The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher, high confidence. Bull-bear ratio is 9:0.
- ES pivot 1144.17. Current price is above that.
- Rest of week bias uncertain, decline possible by Friday.
- Monthly outlook: bias up on technicals.
- ES Fantasy Trader opened new long position at 1160.50.
Last night I was getting worried about the market futures declining in the overnight on more apparently bad news out of Europe. Turns out I needn't have as the Dow went on to motor higher by a rewarding 272 points.
And yesterday I wrote a piece on the woes of Eastman Kodak right here. Today, Kodak was absolutely decimated, suffering a crushing 27% death-drop. Coincidence? I don't think so. Anyone still bullish on Kodak, I have a slightly used bridge in Brooklyn you may also be interested in.
Memo to Antonio Perez: the market no longer believes you. With your company seemingly bent on committing ritual suicide, now would be a good time to pull the ripcord on your golden parachute. Disclaimer: I have no stake in EK, long or short and would not touch this stock with a telephoto lens.
OK, time to round up twice the usual number of suspects, run 'em up the flag pole and see who salutes.
The technicals
The Dow: Today's gain was just right: big enough to develop some traction but not so big as to invite a major correction the next day, leaving us in the sweet spot. With a solid green candle that brings us back above 11K, indicators having bottomed in oversold levels, and the stochastic executing a bullish crossover, what's not to like. This one is clearly +1 bulls.
The VIX: After a gap-up evening star and a spinning top, the VIX finally fell today as I predicted here last night, dropping 5.4%. Never underestimate those ancient Japanese rice traders, the inventors of the candlestick. They were pretty wily characters. With the VIX only now starting to fill the gap and its indicators just peaking at overbought levels and its stochastic executing a bearish crossover, it sure looks like the VIX is going lower Tuesday. Lower VIX -> higher stocks -> +1 bulls.
VIX futures: Once again, the VIX future chart looks a lot like the VIX itself, providing further support for the theory of a lower VIX tomorrow. Another +1 bulls.
Market index futures: After a big green candle today the ES indicators are still just coming off oversold. With all three futures holding onto modest gains this evening (ES up 0.17%), there is nothing negative to see here. +1 bulls.
ES daily pivot: Now 1144.17. With ES now at 1160.50 (at 1 AM EDT) I believe we are far enough out of the pivot's gravitational field for it not to be a factor Tuesday. +1 bulls.
Dollar index: The dollar today put in a second hammer almost identical to yesterday's, right at the top of its big run-up from last Thursday. With its indicators all quite oversold and two hammers being better than one, the dollar is looking lower for Tuesday which is good for stocks. +1 bulls.
Oil: As expected, oil did rise today on a second wide-range doji. Since all its indicators are quite oversold and OBV in particular has bottomed and turned higher, we seem to have more upside in store Tuesday. Since oil is still in sync with the market, that's +1 bulls.
Morningstar Market Fair Value Index: Unchanged at 0.79. This number needs to go higher to give a bull-point. However, I'll note that it's encouraging that at least it didn't drop any further today. So no points here.
History: While the week as a whole has a bum rap, the middle three days tend to outperform, according to The Stock Traders Almanac, so we give +1 bulls.
Sentiment: The new Ticker Sense Blogger Sentiment Poll came out today. Last week's numbers were 50% bearish and only 14% bullish. As I wrote last week, I consider anything below 20% bullish to be contrarian-bullish. I voted bullish then and did so again this week.
Apparently I was joined by some other poll participants because this week the results are 21% bullish, 59% bearish. Despite this, today's readings remain, once again the lowest since March 2007, just before the Dow went on an extended rally. So I give +1 bulls for that.
And the winner is...
The bulls, by a convincing 9:0 shut-out in the bull-bear ratio. I'm pretty confident that there's more upside coming Tuesday. And of course I have to add the disclaimer that when the VIX is around 40, any piece of news out of Europe, good or bad will trump the technicals. There's nothing in the charts that can predict J.C. Trichet announcing "Zut alors! Zis Beaujolais iz not to my liking!" (good for a 2% drop in the Dow).
ES Fantasy Trader
Patience paid off in the end and the ESFT closed out its long trade all the way from last Thursday at 1158.50 for a small 1.25 point profit. Hey, that sure beats being down nearly $20,000 as I was at one point. The portfolio stats the account is now $119,500 since inception on 8/18 after 17 trades, 11 wins, 6 losses.:
BOT 10 ES false DEC11 Futures 1156.75 USD GLOBEX SEP 21 20:05:35
SLD 10 ES false DEC11 Futures 1158.50 USD GLOBEX SEP 26 16:59:41 Tonight, we go long again at 1160.50.
Posts
Market does what it does, so it's never a matter of a single analysis being right or wrong for that day or time-period, but rather the method of approach. This regular scan you do, Michele, is really rigorous, for the short message you squeeze it all into. I feel like you hit all the major checkpoints. Night Owl Trader is now a vital first stop, in the morning, as I consider actions to take thru the day. Good data, and a spoonful of colorful imagery and clever wit always helps the medicine go down, as they say.
ReplyDeleteThanks for keeping watch thru the night, wise owl!
Why thank you so much for the compliments! You made my day :-) And if the blog looks as good as it does, it's due in large measure to your excellent suggestions and thoughtful critique.
ReplyDelete:)
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