Actionable ideas for the busy trader delivered daily right up front
- Tuesday lower, high confidence. Bull-bear ratio is 1:8.
- ES daily pivot 1194.33. In play: staying below is bearish.
- Rest of week bias uncertain, rebound possible by Friday.
- Monthly outlook: bias uncertain, watch Fed meeting for clues.
- ES Fantasy Trader opened new short position at 1190.00.
Another news driven day for the markets, with a horrible opening on lousy Greek news, followed by a recovery on supposedly good Greek news. Or rumors. Or something. Who the heck can tell anymore. Since we can only study today's data here and not tomorrow's newswires, take everything below with a grain of salt, or a cup of extra virgin Greek olive oil.
The technicals
So let's run down the usual suspects tonight, awarding bull/bear points along the way.
The Dow: Put in a vaguely disturbing looking hanging man cum bearish engulfing pattern today. Unable to break through resistance at 11,500 and with its indicators now all solidly in overbought territory, it ain't looking good for tomorrow in Dowville. +1 bears.
The VIX: Rose 5.65% today but did it on an unusual gap-up red candle. Having reversed a five day losing streak and with its stochastic about to execute a bullish crossover, it is not unreasonable to expect the VIX to move higher Tuesday. +1 bears.
VIX futures: Similar story here. The futures gapped up on a red candle. However, the case for continued increases here is not as compelling as for the VIX itself, leading me to believe that we're not in for a major downturn in the market on Tuesday. But +1 bears anyway.
Market index futures: All three are down at 1:53 AM with ES down two thirds of a percent. ES peaked two days ago but its indicators are still highly overbought. Nothing here suggests anything but lower futures tomorrow, hence another +1 bears.
ES daily pivot: Now 1194.33. With ES at 1190, the pivot is in play for Tuesday. Breaking though it and holding there would be bullish indeed. A rejected breakout or simply staying beneath would be bearish. So far the latter seems to be occurring, so +1 bears.
Dollar index:The dollar gained today on the strength of euro woes, crossing back above its 200 day MA. With its stochastic making a bullish crossover, I look for further dollar strength on Tuesday. Bad for stocks, so +1 bears.
Oil: Moved to the bottom of its recent trading range today. Support here has held for a month, so I'd guess oil's going higher tomorrow. With oil now inversely correlated to the market, this is +1 bears.
Morningstar Market Fair Value Index: Unchanged today at 0.86 after three days of gains, so no points here.
History: The Dow is down this week in 16 of the last 20 years, according to The Stock Traders Almanac, and within the week, all five days are down so +1 bears for that. Also, we seem to be continuing the 15 day wave action set up in the last two months.
Sentiment: The new Ticker Sense Blogger Sentiment Poll came out today and the numbers are about as lopsided as they've ever been: 50% bearish and only 14% bullish. As I wrote last week, I consider anything below 20% bullish to be contrarian-bullish. Today's readings are, according to the accompanying chart, the lowest since March 2007, just before the Dow went on an extended rally.
With sentiment this divergent, I have to call these results bullish. For the record, I voted bullish, both on expectations that we'd see the results we got today as well as anticipation that the Fed will make some moves to help out the Street this week.
And the winner is...
The bears, by a lopsided 1:8 bull-bear ratio. This would indicate that the market is not done going down yet, so I'm looking for a lower close Tuesday.
ES Fantasy Trader
We covered our short this morning at 1181.50 for a small profit. The account is now $120,250 since inception on 8/18 after 15 trades, 10 wins, 5 losses.
BOT 10 ES false DEC11 Futures 1188.50 USD GLOBEX 11:38:45
Tonight, we go short again at 1190.00.
And in closing, I'm not above some silliness. I'm playing the CNBC Million Dollar Portolio Challenge, along with seemingly the entire rest of the world. After one day, I'm ranking 91.77%. Right now it's kind of tough to make any money here since apparently you can neither short stocks nor buy inverse ETF's in this contest. Pity.
Posts
Today is going up... Your analysis seems spot on but this market isn't listening...
ReplyDeleteI just don't get it... Too much manipulation to be able to trade this market with any accuracy. My trading has gone from 70% to 40% in 4 weeks... dang this sux
Hey, no one feels worse than me, trust me. My (wrong) headline call is out there for all the world to see and my ES short trade is getting crushed.
ReplyDeleteAnd there was just a story in the paper yesterday about how even the pro traders are having a hard time lately. My response has been to cut way back on my trading, at least until the VIX comes back from outer space.
That said, I note that all of the factors in play last night are still there and today's big climb stalled out at the 11,500 area again.
In my defense, I did say that the ES pivot was in play today. ES broke above it about an hour after I wrote my post. That put my call in question. ES then revisited the pivot, to the exact tick, at 9:50 AM but could not break under. And then it was all uphill from there.
That's why I put the daily pivot in The Hoot. It's that important.
Does the ES translate to anything on SPX or SPY so that I can use it?
ReplyDeleteNot quite sure I understand. All three of those are highly correlated, so if you think one is going up (or down) odds are the other two are going the same way.
ReplyDeleteIf you're talking about the ES pivot, then yes, the pivot applies to SPX and SPY too, but they have their own values. The idea is the same, the exact numbers are different.
Like this:
ReplyDeletePivot Point = ( High + Close + Low )/3