Wednesday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday lower.
• ES pivot 2141.00  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• YM futures trader: short at 17,670.

Recap

I guess I can't be too surprised about the Dow's 54 point drop on Tuesday because the inverted hammer on Monday and a VIX that was looking ready to move higher telegraphed it from the start.  I guess I let myself get spooked by futures that were moving higher in the overnight last night when I ended up calling the day as "uncertain".  Still the day's action gives us something to chew on so let's get right to it..


The technicals

VIX, daily

The VIX:  Recall that last night I said the VIX looked ready for a move higher and that's just what we got on Tuesday with a 3.38% advance that confirmed Monday's stubby gap-down hammer with a comparatively large green bullish engulfing candle.  That just exited the descending RTC for a bullish setup and the stochastic also eked out a bullish crossover - though you have to look at the actual numbers to tell.

In short, there seems to be plenty of upside left here.  Take a look and see if you don't agree.  Oh and it's worth a quick mention - the VIX is back to its normal inverse correlation with the rest of the market.

Market index futures: Tonight, all three futures are lower at 1:36 AM EDT with ES down 0.22%. 

ES daily pivot: Tonight the ES daily pivot falls from 2142.67 to 2141.00.  ES is now back below its new pivot so this indicator turns bearish.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      8      6       6           1       0.600     222
April      6      4       8           2       0.667     416
May        9      3       4           4       0.813     756
June       8      5       7           1       0.643    1393
July       5      6       6           2       0.539    -304 August     1      3       8           0       0.250     120
September  4      5       6           0       0.444     -59
October    9      2       4           1       0.833     314

     And the winner is...

With a VIX looking like it's confirming my guess about moving higher, a bunch of reversal andles on the charts and overnight futures guiding lower, I'm going to call Wednesday lower.

YM Futures Trader

No trade tonight.