Wednesday, September 11, 2013

Wednesday higher if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher if ES pivot holds, else lower.
  • ES pivot 1678.25.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Huh - I sure wasn't expecting a 128 point pop in the Dow on Tuesday.  I figured Mr. Market might need a rest, but you've got to hand it to him, the old guy's got legs. Sign him up for the 2016 Olympics!  So how long can he keep it up?  Let's check the morning line and see what's what on Wednesday.

The technicals (daily)

The Dow: So the Dow has now given us two white soldiers and remains firmly inside a rising RTC.  Actually, everything I said last night still applies, including the conclusion: no reversal in sight yet.

The VIXI was getting into the mood for a move higher from the VIX last night, but I guess I got a bit ahead of myself - the downtr3end remains intact as the VIX lost another 7.04% on Tuesday on a big gap down closing just a wee bit under its 200 day MA.  That could be key, as previous breaches of this level have led lower.  So for now, oversold indicators are about the only sign of a reversal, but past experience proves that can take a while.  This chart overall continues to look bearish.

Market index futures: Tonight all three futures are lower at 12:57 AM EDT for the first time in a while with ES down by 0.10%.  ES blew right through the resistance at 1680 I mentioned last night but that seems to have taken a toll.  The new overnight came to within half a point of the upper BB but seems to be stalling out here.  This chart is therefore looking a bit less bullish than last night.

ES daily pivot: Tonight the pivot rises again from 1664.25  to 1678.25.  ES was sufficiently above the old pivot to remain above the new one, though now by less than three points, putting the pivot in play.  So this remains nominally bullish for the time being, but we need to look out for any attempt to break below the pivot.

Dollar index: The dollar made a weak attempt to regain the 200 day MA on Tuesday but failed miserably, ending up, oddly enough, 0.03% on a bearish harami.  With indicators not yet oversold, this chart continues to look bearish..

Euro: Last night I wrote "the euro still has room to run" and so it did, closing at 1.3268 on a small green spinning top on Tuesday.  Indicators are still not quite overbought but we now have at least the suggestion of a reversal.  The indecision is continuing into the overnight, which tends to reinforce the idea that we could be going lower on Wednesday.  There does seem to be some resistance around 1.3281.

Transportation: Once again, the trans outperformed the Dow with a monster 1.93% move to the upside on a giant green marubozu that took out the upper BB at 6545, stopping only because the bell rang.  However, the action of the last four days is starting to look exponential, and that always ends badly.  With the upper BB hit while indicators are already overbought, perhaps the trans may shift into reverse 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    11      3      6           2        0.813    687
September  4      0      1           0        1.000    270

     And the winner is...

The technicals are now looking a bit less rosy than they were last night after two big up-days but we remain solidly in a rising RTC and the VIX is definitely not looking bearish for stocks at the moment.  So I'm going to split the difference and make a conditional call: if ES stays above 1678.25 by mid-morning Wednesday, we'll close higher.  But if it breaks below that convincingly before then, then we close lower.

ES Fantasy Trader

Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we continue to stand aside.

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