Wednesday, March 5, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1863.25.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Wow - what a difference a day makes, eh?  I'll bet all the Chicken Littles who sold yesterday are regretting that now.  With the Dow having its best day YTD on Tuesday, it seems that the picture has changed once again.  So let's shift our focus to Wednesday now and figure out where it's headed.

The technicals (daily)

The Dow: Monday's bearish RTC setup was canceled in a big way on Tuesday as the Dow shot up 228 points to take it all the way to the other edge of the rising RTC.  With these successive triple digits moves the indicators are bouncing around a lot so I'm watching more the upper BB now and that' not til 16,546.  And there's no resistance til 16,511 so this chart once again looks bullish.

The VIXLast night I wrote "I'd give better than even odds of a move lower on Tuesday than higher" and no one would take me up on that bet.  Good thing for them too because on Tuesday the VIX dumped 12% on a gap-down marubozu that crashed right back through its 200 day MA and completed a classic bearish evening star.  So more downside now seems possible Wednesday.

Market index futures: Tonight the futures are mixed at 1:2:31 AM EST with ES down by 0.05%, YM down 0.04% but NQ up 0.03%.  Call it vaguely flat.

ES daily pivot: Tonight the pivot rockets from 1841.58  to 1863.25.  Even after that huge pop we remain above the new pivot, impressively, so this indicator continues bullish.  Tuesday's stellar performance in ES canceled Monday's bearish RTC setup and drove it right back into the rising RTC and fresh record levels.  With all resistance now behind, the upper BB at 1891 beckons.  There is really nothing bearish about this chart.

Dollar index: Last night I was a bit leery that the dollar could follow through on Monday's gains but it did, up another 0.12%.  That sets up a new rising RTC off the lower BB and bends the stochastic round close to a bullish crossover, so I'm now bullish on the dollar.

Euro: The euro made some big intraday moves on Tuesday but finished with just a long-legged doji around 1.3736.  And the overnight is continuing to hang around that neighborhood.  The only guidance here is from a new bearish stochastic crossover so on that basis I'll guess the euro goes lower Wednesday.

Transportation: Some talking head on CNBC Tuesday was making a big deal of the failure of the trans to "make new highs".  Well gosh, with a 2.23% gain that handily outperformed the Dow's 1.41% and closed above the upper BB, I don't see much to complain about.  If anything, I'd expect a pause here o Wednesday as we often get the day after a big advance.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
February   5       2      2           1       0.750    107

March      2       0      0           0       1.000    382

     And the winner is...

Typically what we see after a big move up is a pause as the market consolidates and I see no reason to expect Wednesday will be any different.  While I'd not be going short right here, I think this is more of a wait & see situation so I'm just going to call Wednesday uncertain in the expectation of a small range or doji day.

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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