Thursday, October 3, 2013

Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 1682.67.  Holding below is bearish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains long at 1695.00.

ES dropped below its pivot shortly after I finished my post last night and that was the end of that.  By noon we were still under the pivot and so we closed lower on Wednesday by 59 points on the Dow.  So as the government shutdown rolls on and the sun still somehow manages to rise in the east every morning, let's see what Thursday might bring.

The technicals (daily)

The Dow: The Dow, which Monday gave us a bullish RTC trigger, put in a big bullish hammer on Wednesday.  With the previous trend now over, support continuing to kick in at 15,130, and indicators remaining oversold, this looks bullish to me.

The VIXAh, that tricky VIX.  I thought it would move lower on Wednesday but instead it gained 6.82%.  But that touched its upper BB again and with a spinning top, overbought indicators and a now-completed bearish stochastic crossover, it all suggests that a move lower next is more likely.

Market index futures: Tonight all three futures are lower at 12:51 AM EDT with ES down by 0.12%.  My bullish expectations for this chart did not play out on Wednesday as the dark cloud cover that developed at this time last night remained in place putting the bullish RTC exit i jeopardy.  The indicators reflect this confusion, all Washington-inspired as ,momentum and money flow are moving lower while the stochastic is rising and RSI is flat.  But tonight's overnight candle is forming up as a bullish hammer, so we'll have to see.

ES daily pivot: Tonight the pivot drops from 1685.67  to 1682.67. After spending Wednesday below the old number we remain below the new pivot though by a lot less.  Still this indicator remains bearish.

Dollar index: After some consolidation lat week, the dollar has clearly resumed its march lower, losing another 0.33% on Wednesday not that that helped the markets any.  And that keeps it straight in a new descending RTC even as the indicators fall back to oversold.  Net net, this chart looks bearish again.

Euro: On Wednesday the euro had its best day ion a couple of weeks after looking too tough to call last night.  It broke through resistance at 1.3552 leaving just resistance at 1.3659 all the way back to January of this year.  Meanwhile, Wednesday's move establishes an admittedly weak rising RTC, as well as driving the indicator overbought.  But without a reversal candle, one can only call the euro higher again on Thursday.

Transportation: On Wednesday's the trans gave back a third of Tuesday's gains with a classic hanging man.  But indicators are only now just off oversold and Wednesday's candle was a bullish RTC trigger.  So we have to think there's more upside from here.

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  8      3      3           3        0.800 

October    0      0      1           1        1.000      0

     And the winner is...

Tonight we have to balance the technicals with the news.  And the news on Wednesday is that the Empty Suit invited the leading clowns of the Clown Congress to his humble abode on Penn Silly Vain Ia Ave., presumably just to tell them that he wasn't interested in talking.  With the predictable (non) results.  It' beginning to look like this nonsense will drag on right up to the debt ceiling deadline at 11:59 PM on October 17th.  Now I'll admit I really thought the clowns would come to some sort of agreement on the budget to avert a gummint shutdown, and that didn't happen.  But this next showdown will be a lot more serious.  Are these idiots all really ready to commit national hiri-kiri out of sheer willful stubbornness?  Until this week, I wouldn't have thought it possible.  Now I'm not so sure.

In the meantime, we've got both the VIX and VVIX rising (but possibly topping) while the SPX Hi-Lo indicators and the A/D line aren't looking particularly bearish.  I'm thinking we're in for a period of congestion that is going to last until we get some decisive action out of Washington.  So given the mixed picture in the charts tonight, the only thing I can think to do is to call Thursday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains at $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 remain at 1695.00.

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