Wednesday, July 23, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 1973.58.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night I was ready to call Tuesday higher just because the past fours days have alternated directions.  But that seemed too easy.  Turns out that was it after all as the Dow gained 62 points on Tuesday for no apparent reason.  Now let's see if this action created any more clarity as we go into Wednesday.

The technicals

The Dow: This is really the Brownian Motion Market, as we alternate between gains and losses for no apparent reason.  Great for the day traders - not so great for the swing traders.  And sadly, there's not much that stands out about Tuesday's green candle, or about the indicators which continue to hover between overbought and oversold..  Breaking the previous two days highs is de facto bullish, I guess, but other than that, there's still not much to chew on here.

The VIX: I wouldn't commit to this chart last night either, as there was no way to see Tuesday's  gap down 4.45% loss, but on a green candle, coming.. The 5 minute chart is even stranger with a big gap down at the open followed by a lot of noodling around and then a big pop at 4:10 PM - what was that all about?  So technically, I guess this is a bullish chart, but who knows.  VVIX did hit its 200 day MA on Tuesday so if you believe in that, a bounce off it could move the VIX higher on Wednesday.  But that's pretty speculative at this point.

Market index futures: Tonight all three futures are dead even at 12:24 AM EDT.  FWIW, the trend has been for a slow drift higher all evening.  Resistance at 1976 remained intact on Tuesday despite a nice rally in ES that rejected the hanging manning thingy from Monday.  So with the indicators still wandering around between overbought and oversold, we have once again little to go on tonight. 

ES daily pivot: Tonight the ES daily pivot ticks up from 1965.58  to 1973.58.  Once again we remain above the new pivot so this indicator continues bullish.

Dollar index:  And another chart with gappage, as the dollar took a monster 0.30% pop on Tuesday to break it supper BB and close just below it.  Indicators remain highly overbought and the dollar respects its upper BB pretty well, so on that basis I call it lower on Wednesday.

Euro: While it wasn't a gap down the euro still cratered on Tuesday with a big red marubozu to close way under it slower BB at 1.3468 (who do we appreciate). The indicators are now extremely oversold, my guess that the break would be higher is trashed, support back to February is broken, and the 200 week MA is coming into view.  Yikes - things aren't looking good in euro-land.  But either this or my dollar call is wrong, since they can't both go lower.  Overall, I'm more confident about this one.

Transportation: The trans outperformed the Dow on Tuesday by a factor of four with a tall green marubozu that saved the rising RTC while leaving the indicators still just barely overbought.  With the rejection of Monday's spinning top, this chart now looks bullish.  Unless the up/down/up pattern holds, in which case Wednesday will go down.


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       4       0      3           3       1.000    323

     And the winner is...

Gosh, I just can't call this damn market uncertain three nights in a row, so here's what I'm gonna do.  I note that the VIX has been bottoming at regular intervals every 8 or 9 sessions since the beginning of June.  If this pattern holds, then the VIX should move lower for around four more days, and that would imply a market move higher.  'S all I've got, but hey, it's a theory.  So I'll go waay out on my speculative limb and call the market higher Wednesday.

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.


  1. Still lurking. I've been studying the SKEW vs VIX and the extremes there.

    I like your blog. You have a clue. xoxo

    1. Well I guess that's a start :-) Thanks for reading.

      If you'd like to share your observations, I'd be most interested.


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.