Actionable ideas for the busy trader delivered daily right up front
- Wednesday lower, low confidence.
- ES pivot 1746.67. Holding below is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Huh - well I sure didn't see that one coming - the Dow was up 75 points on Tuesday when I thought it would go lower. In hindsight, I guess the uptrend ain't over until it's over. So let's be a bit more stringent tonight as we look for the elusive top.
The technicals (daily)
The Dow: On Tuesday the Dow rose 0.49% to finish just about on a resistance line around 14,484. Nut this was a big non-confirm of Tuesday's doji, despite indicators which continue to fall off overbought. With the next resistance not until the upper BB at 15,567, there really isn't anything bearish about this chart tonight.
The VIX: We had another one of those unusual days when the VIX and the market were positively correlated with a 1.29% gain. We also now have a bullish RTC trigger, suggesting the latest descending trend is over. With indicators still just off oversold, I'd say odds favor more upside for the VIX on Wednesday.
Market index futures: Tonight all three futures are lower at 12:31 AM EDT with ES down by a non-trivial 0.33%. After yet another solid up day on Tuesday, this is the biggest reversal we've seen at this hour in a while now, big enough to take us right to the edge of the rising RTC for a bearish setup. Of course, I thought this chart was looking toppy last night and clearly ES still had room to run but the bearish signs are a bit stronger this time so perhaps this will be one of those cases where I was just a day early. Either way, I continue to believe we're due for at least a one day move lower on Wednesday.
ES daily pivot: Tonight the pivot rises from 1738.50 to 1746.67. That bump combined with the overnight sag in ES now puts us below the new pivot so this indicator becomes bearish, just like last night.
Dollar index: On Tuesday the dollar continued its march towards zero, down another 0.58%.and breaking year-long support at 54.39 on the $USDUPX. The stochastic is admittedly flattening out in anticipation of a bullish crossover, but we ain't there yet. As we continue to dribble down the lower BB, this chart remains bearish.
Euro: And the euro defied my expectations on Tuesday, gaining big to close at 1.3785, well above its upper BB and canceling Monday's hanging man. Tonight we have another sign of a reversal but fool me once, etc. so I'm not buying it this time. I'm going to wait and see on this chart.
Transportation: On Tuesday the trans continued outperforming the Dow, up another 0.82% to remain on the left edge of their rising RTC. Indicators all remain pegged at overbought and are now useless for predictions. We do have an inverted hammer suggesting the possibility of a reversal, but one that requires confirmation so I can't really call this one lower just yet.
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 11 3 6 2 0.813 687
September 8 3 3 3 0.800 485
October 4 4 6 1 0.556 452
And the winner is...
Hmm - I think my underlying thesis for a move lower last night was valid, but some pesky good news just got in the way on Tuesday. The bearish technical signs I was seeing then are pretty much still there so I'm just going to stick to my guns and call Wednesday lower.
ES Fantasy Trader
Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17 total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13. Tonight we stand aside.again.