Wednesday, June 18, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain - Fed announcement.
  • ES pivot 1938.75.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader stands aside.

Seems like the dog days of summer are here, with a sleepy session on the Street though tomorrow's Fed announcement is more likely the key more than the weather.  And in the absence of any earth-shattering news, the technicals prevailed and the Dow closed up 27 points.  I'll take 'em.  We'll do the nightly chart run-down as usual, though I'll warn you right away, I never make predictions ahead of the Fed.

The technicals

The Dow: Taken in context of the past two days, the Dow didn't do too badly on Tuesday.  We now have three up in a row and a bullish RTC exit.  Even better we got a newly completed bullish stochastic crossover, so this chart just looks bullish tonight..

The VIX: Last night I wrote "I'd lay better than even odds that the VIX goes lower on Tuesday."  Too bad I couldn't find any takers, because the VIX dumped 4.66% on Tuesday, its biggest daily loss in a month.  Just look at it - we got a tall red marubozu that bounced off the upper BB and then broke out of the rising RTC for a bearish setup, and caused a bearish stochastic crossover.  In my book, that spells lower.

Market index futures: Tonight all three futures are higher at 12:20 AM EDT with ES up 0.06%.  Like yesterday, tonight traders seem to be sitting on their hands waiting for whatever Auntie Janet has to say on Wednesday.  Technically, we're in decent shape with a fat hammer followed by two successive rising spinning tops.  That gives us a new rising RTC and a freshly minted bullish stochastic crossover.

ES daily pivot: Tonight the ES daily pivot rises again from 1934.58  to 1938.75.  We're still above the new pivot so this indicator remains bullish.

Dollar index:  Well I missed this one.  I thought the dollar was going lower but it surprised me by staging a 0.18% rally right back up through the 200 day MA it crashed through on Monday.  It also curved the stochastic around to prepare for a bullish crossover (though not quite) and the close keeps us in a descending RTC.  So this chart is playing coy and we have no opinion.

Euro: Last night I thought the euro looked higher technically but wouldn't call it because of a sharp drop around 8:30 PM.  That was indeed the killer as the euro ended at 1.3547 just about where it began Monday.  The weekly trend is vaguely higher but the best pattern I see here now is alternating up and down days, five in a row now.  So by that logic, Wednesday should be higher.  For what it's worth.

Transportation: Interesting patterns in the trans too on Tuesday with a 0.41% gain that caused a bullish stochastic crossover and just popped up out of the descending RTC for a bullish setup.  With RTC now officially oversold, momentum increasing, and a bullish engulfing candle, this chart looks set to move higher to me.


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       6       3      2           2       0.667    161

     And the winner is...

Technically, we're looking fairly bullish tonight.  However, it is my policy to never make calls on Fed days.  There's just too much headline risk and the last two times I tried it I got my head handed to me.  Fool me once, fool me twice, etc.  So tonight we settle in, relax, and get ready to enjoy the show - Wednesday uncertain.

ES Fantasy Trader

Last night I saw an opportunity and went for it.  We were rewarded with a modest 1.75 point gain but hey, I'll take it, particularly since the market is in holding mode ahead of the Fed.  I did say I'd be out win or lose.  ES seemed to be encountering some resistance around lunch time so I figured I'd just get while the gettin' was good.

Here's the trade:

SLD    10    false    ES    JUN14 Futures     1941.25    USD    GLOBEX    12:48:32
BOT    10    false    ES    JUN14 Futures     1939.50    USD    GLOBEX    00:49:34

Portfolio stats:  the account now rises to $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 ahead of the Fed.

Reminder: I post all of these trades live on Twitter where you can follow them @nightowltrader. 

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