Wednesday uncertain

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

• Wednesday uncertain..
• ES pivot 1403.33.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader holding long at 1407.75..

Recap

Today was one of those days when the news, specifically some really poor ISM numbers, trumped the technicals.  Not much you can do about that.  There are limits to what you can accomplish with TA.  Nevertheless, the damage was limited as the Dow leveled out just before lunch time and then staged a mid-afternoon rally to finish down just 55 points.  We'll run down the charts to see what they have to say about Wednesday.

The technicals (daily)

The Dow: The last three down-up-down candles in the Dow remind me of the indeterminate sort of action we were seeing last year around this time.  I can't even fit a decent regression trend channel to this stuff.  The only thing I can make of it is that the Dow seems to have some resistance at 13095.  Oh, and that we both opened and closed above the lower BB today for the first time in three days.  Moving out to the weekly chart provides a bit more clarity -this one looks bearish and is in fact about to fall out of a rising weekly RTC from June 4th.

The VIX:  Here's a good example of how the news derailed my call.  I was pretty sure the VIX was going lower today.  Instead it gained 2.92% and climbed right back up to its upper BB.  Nevertheless, the close was outside the latest rising RTC, so despite today's gain, that's the bearish trigger.  The other factors I mentioned last night are still in play, so I'll call again for a lower VIX on Wednesday.  The futures support this, having now put in two consecutive red candles with declining indicators.

Market index futures: Tonight all three futures are down at 1:31 AM EDT with ES lower by a non-trivial 0.35%.  Today's ES action gave us a tall doji reflecting continuing market uncertainty.  The overnight so far looks bearish while the stochastic looks bullish.  Go figure.

ES daily pivot: Tonight the pivot drops a bit from 1404.25  to 1403.33.  After flirting with the old level all evening, ES dipped right at midnight keeping us a couple of points below the new number.  This is de facto bearish, but close enough that we'll want to watch for signs of ES breaking back above the pivot in the early morning.

Dollar index: Today the dollar recovered the 200 day MA, closing just a bit above it on a small doji that also filled part of the gap left by Monday's plunge.  This also led the stochastic to get into position for a bearish crossover on Wednesday.  But that all requires confirmation, so once again, this chart is too hard to call.

Euro: Today's doji in the euro was followed by a drop in the overnight that has brought us right back into the middle of the recent 1.2585-1.2505 trading range.The declining indicators and recent price oscillation suggest continued downside for the euro on Wednesday.

Transportation: Last night I wrote "sideways or even a small gain is more likely." for the trans and that's what they delivered on Monday, up just 0.02% on a tall doji star that tested the lower BB intraday.  While this indicates indecision, it also nudges us closer to the right edge of the descending RTC,  In fact, just one more sideways day would be enough to give us a bullish setup here.

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

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353  16/20

 21  5/21       30         52        -     1295  16/21

 22  5/29       35         42        -     1318  16/22

 23  6/4        32         48        -     1278  16/23

 24  6/11       28         40        -     1326  16/24

 25  6/18       39         26        -     1343  16/25

 26  6/25       38         46        -     1335  16/26

 27  7/2        41         40        -     1362  16/27

 28  7/9        42         38        -     1355  16/28

 29  7/16       44         32        -     1357  16/29

 30  7/23       33         42        -     1363  16/30

 31  7/30       43         22        +     1386  17/31

 32  8/6        52         28        +     1391  18/32

 33  8/13       43         21        +     1406 

 34  8/20       46         31        +     1418

 35  8/27       39         29        +     1411 

 36  9/4        31         38        +     1407

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 bullish call on 8/6 was right again, the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 18 for 32.  For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.

Notable this week is that the bulls and bears have essentially flipped positions, marking the first time that the Poll's majority has shifted back to bearish since Jul 23rd.  Going by the monthly SPX chart, I'm not seeing it, though the weekly chart is clearly looking weaker.

Accuracy (daily calls):

Month   right  wrong  no call  conditional  batting   Dow
                                            average  points

April     7      9      2                    .438
May      10      7      3           2        .632  
June      8      6      6           1        .600     632
July     11      2      6           1        .857     917
August    8      6      8           1        .600     -78
September 0      1      0           0        .000     -55 

Performance:

Here are my performance stats for the first eight months of 2012.  The first two columns are for my trading account.  The next, "ESFT", is the ES Fantasy Trader.  Following that I've now added the results for my IRA.  The last is the Dow, my reference benchmark that I try to beat or at least match.

 Date    Trading, Month  Tr. YTD  ESFT YTD   IRA YTD   Dow YTD

1/31/12       7.41%        7.41%   -0.50%     6.18%     3.41%

2/29/12       3.67%       11.35%    7.88%     9.02%     6.02%

3/31/12       1.76%       13.31%   29.88%    10.05%     8.16%
4/30/12       2.35%       15.97%   41.75%    10.90%     8.17%

5/31/12      -1.92%       14.23%   26.63%     4.91%     1.45%

6/30/12       4.33%       19.17%   40.38%     2.80%     5.44%

7/31/12       2.96%       22.69%   76.00%    10.98%     6.49%

8/31/12       2.75%       25.64%   66.25%    13.16%     7.17%

     And the winner is...

More mixed messages tonight.  The VIX looks ready to move lower, which would be good for stocks, and the trans are looking ready to move higher but the futures are looking bearish right now.  The fact that this is a holiday-shortened week doesn't help things either.  It's looking like we're back in another holding pattern, only this time waiting for the ECB on Thursday.  Because I simply can't pick a clear winner tonight, I'm going to call Wednesday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains, for the time being at $166,250 after 60 trades (45 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we remain long at 1407.75.  I'm going to bet that we're going to see more sideways action on Wednesday and that the ECB will provide a pop on Thursday that will save this trade, though it's not looking all that great at the moment.

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.  Act accordingly.