Wednesday stock market forecast

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

• Wednesday uncertain.
• ES pivot 2207.42.  Holding above is bullish...
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: no trade tonight.

Recap

After a gap-up red spinning top on Monday warning of a reversal, Mr. Market said no thanks Tuesday and resumed his climb into record territory with a gain of 36 points, though not setting a record intraday high.  We remain quite overbought on the daily charts with RSI now overbought for almost a month, its longest streak since October 2014 when it was overbought for a month and a half before moving lower.  We're in a strange charting environment right now but I'll see what I can make of tonight's data as we look toward Wednesday.

The technicals

The VIX:  Last night I wrote of the VIX that "there's still plenty of room to run lower here".  And indeed the VIX dropped another 2.88% on Tuesday, breaking its 12.15 support.  In fact it fell right to its next support line at 11.82.  The indicators are now all off overbought but still nowhere near oversold so it's still too early to call a move higher from here.

Market index futures: Tonight, all three futures are virtually flat at 12:36 AM EST with ES unchanged. 

ES daily pivot: Tonight the ES daily pivot rises again from 2197.33 to 2207.42.  But ES remains above its new pivot so this indicator is one again bullish.

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   10      3       4           1       0.786     314

November   4      4       5           3       0.636     463

December   1      1       2           0       0.500     -24

 

     And the winner is...

Dow daily, small ranges

The indicators remain quite overbought   RSI has been overbought since November 9th.  You have to go back to October 2014 to find a longer stretch (when it went a month and a half).  Also, ES is now right up against record high resistance from last month.  And oil looks ready to move lower though its correlation with the market has been breaking down lately.  Meanwhile the Dow continues its choppy trend higher.  After one four day streak last month, it's been pretty much just alternating up and down days.  There isn't even much to be gleaned from the daily candles at this point.  At least the VIX is looking vaguely bullish (for the market, meaning a lower VIX) but this isn't something I'm ready to build a theory on.

With a series of small range near-doji days , it's just too difficult for me to form an informed opinion on tomorrow's market close so I'm just going to have to call Wednesday uncertain.  One thing I willl say is that I'm not seeing a major drop in the cards the next day or two.

YM Futures Trader

No trade tonight.