Actionable ideas for the busy trader delivered daily right up front
- Thursday uncertain.
- ES pivot 1922.92. Holding above is bullish.
- Friday bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1920.25..
This is like deja vu all over again. Once again, the Dow took a dive out the gate, only to recover as the day went on. Only this time, it managed to get back above water, thus killing my call for a lower close on Wednesday, though only by 12 points. Foo - will the charts yield any better direction tonight? Let's take a peek.
The technicals
The Dow: We now have four reversal candles in a row from the Dow - three hanging men and a spinning top - and still no reversal. The bears keep tugging away at it but it always manages to claw its way back to its starting point, but no further. Meanwhile the indicators are slowly sliding off extreme overbought levels, suggesting a move lower. But we've seen this before and it hasn't happened. And we're still well within a rising RTC. So the best I can say at this point is that we require confirmation of any move lower. Fool me once, fool me twice, etc..
The VIX: And the bizzaro May monkey motions continue with the VIX again rising on a day the market is up. I've lost track of how many times this has happened - I think it's like four in the last month. Anyway, Wednesday's 1.77% advance came on a spinning top that pushed the VIX overbought. So we have a suggestion of a move lower here but like the Dow, I'm going to want to see confirmation before calling the VIX lower. Interestingly though, VVIX is already falling, so we just might get a lower VIX Thursday.
Market index futures: Tonight all three futures are slightly lower at 12:26 AM EDT with ES down 0.04%. On Wednesday ES posted a small gain but on a hanging man, following two doji stars in a row. Just what does it take to get this chart to move lower, an engraved invitation? The indicators remain pegged on overbought but still no break lower. This can't go on forever. But I've been seeing signs of a reversal for several days now and it just doesn't want to happen.
ES daily pivot: Tonight the ES daily pivot rises once again from 1920.50 to 1922.92. We remain above the new pivot so this indicator continues bullish.
Dollar index: Last night I just gave up on the dollar which is just as well because I dont' see how you could have predicted the 0.14% gain on Wednesday that took it right back above its 200 day MA. This did though also give us a bullish stochastic crossover from a high level and those are usually good for a day or two of higher action, so I'll guess that the dollar can extend its gains on Thursday.
Euro: And meanwhile the euro continued in its week-long consolidation, dropping right back to the lower end at 1.3599 on Wednesday. With this sort of horizontal motion, there's just no calling this chart. I think it will finally start moving after we hear from the ECB on Thursday.
Transportation: In a bit of bearish divergence, on Wednesday the trans lost 0.02% on a day the Dow was up 0.09%. The candle was basically bearish engulfing and it dropped the trans out of their rising RTC for a bearish setup. With indicators now falling off overbought and a completed bearish stochastic crossover this chart looks lower for Thursday.
Accuracy:
average points
January 5 10 6 0 0.333 64
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 6 7 6 0 0.462 -67
June 2 1 0 0 0.667 35
And the winner is...
Well just like last night and the night before, the market once again technically looks to be topping. But it's all starting to remind me of that scene in The Pirates of Penzance when the policemen sing "We go, we go!" to which the exasperated Maj. General Stanley replies, "Yes but you don't go!". So I'm just going to call Thursday uncertain until Mr. Market decides to go, one way or the other. Oh and this ECB announcement business has me wondering too.
ES Fantasy Trader
Portfolio stats: the account remains at $121,500 after five trades in 2014, starting with $100,000. We are now 4 for 5 total, 2 for 2 long, 2 for 2 short, and one push. Tonight we hang on to our short at 1920.25,in the hope of eventual redemption.
Posts
No pain no gain, eh Michele?
ReplyDeleteOn the other hand, no pain is very nice.
:)
When do you think we should put a wrap to this painful roll-up process and exit this DJIA//SPX short..?
Oh, well, uh, let's see, what time is it? I'd say um, right about now. Out at 1939 - ugh. There's a reason this is called "fantasy trading" and this is it. Oh well, I've had bigger losses. FWIW, my real account is doing quite nicely.
DeleteNice to hear from you anyway.
Michele-
DeleteWow, I've been checking for the Twitter exit stamp regularly, about every 15min. I meant nothing snidely in my remark about when to say U.N.C.L.E.; I believe the hardest thing in short term trading is to guess-timate where and when a blowoff breakout move will finish its gusher-like behavior.
Sometimes they quickly roundtrip back to the initial breakout point for a retest. Other times they go on and on and on, until one finally capitulates, and THEN they reverse...
:)
I always love it when you add comments on trade tactics and mgt along with your market analysis. It's the other aspect of trading success.
Thank you for the kind comment. I've been reading your blog periodically, to lightly keep up with the general madness. Personally I've been involved until recently in a multi-month creative project; and when that happens I go into a plain vanilla, long term buy-and-hold mode, and try to pay no attn to markets...
But any readers who encounter this comment-- you can do alot worse in terms of tracking the market in a sophisticated way than by reading this blog. Just by reading these recaps and daily prognostications, I've been able to at least converse intelligently with others about financial matters. This is truly a dense and nuanced site and hopefully people aren’t fooled by the seeming simplicity of the format. I know at least an hour or so of your time goes into it every evening!
Thx.
Well thanks very much for the kind words. You had a lot to do with helping me improve the design of the blog, and yes it does take about an hour to put it together every night (in addition to the background research involved which of course takes a lot longer).
DeleteI wish you well with your endeavors and I'm always glad to hear your comments. I'll keep doing the Night Owl as long as it remains fun.
A quick followup..
DeleteAs I've done many times before, when the Night Owl swooped and took her position I took it ‘with’ her. Actually I used the etf SDS rather than futures to express a strongly negative bias, and I bought at the next 'best' available price, in the pre-market.
So I felt the pain on this positional stop-out, one to one with the Night Owl and her similar SH position, nothing 'Fantasy' about it...
Winning percentage can never be 100%, but taking only intelligent well-thought out positions, w a developed Exit Strategy, CAN be 100%.
So my only addl comment for today is that the intraday stochastic patterns on the SPX index, the midcap etf MDY, and the Nas-100 etf QQQ have been nearly identical all day. I mean, you have to use a microscope to tell them apart. This indicates that virtually the entire day’s trading volume has been the ‘basket-buying’ of huge Buy programs.
And what that means is there really IS no way to detect a rhyme or reason to the patterns-- because they're machinated and orchestrated, not organic. So it’s all basically a guesswork-- more akin to Stratego or Chess or Go, positional board games... rather than standard investment logic and metrics. IMO.
:)
All good points. I'll just add that both of these short positions could have been winners had one been around for the big drops that came right on the market open. But that's a time I always stay away from, partly because I find it very confusing and also because I'm always asleep then (hey, you gotta sleep sometime).
DeleteAs for mareket patterns, I think it's actually easier to play against the machines than people. You can just see the various points that are progrmmed in, like pivots, various MA's, inside days, etc. Those never seem to vary. But as far as calling the close, that's clearly not an easy game (or else everyone would be doing it).
And it's a big reason I put up my accuracy numbers every day, just to prove it *can* be done at all, since so many people say it can't.