Wednesday, June 25, 2014

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower, low confidence
  • ES pivot 1947.67.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader stands aside.

Huh - when I got up this morning at the crack of 11 AM I had to wonder how I could have been so wrong in calling Tuesday lower.  But not to worry as Mr. Market must have not liked his lunch and we went on a 119 point exponential cascade lower for the rest of the day, thus saving my call.  Now of course we have to figure out if this was a one-off or if there's more on the way.  The charts, as usual, tell all.

The technicals

The Dow: On Tuesday the Dow took its biggest dump in a month, off 0.70% on a tall red marubozu.  This (finally) sent the indicators off overbought, confirmed a bearish stochastic crossover, and exited the rising RTC for a bearish setup.  So with the 17,000 level rebuffed in a big way, this chart just looks lower.

The VIX:  Last night I wrote that I was "calling the VIX higher again on Tuesday.". And lucky thing too since the VIX rocketed up 10.7% on a jolly green giant marubozu for its biggest gain since April 10th.  This nicely confirms a bullish stochastic crossover, starts the indicators moving off oversold, and establishes a new rising RTC.  That all spells bullish in my book.

Market index futures: Tonight all three futures are lower at 12:49 AM EDT with ES down  0.13%.  Last night I wrote that "this looks like a chart ready to move lower".  And it was a good look as ES fell out of its rising RTC for a bearish setup, confirmed a bearish stochastic crossover and sent the indicators lower off overbought.  Those are all bearish, so this chart continues to look lower for Wednesday, and the overnight is seeming to confirm that so far.

ES daily pivot: Tonight the ES daily pivot drops from 1954.25 to 1947.67.  We remain well under the new pivot so this indicators stays bearish.

Dollar index:  Last night I didn't think the dollar was going higher but ti did anyway, though only by 0.07%.  That was good for a bullish engulfing pattern, to the extent that such small moves can be considered predictive.  Still, having just touched the lower BB on Tuesday and bounced off, I'd have to guess that Wednesday goes higher again.

Euro:  Last night I wouldn't commit to this chart which is just as well since it ended on a perfect doji - open at 1.3607, close at 1.3606.  So we continue the now four days in a row consolidation as we wait for the indecision to resolve.  And no, I'm still not guessing this one.

Transportation: Last night I wrote simply enough, "this chart now looks lower.".  Well down 0.85% is pretty lower to me.  This move gave us a bearish stochastic crossover, moved the indicators off max overbought, and made a bearish RTC trigger.  So this looks like it still has room to run lower.


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        6       7      6           0       0.462    -67

June       8       5      3           2       0.667    259

     And the winner is...

Tuesday finally provided the break that we'd been waiting for for three days.  This has now tipped the scales to bearish, technically speaking.  Therefore the logical call is for Wednesday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

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