Wednesday, July 9, 2014

Wednesday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher if ES breaks above pivot, else lower.
  • ES pivot 1971.92.  Breaking above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader stands aside.

Its nice when the technicals play out and Tuesday was definitely one of those days.  Last night's bearish signs all came to pass with a big 118 point dump in the Dow.  It doesn't even matter why - all that counts is that it did.  So now let's move on and see what Wednesday is going to do.

The technicals

The Dow:  The Dow just fell out of bed on Tuesday, plunging out of its rising RTC for a bullish setup that might as well be a trigger, sending RSI conclusively off overbought, giving up the 17K level like it wasn't there, and forming a bearish stochastic crossover all in one.  The only thing about this chart that might be construed as bullish is the possibility of a DCB on Wednesday.

The VIX: Last night I remarked that the VIX looked like 2/3 of an evening star but I refused to call it lower until I saw some confirmation.  And it's good that I did because on Tuesday the VIX simply continued on another 5.74% higher with a gap-up inverted hammer.  Now this one, having nearly touched its upper BB, looks more like a possible reversal.  The indicators suggest there's still room to run but the candles are a clear reversal warning.  So that's a push - and once again I demand some confirmation so we 'll just wait and see how this plays out.

Market index futures: Tonight the futures are mixed at 1:11 AM EDT with ES deaf even but YM down 0.04%.  ES on Tuesday ended up putting in a sort of heavy hammer.  It remains in a descending RTC and the indicators are all marching lower off overbought but that candlestick tail seems to suggest that the bears were unable to keep the day's lows.  And the overnight pin action suggests that the selling may be abating.

ES daily pivot: Tonight the ES daily pivot dives from 1971.92 to 161.33.  And even after all that, we're still below the new pivot, though now by less than one point.  So it's still bearish, but a test of the pivot is definitely not out of the question at this point.

Dollar index:  Last night I took a pass on this chart and it's just as well since the action was nothing to write home about with a meager 0.06% drop.  But that still makes three days of lower lows and that was enough to short-circuit the indicators lower before even reaching overbought.  So now I have to think there's more downside available here.

Euro: Well one I did not equivocate on last night was the euro when I said that I "claim the euro goes higher on Tuesday."  And so it was with the euro finishing up nicely to 1.3625 for three wins in a row.  That gives us a new rising RTC, a bullish stochastic crossover, and indicators now officially oversold.  SO this chart just looks higher still on Wednesday.

Transportation: Last night this chart was looking bearish but I held out some chance of a possible DCB.  But it was not to be, though interestingly while the Dow was just down, the trans put in a classic hammer, off just 0.10% to the Dow's 0.69%.  So now we have a conflict between a bearish RTC trigger and a bullish reversal candle.  That's also a push so no call here - though if I had to guess, I'd say we might go higher.

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      10      3           2       0.500    132
July       2       0      0           0       1.000    162

     And the winner is...

There's considerable uncertainty in the charts tonight.  The VIX looks like it might head lower on Wednesday and the futures look like the selling might be done, but all of that requires confirmation.  So this looks like a good night for a conditional call: if ES manages to break above its pivot by mid-morning Wednesday, then we close higher.  If not, we close 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.

No comments:

Post a Comment

Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.