Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday higher, low confidence - Fed day.
• ES pivot 1785.42.  Holding above is bullish.
• Rest of week bias higher.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Tuesday's action played out picture-perfect just like a candlestick charting textbook.  We had an exponential run lower in the Dow ending with a spinning top bottom.  And that was confirmed with Tuesday's 91 point gain.  Bada bing!  Now let's see where Wednesday's headed.

The technicals (daily)

The Dow: The Dow's advance on Tuesday caused RSI to bottom from very oversold and moved the stochastic very close to a bullish crossover.  This chart now looks decidedly bullish.

The VIX:  Last night I wrote "this one still has more downside to go" and that's just where the VIX went on Tuesday, down nearly 10% on a tall red marubozu that took RWI off extreme overbought, caused a bearish stochastic crossover, and finally got us back below the upper BB.  So the outlook remains bearish for the VIX.

Market index futures: Tonight all three futures are higher at 12:33 AM EST with ES up by a solid 0.49%.  Tuesday's gains were a big bullish engulfing candle that bottomed out RSI and completed the stochastic's bullish crossover, getting ES off the lower BB.  This chart now looks solidly bullish.  

ES daily pivot: Tonight the pivot inches up from 1778.25  to 1785.42.  ES remains well above the new pivot so this indicator remains bullish.

Dollar index: Last night I wrote "I see more upside here" and we got just a tad, with the dollar up 0.06%.  The stochastic is just about to do a bullish crossover and RSI has begun moving higher so I'd say Wednesday looks higher for the dollar.

Euro: Last night I wrote "this chart looks like it's going to drift lower" and that's just what it did Tuesday, posting a small loss on a small hanging man.  RSI remains overbought, the stochastic just completed a bearish crossover, and the overnight is continuing the decline so I see more downside to come here.

Transportation: The trans had an excellent day on Tuesday gaining just over 1% on a tall green bullish engulfing marubozu over Monday's candle that touched the lower BB.  RSI remains just barely oversold and the stochastic remains low - its next move will have to be a bullish crossover.  So this chart looks positive now.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  I have updated last week's numbers here.  And the week before never did appear so it remains listed with "??".

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

 

  1  12/31      40         48        -      -   1402   0/1

  2  1/7        47         30        +      +   1466   1/2

  3  1/14       52         15        +      +   1472   2/3

  4  1/22       50         21        +      +   1486   3/4

  5  1/28       44         26        +      +   1503   4/5

  6  2/5        40         36        +      +   1513   5/6

  7  2/11       43         25        +      +   1518   6/7

  8  2/19       21         43        -      -   1520   6/8

  9  2/25       30         52        -      -   1516   6/9

 10  3/4        29         39        -      -   1518   6/10

 11  3/11       41         26        +      +   1551   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643   13/24  11/21

 25  6/17       32         40        +      -   1627   14/25  11/22

 26  6/24       13         46        -      -   1592   14/26  11/23

 27  7/1        25         42        -      -   1606   14/27  11/24

 28  7/8        42         29        +      +   1632   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692   16/30  13/27

 31  7/29       39         17        +      +   1692   16/31  13/28

 32  8/5        46         27        +      +   1710   16/32  13/29

 33  8/12       32         41        -      -   1691   17/33  14/30

 34  8/19       23         54        -      -   1656   17/34  14/31

 35  8/26       23         50        -      -   1664   17/35  14/32

 36  9/3        21         54        -      -   1633   17/36  14/33

 37  9/9        35         30        +      +   1655   18/37  15/34

  28 9/16       40         28        +      +   1688   19/38  16/35

 39 9/23        52         36        +      +   1710   20/39  17/36

 40 9/30        39         43        +      -   1692   21/40  17/37

 41 10/7        30         33        +      -   1691   22/41  17/38

 42 10/14       48         22        +      +   1703   23/42  18/39

 43 10/21       57         30        +      +   1745   24/43  19/40

 44 10/28       59         19        +      +   1760   25/44  20/41

 45 11/4        42         25        +      +   1762   26/45  21/42

 46 11/11       39         39        +      x   1771   27/46  21/42

 47 11/18       52         30        +      +   1798   27/47  21/43

 48 11/25       58         29        +      +   1805   28/48  22/44

 49 12/2        56         26        +      +   1806   29/49  23/45

 50 12/9        55         30        +      +   1805   30/50  24/46

 51 12/16       30         43        +      -   1775   31/51  24/47

 52 12/23       38         29        +      +   1818   32/52  25/48

  2014

 01 12/30       50         23        +      +   1841     0/1    0/1

 02  1/6        40         44        +      -   1831 

 03  1/13       ??         ??        +      ?   1842

 04  1/21       36         41        -      -   1839

 05  1/27       35         43        -      -   1790

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that both I and the majority of the poll voted bullish four weeks ago so we were both right.  Therefore we can now finally close out the predictions for 2013:  the Night Owl ends with an accuracy of 32 for 52, or 62%.   And the poll as a whole rises a bit to 25 for 48 or 52%.  Not too shabby for a game where you're doing well to be batting .500.  Starting next week we'll drop the 2013 numbers and continue on with 2014.

We also see that our first prediction for 2014 was wrong.  This will no doubt improve as we go on.

This week we see that I voted bearish for the second week in a row, the first time I  changed from bullish since last September.  I'm seeing signs of bearish RTC exits and stochastic crossovers that concern me enough to vote a minus sign.  The failure of the 2014 January barometer is also of concern.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    4      9      5           0       0.308     144

     And the winner is...

I normally call Fed days as "uncertain" just as a matter of policy because there's never any way of being sure just what odd things will come out of their mouths.  But tonight the charts are looking rather strong technically and the futures are up significantly, much more than they usually are on a Tuesday pre-Fed evening.  That makes me think that "they" know something I don't, so I'm going to break my policy go out on a limb and call Wednesday higher.  That could all go south if Uncle Ben says something Mr. Market doesn't want to hear.

ES Fantasy Trader

Well it's nice that we had a successful first trade of the year as we made a quick six points on last night's trade.  Not bad for ten hours of work (most of which I slept through).  And since I get asked this - I entered the trade because I saw a collection of reversal signs, particularly the bullish stochastic crossover that suggested a high probability trade.  And I exited because it looked like the short-term momentum had been exhausted.  While this one might run further, the ESFT is about trading not investing, so if a trade is profitable the next day, I'll book it and live to trade again.

Portfolio stats:  the account rises to $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside, having missed the next big upside move earlier this evening.

SLD    10    false    ES    MAR14 Futures     1787.25    USD    GLOBEX    11:05:35
BOT    10    false    ES    MAR14 Futures     1781.25    USD    GLOBEX    00:49:06