Actionable ideas for the busy trader delivered daily right up front
- Wednesday uncertain, bias lower.
- ES pivot 1312.50. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader standing aside.
"Once you sell an asset (or 4% of an asset), what you sold is gone."
- David van Knapp, on dividend growth investing at Seeking Alpha
Recap
Last night I didn't really know what to make of the market today so we just reviewed the weekly charts. With a strong triple digit gain today that erased yesterday's triple digit loss, it's still not clear which way this market wants to go. But we're back to the daily charts hunting for clues.
The technicals
The Dow: The Dow's 163 point gain today established a trading range bounded by 12,550 on top and 12,410 below. After three days of alternating big gains and losses, you'd expect Wednesday to go lower on that basis alone. The indicators support this, to the extent they can be trusted, being as they're all at overbought levels now. Other than that, there's no real pattern here.
The VIX: Hmm - here's a clue. While the Dow regained all of yesterday's losses today, the VIX dropped by less than half of its gains on Monday. It is also now officially oversold. And yesterday's pop took it outside its descending RTC for a bullish setup. Today's action was entirely outside the RTC, so there's the bullish trigger. This pattern is usually very good so that would imply a higher VIX for Wednesday which would be bad for stocks.
Market index futures: At 1:35 AM EDT all three futures are in the red with ES leading the way lower, down 0.19%. Of more concern is that we seem to have some strong resistance at 1323, just above the current price of 1317.75. And the indicators are all overbought, with the stochastic finishing a bearish crossover.
ES daily pivot: Tonight the pivot drops from 1314.00 to 1312.50. With ES drifting aimlessly in the overnight so far, we were above the old number and are still above the new pivot, and by a bit more now so that's a positive sign.
Dollar index: The dollar traded outside its descending RTC today for a 0.12% loss and a bullish setup. Its stochastic also finished a bullish crossover and the other indicators are very nearly oversold. I'd say a move higher is not out of the question here on Wednesday. If the inverse correlation holds, that would be bad for stocks.
Transportation: The trans almost hit their 200 day MA today before recovering nicely for a 0.86% gain. But that's still just half of Monday's loss. With the alternating up/down pattern in force here too, there's no clear trend - just more consolidation.
Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll. We continue to track the poll to see how well it performs. Here's the updated cumulative list for this year:
Wk.# Week % Bullish % Bearish NightOwl SPX Accuracy
1 1/3 46 21 + 1258 1/1
2 1/9 56 37 + 1278 2/2
3 1/17 41 33 + 1289 3/3
4 1/23 46 32 + 1315 4/4
5 1/30 48 31 + 1316 5/5
6 2/6 56 30 + 1345 6/6
7 2/13 48 31 + 1343 7/7
8 2/21 44 32 + 1361 8/8
9 2/27 48 24 + 1366 9/9
10 3/5 43 26 + 1370 10/10
11 3/12 46 32 + 1371 11/11
12 3/19 46 29 + 1404 11/12
13 3/26 39 29 + 1397 11/13
14 4/2 42 21 + 1408 11/14
15 4/9 25 46 - 1398 12/15
16 4/16 26 48 - 1370 13/16
17 4/23 30 48 - 1379 14/17
17 4/23 30 48 - 1379 14/17
18 4/30 44 32 + 1403 14/18
19 5/7 23 50 - 1350 15/19
20 5/14 32 44 - 1353 16/19
21 5/21 30 52 - 1295
22 5/29 35 42 - 1318
23 6/4 32 48 - 1278
24 6/11 28 40 - 1326
Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out. The "NightOwl" column is how I voted. Since the poll is for 30 days out, after the first four weeks we're able to see how well we did. This week we see that my bearish call on 5/14 was right, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls. So now I'm 16 for 19. And of course that means that since I voted with the majority back then, the poll as a whole was also wrong that week. So closing in on half the year gone the poll's accuracy edges up to 84 % YTD. Not bad.
This week we note that both bullish and bearish sentiment declined from last week. I believe this reflects the overall uncertainty and instability in the market that I've mentioned a few times recently. But these are still not contrarian extreme readings. And for the record, this week I voted bearish again which keeps me in step with the majority of the poll.
Accuracy (daily calls):
Month right wrong no call conditional batting average points trade
April 7 9 2 .438
May 10 7 3 2 .632
June 4 2 2 0 .667 +77 +$66
And the winner is...
Technically, I'd call this market lower Wednesday. But with the current instability in the system, every little jitter gets magnified and can send stocks on a tear one way or the other on a whim. And on top of that it's a triple witching week which is often jittery by itself. So let's just say I see a bias lower Wednesday, but there's no official call once again tonight.
ES Fantasy Trader
Portfolio stats: with no trade last night the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1 With no obvious edge, there's no trade again tonight.
CUA (Commonly Used Acronyms)
BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date
Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction. All trades listed here are presented only as examples of the author's personal trading style. Investing entails significant risk and trading entails even greater risks. Deal with it.
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