Wednesday, September 3, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 1999.58.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well I guess that's what I get for overriding my own analysis and trying to get smart.  On Tuesday, the market went lower after all.  Live and learn, or sometimes not even learn.  Anyway, let's now give Wednesday a shot now that we have some fresh charts to look at.

The technicals

The Dow: So the Dow dropped 31 points on Tuesday, pretty much confirming what I said last night: "The first day of most months has a bullish bias, but not particularly in September".  Maybe now I'll listen to myself. While the numbers weren't large, the trend is now clearly lower, and we set up a new descending RTC with a decent Pearson's of 0.921.  But we still have five reversal warnings in a row, Tuesday's being another hammer.  But the indicators are still only barely coming off overbought and the stochastic is in full-blown retreat right now so I'd have to say this chart now looks bearish.

The VIX:  The most surprising chart of the day was the VIX, whose 2.25% gain belied a giant gravestone doji that very nearly touched the 200 day MA. It also sent the indicators to almost overbought.  The overall impression here is that the VIX is unable to gain much traction right now and lower looks likely.

Market index futures: Tonight all three futures are higher at 12:31 AM EDT with ES up 0.09%.  Since ES exited its rising RTC three days ago it's been doing a lot of indecisive vacillating.  This may be partly just due to the pre-holiday week.  Tuesday gave us a nice doji and the overnight is guiding higher - a bit more convincingly than last night.  But there's still a lot of indecision apparent on this chart.  I don't want to repeat last night's mistake so I'm just going to let this one go by.

ES daily pivot: Tonight the ES daily pivot ticks up from 1999.17 to 1999.58.  We're now above the new pivot so this indicator turns bullish.

Dollar index:  Last night I wondered if the dollar has any gas left in the tank for Tuesday.  Well it did have another 0.27% to generate a second spinning top.  We now have an unusual binary-twin evening star in the making here.  With two reversal warnings, overbought indicators, and an inability to push much higher,my guess would have to be that the dollar goes lower on Wednesday.

Euro: Meanwhile,t he poor downtrodden euro just kept going lower on Tuesday to close at 1.3127.  It was though with a small star though we've seen plenty of those go by lately to no effect. The downtrend remains intact and this isnt' enough to call a reversal yet.

Transportation: OK, I take it back - the most surprising chart on Tuesday was not the VIX, it was the trans, which popped an impressive 1.29% on a day the Dow was down. That generated an instant bullish RSI setup, heck, let's just call it a trigger  given the fact that this marubozu also blasted past resistance at 8461 and even closed at a new all-time high.  With a bullish stochastic crossover now created and the upper BB way up at 8628, this chart looks bullish - Dow Theorists take note.


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  0       1      0           0       0.000    -31

     And the winner is...

It's not quite clear to me where Tuesday's lower number came from, especially given some BTE economic news.  The Nasdaq did finish higher.  But the net effect is that tonight actually looks stronger than last night, so I will crawl right back out on that limb and call Wednesday higher.  Hey, I've got to be right some time.

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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