Wednesday, March 26, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1857.25Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Parable of the Day
"Give a man a technical chart and he'll be confused today.  Teach a man technical analysis and he'll be confused for the rest of his life."
                          - The Night Owl

Mr. Market's acute case of indecision rolls on with Tuesday's 91 point gain being just barely over the upper end of the recent trading range.  A trend!  My kingdom for a trend!  Will Wednesday finally be the day?  Perhaps the charts have a clue.

The technicals (daily)

The Dow: I had kind of informally drawn the upper end of the Dow's recent range at 16,350.  Does Tuesday's close of 16,368 represent a breach of that?  Ehhh, probably not.  All it did was jack the indicators further into overbought territory.   And the stochastic has both its lines on top of each other.  So from recent experience, the only thing you can think is that Wednesday will move lower.  That's hardly an insightful observation but it's all I've got tonight.

The VIXOn Tuesday the VIX dropped through its 200 day MA again, touching it for the 10th time in 12 days.  That leaves us right at a support level at 14 with oversold indicators.  With this inverted hammer, the next logical move would seem to be higher.

Market index futures: Tonight all three futures are higher at 12:18 AM EDT with ES up by 0.12%.  On Tuesday ES gave us some confirmation of Monday's spinning top, such as it was, in the form of a green bullish engulfing candle.  And the new overnight is continuing higher with the stochastic swinging back around into position for a bullish crossover at a high level.  So this chart now looks bullish.

ES daily pivot: Tonight the pivot rises from 1852.25  to 1857.25.  We remain above the new pivot so this indicator remains positive.

Dollar index: Last night I thought the dollar was going lower on Tuesday.  Well the candle was indeed red, but the close was up - all of 0.01%.  This did give us a bearish stochastic crossover though so I'm going to stick to my guns and claim that the dollar's going lower on Wednesday.  This time for sure :-).

Euro: On Tuesday the euro put in a tall tall hanging man that would seem to suggest lower for Wednesday, even though the indicators remain oversold.  And the overnight action is in fact continuing lower, down 0.10% so far.

Transportation: And finally on Tuesday the trans tried to break out of their recent slide, gaining half a percent but remaining inside a descending RTC.  We now almost have a new bullish stochastic crossover, but not quite so this chart remains frustratingly opaque tonight.

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     10       3      4           0       0.759    291

     And the winner is...

Tonight we're facing a mixed picture.  The futures are looking higher but the Dow and the VIX are guiding lower.  The only really clear chart we've got now is Dr. Copper, who looks to have finally bottomed.  When and if that translates to broader market gains remains to be seen.  And as Dr. Steenbarger observed today, SPY money flow has been declining for a month now, a trend also in evidence in the Dow, though not as bad.

So bottom line, there's too much conflict in the charts tonight to make any sort of rational judgement.  Therefore once again I have to call Wednesday uncertain.  It means leaving money on the table, but I'd rather miss the bus once in a while than get on the wrong one.

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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