Actionable ideas for the busy trader delivered daily right up front
- Wednesday lower, low confidence.
- ES pivot 1764.42. Holding below is bearish..
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Well some yammering from assorted Fed heads on QE on Tuesday torpedoed our call for a higher close with the Dow ending down 32 points. All of which leaves us in a perplexing position. These trendless markets are tough to trade but maybe the charts will give us a clue for Wednesday.
The technicals (daily)
The Dow: On Tuesday the Dow put in a second spinning top, slightly below Monday's. The indicators are now overbought and it's hard to see where more gas is coming form for another leg higher. I'm seeing more downside risk than upside potential here tonight.
The VIX: The VIX gained 2.31% on Monday, a move belied by the tiny doji it formed. But it still traded outside its descending RTC for a bullish trigger. We're also close to the lower BB now so I'm thinking we're near a turning point here - or at least the stage is set.
Market index futures: Tonight all three futures are lower at 12:24 AM EST with ES down by a worrisome 0.33%. ON Tuesday ES gave us a second spinning top. I find that these double spinning tops are often decidedly bearish and with the overnight moving lower, this seems to be the current case. So contrary to what I wrote last night, I'm switching my view of this chart from bullish to bearish.
ES daily pivot: Tonight the pivot drops from 1766.83 to 1764.42. Owing to a steady drop in the overnight, we remain below the new pivot so this indicator remains bearish. The indicators are now moving lower, having never quite hit overbought and the stochastic is about to execute a bearish crossover.
Dollar index: It was hard to tell which way the dollar was going last night and I guess it didn't know either, finishing Tuesday up just 0.06% with a doji.The gestalt of this chart is bearish, but not enough for me to call the dollar lower.
Euro: :Last night I wrote "This one looks higher for Tuesday" and the euro did indeed extend its gains with a green spinning top sitting just above Monday's candle. That caused a bullish RTC trigger and brought us off oversold. So I'd say the euro's going higher on Tuesday. The overnight seems to be confirming that, up 0.14% so far.
Transportation: Last night I wrote "This chart now looks even more bullish" and sure enough, the trans extended their gains on Tuesday in an interesting bit of bullish divergence, rising 0.69% while the Dow was down 0.21%. That gives us three white soldiers, a new rising RTC, a bullish stochastic crossover, no resistance til 7130, and an upper BB still nearly 100 points away. So once again, this chart looks bullish.
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 7 5 8 2 0.643 674
November 3 3 1 0 0.500 111
And the winner is...
The only bright spot in the charts tonight comes from the trans which are giving an early Dow Theory warning of a move higher. But it may be a bit too early since nothing else is now looking at all bullish. Given that, I'm afraid I have to call Wednesday lower. I'll be happy to be proven wrong.
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.