Wednesday, April 9, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 1841.58Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader going long at1846.00.

Humph, now that I can finally see again, it's time to take on the markets.  Interesting doji day on Tuesday.  The talking heads on CNBC were in total disagreement all day about what this means, even more so than usual.  So let's simply forget them and go straight to the source - the charts.

The technicals

The Dow: So on Tuesday the Dow put in a classic spinning top reversal candle after two straight tall red marubozus.  I went back through to the end of 2012 and found five other instances of this.  And all five times the Dow was higher the next day.  The indicators are falling but not yet overbought and the stochastic is moving lower but not yet in position for a bullish crossover.  Still, the historical evidence is compelling.

The VIXOn Monday (which I missed because I couldn't see anything) the VIX took a big pop back up over its 200 day MA.  But on Tuesday, it put in a big bearish engulfing pattern that , while it remained above the 200 MA, augers ill for the VIX.  With the stochastic now higher than lower and the RSI turning lower, I'd go out on a limb and guess that the VIX is going lower on Wednesday.  So sez I.

Market index futures: Tonight, all three futures are a bit higher at 12:28  AM EDT, with ES up by all of one tick.  .On Tuesday ES put in a nice green spinning top that nearly touched the lower BB.  OBV and money flow have now turned upward and the stochastic has flattened around in preparation for a bullish crossover.  The overnight is confirming a reversal, so far anyway so I am now cautiously optimistic about ES's chances for Wednesday.

ES daily pivot: Tonight the pivot drops from 1844.75 to 1841.58.  After bumping along the old pivot all evening that now leaves us four points above the new one, so this indicator turns nominally bullish.

Dollar index: Whoa!  On Tuesday the dollar just fell out of bed with a huge gap-down 0.65% loss.  That was enough to take the indicators right off overbought.  And the chart now looks inverted exponential so you have to think a reversal is coming soon.  And we did stop right on support at 54.28 ($USDUPX).  But holy moly, there's no reversal sign here so ore downside is not out of the question.

Euro: On Tuesday the euro posted an orderly gain to 1.3793, establishing a new rising RTC.  But it stopped right at resistance.

Transportation: And a nice doji star from the trans on Monday giving us a reversal hint here too.  I'd like to see the stochastic on board though, which it isn't yet.  So I'll have to settle for a wait & see on this one.


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     12       3      6           0       0.800    431
April      3       0      2           0       1.000    282

     And the winner is...

Tonight we're seeing a number of positive reversal signs in the charts enough in fact 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 go long at 1846.00.

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