Wednesday, September 10, 2014

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower, low confidence.
  • ES pivot 1992.00.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

This time the technicals paid off as the Dow lost a non-trivial 98 points on Tuesday.  That changes the picture somewhat so let's take a closer look at where Wednesday is headed.

The technicals

The Dow: Well it looks like what the Dow gave us was a classic "fake-out breakout".  Two days above the descending RTC made a bullish trigger, but on Tuesday the Dow collapsed right back through the RTC and out the other end.  That also short-circuited the new bullish stochastic crossover and sent all the indicators back lower.  Net-net, this chart suddenly looks bearish again..

The VIX:  On Tuesday the VIX had its best day since 8/15 with a tall green candle that finished up 6.64% to stop exactly on its 200 day MA and just shy of its upper BB.  With the VIX now fairly overbought and the natural resistance of the 200 MA, and its propensity to bounce off the upper BB, I'd lay better than even odds that the VIX actually goes lower on Wednesday..

Market index futures: Tonight all three futures are lower at 12:16 AM EDT with ES down  0.14%.  After two down days in a row, ES has now hit oversold though the stochastic is not yet lining up for a bullish crossover.  There's support at 1982 and with indicators now oversold, I don't think there's much downside left, though a reversal doesn't seem to be immediately at hand.  IN any case, the overnight continues to guide lower.

ES daily pivot: Tonight the ES daily pivot drops from 2000.42 to 1992.00.  We remain below the new pivot so this indicator continues bearish.

Dollar index:  The dollar continued its ride into the stratosphere on Tuesday with a 0.05% gain.  While that's a small spinning top, I pay scant attention to this given the unstoppable nature of the dollar lately. If you look at the weekly chart, you'll see that the weekly RSI of the dollar has been pegged at 100 for three straight weeks now.  That's fairly amazing.  In the meantime, the dollar remains in a long-running rising RTC and I'll believe it goes lower when I see it and not before.

Euro: And on Tuesday the euro put in a small spinning top, just like the one it made on Friday.  And that one was followed by another drop  The euro now has no support until 1.2811, though it is forming a hammer on the weekly chart so I'd be careful about going short at these levels.

Transportation: After a dark cloud cover on Monday the trans confirmed that with a 0.69% fall on Tuesday to drop right out of the rising RTC for a bearish setup and a bearish stochastic crossover.  Indicators remain overbought so this chart now looks bearish.


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  1       2      1           0       0.333     41

     And the winner is...

Tonight the general gestalt of the charts is fairly negative, though with signs of an impending turnaround.   The SPX Hi-Lo indicator has come off 100 but at 86 is not yet at a level from which reversals are a sure thing.  Wednesday just might be a hammer-style doji day.  But I haven't quite the hubris to be that specific, so I will simply settle for calling Wednesday 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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