Wednesday, September 25, 2013

Wednesday higher only if ES pivot crossed

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower, medium confidence.
  • ES pivot 1693.67.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

I'll readily admit I was somewhat surprised to see the Dow higher when I got up this morning at the crack of 11 AM.  But I was vindicated by the close when we finished with a 67 point loss thus saving my call for a lower close.  Now we move on to Wednesday.

The technicals (daily)

The Dow: The Dow remains in its latest falling RTC and the indicators continue their match towards oversold but we're not there yet.  So with no nearby support, this chart still looks bearish.

The VIXMonday's inverted hammer was confirmed on Tuesday as resistance at the 200 day MA proved impossible to beat.  The net result was another strange day in which both the markets and the VIX were down.  But that's the third time in two weeks this has happened - odd.  In any case, Tuesday's little red spinning top indicates indecision.  Combined with indicators right at the midpoint between overbought and oversold and this one is too tough to call.

Market index futures: Tonight the futures are mixed at 12:43 AM EDT with ES down by 0.03%, YM down just 0.01% but NQ up 0.11%..  After a two black crows pattern, ES on Tuesday pulled off a star signaling that the bears may be running out of, um, whatever it is bears run on - berries?  And the overnight candle is forming as a doji too.  Meanwhile the indicators continue to fall and the stochastic looks to be within a few days of a bullish crossover.  But not just yet.  I'd expect to see some sort of bottoming process here on Wednesday.

ES daily pivot: Tonight the pivot dips from 1696.58  to 1693.67.  Once again, we remain below the new pivot, even with this drop.  We are however now within two points so that puts the pivot in play.  But for the moment, it remains bearish.

Dollar index: After Monday's bullish RTC trigger, the dollar gained 0.15% on Tuesday but did it on a star, so we can't really call this a new uptrend.  We may be in for some wandering around current levels for a day or two..

Euro: On the other hand, the euro is in a much more clearly defined descending RTC now, down three days in a row and continuing lower in the overnight.  Indicators remain overbought but have peaked and the bearish stochastic crossover is complete, so I'd say we're not done going lower here.

Transportation: The trans put in a doji on Tuesday but surprised me by actually finishing up just a tad.  But with the indicators still overbought and some downward momentum established, I don't think we're ready for a move higher here just yet.

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  7      3      3           1        0.727    356

     And the winner is...

Tonight I'm seeing a bunch of indecision in the charts as the forces that have driven us lower for the past few days seem to be dissipating.  I hate these sorts of falling-knife situations so I'm just going to make a conditional call: if ES can break over its pivot at 1693.67 by mid-morning Wednesday, we'll close higher.  If not, we close lower once again.  Let me add that the NYSE A/D line turned positive again on Tuesday, further weakening the bears' case.

ES Fantasy Trader

Portfolio stats: the account now rises to $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside waiting for the next trend change.

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