Wednesday, December 3, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 2061.58.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Monday night's conditional call  worked a treat on Tuesday.  ES noodled about its pivot in the wee hours of the day before finally breaking decisively above right at the open.  From there the outcome was never in doubt and we closed higher.  This trick doesn't always work but it works often enough to keep coming back to it.  So with that out of the way, let's move on to Wednesday.

The technicals

The Dow: On Tuesday the Dow short-circuited what had been looking a lot like an incipient collapse after a breakdown of week-long support.  But that was not to be as we clocked a handy dandy 103 point pop that took the Dow right back through last week's mean and close to its upper BB.  That keeps us in a month-long rising RTC and extends the crazy-long overbought streak another day.  And after this bullish engulfing candle I can only call this chart higher again from here.

The VIX: Last night I mentioedn an incipient bearish evening star in the VIX and wrote "this pattern is at least a warning that the VIX may be played out.".  And indeed it was as on Tuesday the VIX plunged 10% right back down through its 200 day MA on a tall red marubozu to complete the evening star.  That was enough to cock the stochastic around in preparation for a bearish crossover.  In all, this one looks like more downside to come on Wednesday.

Market index futures: Tonight, all three futures are just barely higher at 12:15 AM EST with ES up  all of one tick. On Tuesday ES retraced all of Monday's losses plus a bit to form a bullish engulfing pattern and just recapture the rising RTC thus canceling the bearish RTC setup.  The stochastic is also curving around for a bullish crossover and with no notable bearish presence in the overnight this chart looks continued higher.

ES daily pivot: Tonight the ES daily pivot rises from 2054.33 to 2061.58.   Even with that gain we remain above the new pivot so this indicator is now clearly bullish.

Dollar index:  On Tuesday the dollar completed a bullish morning star to close above its upper BB, its best close since July 2010.  But with the upper BB hit and in the absence of a trend, this chart remains too tough to call.  I'd guess the next move might be lower, but those counter-trend calls have been devilish all year.

Euro: The euro had a big tumble Tuesday to end right on some strong support at 1.2381.  THis is also very near the lower BB and indicators are close to oversold now.  Recent history would seem to suggest the next move is higher from here.

Transportation:  On Tuesday the trans retraced a third of Monday's losses.  That drop reset the indicators back off overbought so this chart now seems to have more room to run higher from here.


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  6       6      5           2       0.571    376 
October    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   2       0      0           0       1.000     51   

     And the winner is...

Whereas last night the charts were looking fairly bearish while the futures and the VIX were suggesting otherwise, tonight everything seems to be in agreement that things are looking fairly positive.  Therefore, I'm going to call Wednesday higher.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

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