Wednesday, February 26, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence..
  • ES pivot 1844.83.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night I made a conditional call for Tuesday, that we'd close higher only if ES managed to stay above its pivot by mid-morning.  ES, which dipped below the pivot around 3 AM did make a half-hearted attempt to break back above around 10:45 AM but by the time it finally got in gear it was too late and both the Dow and SPX did eventually close a bit lower.  So let's move on and see what the charts have to say about Wednesday.

The technicals (daily)

The Dow: The Dow continues to be frustrated by resistance around 16,250, ending Tuesday with a red spinning top and a failed high level bullish stochastic breakout.  But with the upper BB still still over 200 points away, we could just as easily continue higher.  However, the spinning top requires confirmation so I'm just going to have to wait and see on this one.

The VIXLast night I wrote about the VIX "you've got to think this one's going lower" and if you thought that you'd have been right because that's just where it went - down another 4% on Tuesday with an inverted hammer that tried and failed to recover the 200 day MA.  With an admittedly wide descending RTC now in place and a bearish stochastic crossover complete, and no sign of a reversal from VVIX, I'm not sure there couldn't be still more downside to come on Wednesday, at least to 13.44 where there's some support. 

Market index futures: Tonight all three futures are higher at 12:22 AM EST with ES up by a decent 0.27%.  That's enough to keep it firmly inside a rising RTC and provides a non-confirmation of Tuesday's spinning top.  The indicators are sort of wandering, with RSI flat just in overbought, momentum falling, but money flow and OBV rising.  And the stochastic is threaded out, with both lines virtually on top of each other, so no help there.  But the overall trend remains bullish.

ES daily pivot: Tonight the pivot inches up from 1844.00  to 1844.83.  After finally breaking above the pivot just before the close, we remain well above the new number so this indicator is now clearly bullish

Dollar index: I couldn't call this one last night and it was just as well since the dollar lost a scant 0.07% on Tuesday, and on a green spinning toppish/hammer.  Largely just more indecision.  Tonight though, we're seeing a nascent bearish stochastic crossover.  So although RSI is just coming off oversold, I'm going to guess that maybe the dollar goes lower on Wednesday..

Euro: Last night I wrote "more sideways drifting seems to be ahead" - and that's just what happened as the euro put in its fourth doji in a row, continuing to oscillate around the 1.3741 level.  With the indicators remaining overbought, the break (when and if it ever comes) would seem to be more likely headed lower.  But so far in the overnight, it just looks like more of the same consolidation.

Transportation: And while on Tuesday the Dow lost just 0.17%, the trans lost 0.67% on what as close to a bearish engulfing candle that got the stochastic into position for a bearish crossover.  ll in all, this chart now swings to bearish.

Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
February   3       2      1           0       0.600     39

     And the winner is...

Tonight the charts seem generally bullish, despite the fact that the end of February historically underperforms.  Not a raging bull, mind you, but nonetheless enough for me to call Wednesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

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