Wednesday, May 21, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1872.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Well I certainly seem to have the knack for picking bad days to be wrong.  After my call for a higher Tuesday, the Dow lost a big 138 points after poor retail sales, more Fed Head blathering, whatever, pick your excuse.  Regardless, it looks like one of those days when the news trumped the technicals.  There's not much to be done about that, so we just move on to Wednesday.

The technicals

The Dow: n Tuesday the Dow short-circuited a nascent uptrend with a dive that erased two days worth of gains , broke support at 14443 and didn't stop til it touched the lower BB.  And even then we're still not quite oversold.  The indicators are in fact all still pointed lower.  The best hope at this point is support at 16,363 but there's no really good sign even that will hold on Wednesday..

The VIX: I didn't think the VIX looked bullish for Tuesday but it did deliver a 435% advance in the form of a textbook bullish harami.. With rising indicators recently off oversold, this chart now really does look bullish.

Market index futures: Tonight all three futures are basically flat at 12:39 AM EDT with ES unchanged and YM up just 0.02%.  On Tuesday we quickly erased two days worth of gains but stopped at strong support at 1867.  It was enough to drive ES oversold, though the indicators continue to head lower.  This is where the overnight becomes important.  But frustratingly enough, once again we've got no guidance at all.  This might actually be a positive as it indicates that support is holding.  But with the RTC in chaos, this chart is too tough to call.

ES daily pivot: Tonight the ES daily pivot falls from 1877.00 to 1872.42.   With Tuesday's action, we're now below the new pivot so this indicator turns bearish.

Dollar index:  And I got the dollar wrong too as it gained 0.06% on Tuesday to break out of a short descending RTC for a bullish setup.But it was a small red spinning top and with indicators still heading off overbought, I'll once again claim the dollar is moving lower.

Euro: Meanwhile the euro remains mired in the doldrums around 1.3696.  That level is now very good support but there seems to be no impetus to move higher so we just continue drifting sideways into a second week of this.

Transportation: After two big gains I wasn't ready to call the trans last night and it's good I didn't because they took a dump on Tuesday too, down nearly a percent for a bearish engulfing candle that caused the indicators to peak at overbought.  This chart now looks bearish/


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      9       3      5           0       0.750    482

May        4       6      3           0       0.400   -122

     And the winner is...

My carefully laid out thesis for a move higher last night was pretty much torpedoed by the news on Tuesday.  I think we may be near a move higher but Mr. Market seems to be tuning in to the Fed again and with Fed minutes out on Wednesday I think discretion is the better part of capital preservation, so we're going to sit on the sidelines for this one and call Wednesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside.

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