Wednesday maybe lower

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

• Wednesday lower - low confidence
• ES pivot 1316.25.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Grrrr.  Close but no cigar.  I called for a higher close today and if the market had closed just 2 minutes sooner I would have been right.  As it was, the Dow managed to snatch defeat from the jaws of victory and ended the day down a mere 1.67 points on a late-day sell-off.  But it felt worse than that after having been up 50 or 60 most or day day until 3 PM when, gosh I don't know - I was out shopping for groceries.  Something happened, probably those freakin' Greeks again and down we went.  Oh well, the past matters little here and tonight we focus once again on tomorrow.

One million dollars!

Oh and how about that Face-plant Book today?  Down another 9%.  Boo wah hah hah - best trade I never made.  I just don't get this company.  What is Facebook anyway?  It's a web site.  Just like this one.  They have shared information, I have shared information.  The only difference I can see is that they have a membership that's five orders of magnitude larger than I do.  So if they're worth $100B, give or take a few mil, then I should be worth ... one million dollars!  And so far I haven't exactly been deluged with offers from MS or JPM to buy me out.  But hey, feel free - I'm open to negotiations.  I've even got my ticker symbol picked out: NOT, for Night Owl Trader.

I mean c'mon guys - a hundred billion smackers for a web site?  OK, so they have ads.  I can get rid of all of their ads instantly using the AdBlock Plus add-on for Firefox.  If I want to send photos to my friends, I've got their email addresses.  Drag & drop, click send, done.  Like I said - I don't get it.

The technicals

The Dow: It was fun while it lasted but at the end of the day the Dow left us with a classic doji sitting right at the top of yesterday's close, and a classic case of indecision.  On the plus side, today's action (or inaction) traded completely outside the declining RTC and so that's a bullish trigger.  On the minus side, a doji is a reversal warning and it's not uncommon to see some give-back for a day or two following the exit of a a down RTC like this.  So I view this more as a blinking caution light than a red flag.

The VIX:  The VIX did not really follow through on its bearish RTC setup from yesterday, gaining 2.14% instead on a spinning top just under the recent rising RTC.  Technically, it's still a bearish trigger, but a weak one.  And there's not much help from the futures which are pretty much in the same position - just a lot of indecision.

Market index futures: Same story in the futures as ES put in a doji just like the Dow today.  The only guidance is coming from the overnight, where all three futures are in the red with ES down a non-trivial 0.55% at 1:20 AM EDT.  It's still a bullish trigger, since we're now two days outside the descending RTC. it just doesn't feel like one.

ES daily pivot: Tonight the pivot jumped from 1306.33 to 1316.25.  Combined with ES trending lower in the overnight, we crossed under at midnight which now puts us eight points down - not a good sign.

Dollar index: The dollar today did not continue lower as I was expecting, but instead gained 0.51% to exit an admittedly short descending RTC for a bullish setup.  This move was also enough to send the indicators back up.  Basically, it's not about technicals here right now, it's the politics, baby.  The politics of Europe (not of dancing).

Transportation: The $TRAN chart today played out just like the Dow, albeit ending up 0.1% but with a similar doji.  Just more indecision here.


History: According to The Stock Traders Almanac, Wednesday is historically very bearish.

Accuracy (daily calls):

Month right  wrong  no call  conditional
April   7      9      2
May     7      6      2           1
     And the winner is... 

A very strange night.  There is almost no guidance from any of my usual charts tonight.  So given that I have to fall back on the futures, and they're saying it's likely we'll see a lower close Wednesday.  This is not out of keeping with the idea that exiting this long descending RTC will lead to a rally.  Especially after long declines, it often takes a day or two for the counter-trend to get into gear.  Wednesday may be one of those days.

ES Fantasy Trader

OK, that's it, I'm done.  Tonight I finally gave up on my long-running long play from 1365, cashing out at 1310.75 for my biggest loss of the year - 54.25 points.  Ouch!

Portfolio stats:  the account plummets  $27,125 to  $123,000 after 36 trades (28 wins, 8 losses) starting from $100,000 on 1/1.  While I do think we still have room to run higher, I also think I'll be able to get back in at a lower level.  Nevertheless, tonight we're standing aside in view of all the dojis running around on the charts right now.