Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher, low confidence.
- ES pivot 1862.50. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Tue. April 1, 2014 (AP)
Chicago based derivatives exchange operator CME Group Inc said on Tuesday it will launch an innovative new trading platform beginning in April in a bid to boost trading volume. Called LPT, or Linear Predictive Trading, this product is designed to appeal to high frequency traders looking for ever narrower edges to beat the competition. To achieve the ultimate in execution speed, LPT actually executes trades before they are placed, thereby saving at least 20 milliseconds per trade. "This technological breakthrough ushers in a new era in trading" said CME spokesman Emmett Brown. "No longer will traders have to wait for trades to be executed to get results. With LPT we are quite literally taking trading back to the future."
On Monday the technicals worked nicely as the Dow registered a handy 135 point pop. Now as we begin a new month and a new quarter, what can we expect? Let us query the charts as we do every night.
The technicals (daily)
The Dow: I'd say the Dow's big move Monday constituted a breakout of sorts from our recent trading range, finally cracking the 16,375 barrier. In fact, we moved right on up to the next resistance level, right at 16,457. So the question is, do we have enough gs in the tank to move higher? Well we note that the last time we were here, on March 7th, the indicators were quite overbought and the stochastic had just given a bearish crossover. This time though, the indicators are still not overbought and the stochastic has e=actually executed a bullish crossover form a high level - something that's often good for another day or two of gains. And with the upper BB still at 16,516, I'd say it's entirely possible to see further upside on Tuesday here.
The VIX: I missed this one, thinking the VIX would go higher on Monday which it did not. In fact Friday's spinning top was non-confirmed - by another spinning top, this one near recent support of 13.76. We haven't been below that since January 22nd, so it would appear that caution is in order. With a reversal suggestion here, I'd just have so say wait and see.
Market index futures: Tonight the futures are higher at 12:41 AM EDT with ES up by 0.08%. Like the other charts, on Monday ES popped out of its descending RTC for a bullish setup while the completed bullish stochastic crossover marched on. This all left us exactly on strong resistance at 1866. Can we move higher this time? Well the indicators are a lot less overbought now than the last time we tried so there does seem to be some gas in the tank for a push higher from here. So far at least the pin action in the overnight seems to suggest that ES has the mojo for at least a modest push higher on Tuesday.
ES daily pivot: Tonight the pivot rises again from 1850.50 to 1862.50. And once again we remain above the new pivot so this indicator stays bullish.
Dollar index: Last night the dollar looked like it might go lower - just like it looked the previous three days but didn't. But I guess the fourth time's the charm as the $ finally dropped 0.10% on Monday to fall out of a razor-sharp rising RTC for a bearish setup. With indicators coming off overbought, I think it's possible we could see more downside on Tuesday.
Euro: And on Monday the euro had the usual mirror image of the dollar, popping up out of its descending RTC for a bullish setup with a bullish stochastic crossover. So I'd say it looks good for a higher euro on Tuesday.
Transportation: Last night I wrote "it looks like further gains are a possibility here on Monday" and indeed the trans had an excellent day, doubling the performance of the Dow with a jolly green marubozu that popped right out of their descending RTC for a bullish setup. With a completed bullish stochastic crossover and solidly rising indicators, it looks like we could see still more gains on Tuesday.
With the first quarter in the books, here are my 2014 YTD trading results so far, compared to the Dow, my benchmark:
Jan. 0.50% -5.30%
Feb. 3.94% -1.94%
Mar. 6.01% -0.72%
Again, my trading goals, in ascending order of difficulty, are:
1. Don't lose money.
2. Make money.
3. Beat the Dow.
4. Get a return around 30%.
So far this year I'm doing reasonably well, though a bit short of that elusive 30%.
Accuracy (daily calls):
And the winner is...
Tonight we're seeing mostly bullish signs with a few caution lights. However, the first of April is traditionally a very good day marketwise, no fooling, so we're going to go with history and call Tuesday 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.