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- Tuesday lower, medium confidence. Bull-bear ratio is 0:8.
- ES pivot 1206.08. Staying below is bearish.
- Rest of week bias lower.
- Monthly outlook: bias up, on technicals.
- ES Fantasy Trader went short at 1193.50.
Sigh - sometimes you just can't win for losing. I've called the wrong direction for two of the past three days. Last night I tried something different (working off the weekly charts rather than the dailies) and still came up short. Or rather long when I should have been short. In retrospect, I think my problem today was probably 70% lack of patience after waiting and waiting for the market to go lower last week, and 30% renewed noise out of Europe after a week of nothing.
So tonight it's back to the daily grind, I mean charts. Let's give it another shot and see if I can't get back on track for a change.
The technicals
The Dow: With a nasty 247 point dump, the Dow made a bearish engulfing pattern today. It also confirmed Friday's bearish regression trend channel setup. And its indicators are all finally starting to come down from their overbought peaks. That all looks bad, so +1 bears.
The VIX: Put in a gap-up green candle off highly oversold indicators and blew right past its resistance at 31.45 to close at 33.39. There is nothing on this chart to suggest anything but a continuation to the upside Tuesday, so +1 bears.
VIX futures: The futures also made a tall solid green candle today. Indicators are now coming off oversold. Also the futures broke out of their descending RTC, pointing the way to go higher still. That's all bad for stocks, so +1 bears.
Market index futures: These are mixed right now (1:40 AM EDT). NQ is up a hair, YM is down a bit and ES is exactly flat. ES did put in a bearish engulfing pattern today that reminds me a lot of the action we saw 8/31 and 9/1. The next day then was another leg down. With still overbought indicators that finally seem to be returning to life, this isn't looking good for the bulls, so +1 bears.
ES daily pivot: Now 1206.08. ES is currently a good 14 points under this and has been drifting aimlessly in the evening trade. It is in fact exactly where it closed the regular session. In the absence of any great push higher, this is +1 bears.
Dollar index: A bullish piercing pattern today that bounced right off its 200 day MA, the dollar's indicators are all very oversold now. RSI has actually already bottomed. That all looks positive for the buck, and therefore bad for stocks, so +1 bears.
Oil: Today put in a classic dark cloud cover. Its stochastic made a bearish crossover and OBV peaked yesterday, implying oil slipping on Tuesday. Since oil is still in sync with the market, that's +1 bears.
Morningstar Market Fair Value Index: Did not update today, so no points here.
History: According to The Stock Traders Almanac,Tuesday historically underperforms, so +1 bears.
Sentiment: Once again it's Monday, so the new Ticker Sense Blogger Sentiment Poll came out today. The bullish numbers for the previous two weeks were 14% and then 21% before reversing suddenly to 56% last week. This week we find the bullish number dropping just a bit to 55% and the bear climbing from 11% to 23%.
I find this interesting because last week the poll turned positive and we had a great week in the markets. The conventional wisdom is that the crowd is always wrong - but maybe the Ticker Sense folks are smarter than the average bear, eh Boo Boo?
For the record, I voted bullish again this week, on the basis of my reading of the monthly Dow chart and the upcoming bullish fourth quarter seasonality.
And the winner is...
The bears by a shut-out, with a bull-bear ratio of 0:8. Now I see that J-Trader is giving a strong buy signal tonight which leaves me kind of conflicted. I've been so wrong so often lately, I'd like to agree with him just because it seems like I'm becoming my own contrarian indicator. But in the end, I have to go with the charts and right now the charts are saying lower on Tuesday. C'mon Mr. Market, throw me a bone here.
ES Fantasy Trader
Tonight we go short at 1193.50.
Portfolio stats: the account remains $130,500 after 24 trades (17 wins, 7 losses) since inception on 8/18 with $100K.
Posts
Right now, we're both right! :) Dow down 35, TNA up 1%.
ReplyDeleteNot anymore :-) Now the Dow's up 65 - arrgh. Look at how it just bounced off its daily pivot though. Should be an interesting afternoon.
ReplyDeleteI almost hesitate to now say that it looks like we'll end positive since everything I say lately is wrong, but there's clearly no follow-through on yesterday's losses.