important for Wednesday.

Dollar index: Lsdt night I wrote "all signs are pointing to higher again on Tuesday" and indeed the dollar gapped up again for the second day in a row, gaining 0.54% and just touching its 200 day MA intraday before retreating a bit at the close..  We now have two competing forces: the 200 MA resistance line and the bullish indicators, inlcuing a bullish stochastic crossover.  The dollar doesn't seem to respect its 200 MA very well, so I'm going to guess it might move higher again on Wednesday.

Euro: I also called for a lower euro last night and got that too, as it fell out of its rising RTC on accelerating losses for a bearish trigger.  And the overnight seems to be confirming that, down another 0.04% so far.  With no support until 1.3211 and indicators still not oversold, I'd say the euro's going down again on Wednesday.

Transportation: On Tuesday the trans remained stuck in neutral, continuing to find support round 6452.  However, they traded outside the descending RTC for a bullish trigger but  the candle was bearish engulfing - go figure.  RTC exits aren't 100%, so I'm a bit skpetical that the trans are moving higher on Wednesday.

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      4           4        0.875    486
August     8      0      1           0        1.000    410

     And the winner is...

Tonight the charts seem rather conflicted and I'm just not getting a clear reading.  Perhaps this reflects uncertainty over the  PPI numbers and more Fed speak coming on Wednesday.  So much as I don't like doing it, without a good feel for either the bull or bear case the only logical call is Wednesday uncertain.

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.

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