Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher, medium probability. Bull-bear ratio is 3:1.
- ES pivot 1152.25. Falling below this becomes bearish..
- Rest of week bias uncertain, end of week lower if Tuesday rallies.
- Monthly outlook: bias down, regardless of Fed action in September
- ES Fantasy Trader opened new long position at 1145.50.
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| We're going this way |
Today's Wall St. tug of war featured a total of 14 zig-zags that had the day traders pulling their hair out. It wasn't a bull market, it wasn't a bear market, it was a bullbear market. (The BullBear of course is closely related to the species CatDog).
Sunday night I called for a lower close today and indeed we were in triple digit loss mode for most of the day, until the FT published some news, well some rumors more like it, about the Chinese devloping a sudden appetite for Italian bonds, of all things just before the close. Mama mia, that was all it took to set off a rally that ended with the Dow actually gaining 69 points and reclaiming the 11K level.
The technicals
The Dow: The Dow put in a nice hammer today that just touched its lower Bollinger band which coincidentally is right around the August low support level at 10,800. Its indicators are now more oversold than overbought and while they haven't yet bottomed, I'm more inclinded to give this pattern a +1 bulls.
The VIX: Today the VIX put in a big dark cloud cover that spanned the 40 level. The other two times when the VIX had been over 40 and then closed under, it went lower the next day. Combined with indicators that are now looking overbought, I'm inclined to think the VIX is ready to go lower, so I give +1 to the bulls.
VIX futures: Today saw the futures put in a bearish shooting star. By itself the shooting star isn't the best reversal indicator, but this one is helped by the gap up. Lower futures -> lower VIX -> higher sotcks -> +1 bulls.
Market index futures: All three (ES, NQ, YM) are up at 1:20 AM with ES up 0.15%. What's important here is not so much the amount of the gain as that almost none of the China bond rumor run-up has been retraced. +1 bulls.
ES daily pivot: Tuesday's pivot is now 1152.25 and we're now comfortably above that level at 1164.50. This pivot serves as support. If we break under that will be bearish, if we bounce off, bullish. Right now it's looking like +1 bulls.
Dollar index:The dollar, having cleared resistance yesterday continued its relentless upward march today and did not pull back to its 200 day MA. While looking overbought technically, there's no telling when this will end. It's all news-driven out of Europe right now. A strengthening dollar being bad for stocks, this gets a +1 bears.
Oil: After falling for two days, oil rose today to the middle of its recent trading range and stayed right in the Twilight Zone, that region near the center of the Bollinger bands. No telling where it's headed tomorrow, so no points here.
Morningstar Market Fair Value Index: This doesn't seem to have been updated today, so no points here.
History: Not much in the way of history for tomorrow, but I give +1 bears just because the week as a whole is historically bad.
Sentiment: Finally, we once again make note of the latest Ticker Sense Blogger Sentiment Poll which came out today. As I suspected, bearish sentiment increased from last week. Last week it was running 22% bullish and 44% bearish which was an increased bearish level from the week before.
Today's poll shows that gap has now increased to 21% bullish and 48% bearish.. (For the record, I again voted bearish). That's getting closer to where I'd award a point to the bulls on a contrarian basis. As I mentioned last week, the last time the bullish number was this low was in February 2010 at the end of a month-long decline. The Dow then went on to rally over 1000 points in the following two months. I really want to see that bullish number drop below 20% to go contrarian bullish. But this is so close, I'll give it a +1 bulls anyway.
And the winner is...
The bulls, with a bull-bear ratio of 6:2. This isn't a new bull market and it probably isn't even a multi-day rally, but I think the market has been looking for an excuse to go up for a day or so now and today's rumor was all the catalyst it needed. Once the smoke clears, it's probably back down again, but for tomorrow at least I'm looking for a higher close.
ES Fantasy Trader
The ESFT covered last night's trade this morning, prematurely as it turned out at1144.00, settling for a meager 1.5 point profit. The account is now $128,500 since inception on 8/18 after 12 trades, 8 wins, 4 losses.
SLD 10 ES false SEP11 Futures 1145.50 USD GLOBEX 01:04:55
BOT 10 ES false SEP11 Futures 1144.00 USD GLOBEX 11:09:34
Tonight, we go long at 1145.50.
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