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- Wednesday lower, low confidence.
- ES pivot 1787.00. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Well ES made a couple of half-hearted attempts to break above its pivot Tuesday morning, but it was not to be, and we did end the day lower. But it was an interesting chart move so let's run through the usual suspects and see where Wednesday is headed.
The technicals (daily)
The Dow: The Dow dropped just nine points on Tuesday but it did so with a spinning top, the second in a row. We remain in a rising RTC but with indicators remaining overbought and a completed bearish stochastic crossover I now think there's more downside risk than upside potential here.
The VIX: Last night I wrote "I'm saying the VIX is going higher on Tuesday." It doesn't get much plainer than that and the VIX did in fact gain 2.21%. Not only that but it also gave us a bullish RTC trigger and with the indicators now rising off oversold and the upper BB still at 13.99, it seems likely that there's still more upside to come.
Market index futures: Tonight the futures are mixed at 12:29 AM EST with ES down by 0.04%, YM flat and NQ up 0.07%.. ES put in a second spinning top on Wednesday, sitting right below Tuesday's. That left us right on the edge of the rising RTC and the overnight action is just outside it for a bearish setup. The bearish stochastic crossover is complete and indicators are now coming down off overbought so this chart csontinues to look bearish.
ES daily pivot: Tonight the pivot drops from 1791.08 to 1787.00. That still leaves us below the new pivot, so this indicator remains bearish.
Dollar index: On Tuesday the dollar lost 0.10% on a spinning top as a bullish harami.. With indicators now oversold we have at least a warning that a reversal higher might be coming soon.
Euro: The euro remains in a tight rising RTC. Indicators are now broken overbought and have lost their predictive power so there's nothing here to suggest anything but more upside on Wednesday.
Transportation: Last night I wrote "this chart is looking lower for Tuesday" and indeed the trans dropped a significant 1% after Monday's bearish dark cloud cover. This dropped us right out of the rising RTC for a bearish trigger, reinforced a bearish stochastic crossover and so this one looks continued bearish for Wednesday,
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 6 5 1 0 0.545 166
And the winner is...
The bearish signs I saw in the charts last night are still there, only tonight they're more pronounced. In addition, I'm seeing weakness in both the NYSE A/D line and the SPX Hi-Lo index. While the rising regression trend remains intact for the time being, all signs are pointing towards a close of 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.