Wednesday, September 24, 2014

Wednesday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher only if ES pivot passed, else lower..
  • ES pivot 1976.17.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

As expected, the Dow continued lower on Tuesday for its second triple digit loss in a row, for whatever reason, and there were plenty of them if you watched TV or followed the blogosphere.  What's nice about the charts is that they're always the same and they don't lie.  So we consult them once again to determine the fate of Wednesday now.

The technicals

The Dow:  On Tuesday the Dow plunged 117 points to form a two black crows pattern and a bearish RTC trigger.  The bearish stochastic crossover is now complete, we're only just off overbought and support at 17,145 collapsed without a whimper.  So on the face of it, with no reversal signs in sight this chart continues to look bearish.

VIX daily
The VIX: Wow - this one deserves a chart.  Take a look at the VIX for Tuesday.  After barely cracking the 200 day MA on Monday, the VIX rocketed up 9% on a big gap up for the mother of all hanging men.  This both opened and closed entirely above its upper BB.  And like I always say, the VIX rarely tarries at these levels.  So although the indicators aren't yet overbought and technically we do have a bullish trigger on the RTC (the three parallel descending lines), this pattern looks a lot more bearish than bullish to me.  I'd not be surprised to see the VIX move lower after this one.
Market index futures: Tonight all three futures are higher at 12: 27 AM EDT with ES up 0.11%.  On Tuesday, ES gave us two  black crows and a bearish RTC trigger.  Support at 1973 held, more or less and the new overnight seems to be attempting to make a stand of sorts right along the lower BB.  We're still not oversold, bu getting close.  While this chart may have a bit more downside left, I get the impression that the bulk of the selling is over, at least for now.

ES daily pivot: Tonight the ES daily pivot tanks again from 1990.58 to 1976.17.  And despite that big drop, ES remains below the new pivot, though now at least it's by less than two points.  Being this close puts the pivot in play and raises the possibility that ES may try to break above, but for now, this indicator remains bearish.

Dollar index:  After a star on Monday the dollar confirmed it with a 0.10% drop on Tuesday,albeit on a tall green candle.  After exiting a rising RTC two weeks ago, the dollar seems to be struggling for direction and I'm not calling it tonight.

Euro: Meanwhile the euro continues to find support at 1.2841 with a small inverted hammer on Tuesday.  That was good for a bullish stochastic crossover but we remain inside a descending RTC.  The dollar conflict is reflected here and this chart is also too tough to call tonight.

Transportation: One worse than the Dow, the trans now give us Three Black Crows cawing their way down with a steep descent to 8445. Friday's record close looks a long way off now.  Support at 8464 also gave way, the lower BB isn't til 8374 we're still not oversold yet.  So technically this chart remains bearish in a big way.


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       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81

September  5       6      3           0       0.400    209

     And the winner is...

Most of the charts remain bearish tonight but two are suggesting reversals, and they're important ones: the VIX and ES.  I also checked my favorite bottom-finder, the SPX Hi-Lo indicator and it hit 29.41 on Tuesday.  It's only been lower than that three times in the last six months and every time, the bottom was in within a day or two.  But it's still a bit premature to definitively call Wednesday higher.  So I'm going to do a conditional call: if ES can break above its pivot by mid-morning on Wednesday, we close higher.  If it remains below though, we close lower.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

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