Tuesday looking lower

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

• Tuesday lower, medium confidence..
• ES pivot 1311.42.  Holding under is bearish..
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

After something of a mini-roller coaster day, the Dow saved my call for the day by ending down a mere 11.7 points.  What does this mean for Tuesday?  Read on, McDuff...

The technicals

The Dow: Today's amusement park ride produced a classic doji, the first one we've seen since December 27th.  This is often a good reversal indicator (the market did indeed fall on December 28th).  And after spending several days at highly overbought levels, today the Dow's stochastic made a bearish crossover.  In addition the S&P High-Low index hit 100 today, also a bearish sign.

The VIX:  The VIX actually closed up 2.13% today but did it on a fourth consecutive red candle.  Meanwhile its indicators continue to travel from overbought to oversold but aren't there yet.  Nevertheless, we touched the lower BB at 18.55 for the second day in a row.  The VIX tends to not spend more than two days playing tag with the lower BB so there's at least the possibility of moving higher Tuesday.

Market index futures: Like last night, all three futures are running lower, with ES down 0.21% at 1:50 AM EST.  Today's inverted hammer clearly demonstrates the resistance we've got at 1311.  It also took us to the right edge of the current rising RTC from January 5th, another bearish sign.

ES daily pivot: Moved up from 1309.08 to 1311.42 still leaving us a few points below.  But just like last night, we're seeing ES gradually rising, this time starting at 11 PM.  This sort of price movement does not look particularly bearish to me.

Morningstar Market Fair Value Index: Didn't post a new number today.

History: According to The Stock Traders Almanac, this whole week is historically pretty bad.  Wednesday "has been down big 9 of the last 13".  Tuesday is still bearish, though not as bad as Monday.


Sentiment: It's the start of a new week so once again it's time for the TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  Here's how things stack up so far this year:

Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

1/3         46        21        +     1258   1/1

1/9         56        37        +     1278

1/17        41        33        +     1289

1/23        46        32        +     1315

The SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  Since that moment is now at hand, I note that my bullish call on 1/3 was correct, the S&P now being higher than then.  So now I'm adding an extra column "Accuracy" to track my calls.  For now, I'm 1 for 1.  And of course that means that since I voted with the majority, the poll as a whole was correct that week.

We note that this week while bearish sentiment remains unchanged, bullish sentiment advanced 5% to the same level as the start of January.  And for the record, I voted bullish yet again this week, once again on the basis of my reading of the monthly SPX chart as well as on seasonality.


     And the winner is...

And once again, I'm going to say the bears, in part because of the technicals on the charts as outlined above, but also partly because we're getting some noise from Europe again and in part because of the Fed on Wednesday.  I don't think there's going to be much enthusiasm for a big rally ahead of that. n So there you have it - Tuesday lower.  OTOH, also once again I'm not looking for a major decline.

ES Fantasy Trader

Tonight we're hanging onto our short from last night.  It's just a couple of points under water, and I still believe in this trade.. Portfolio stats: the account remains $99,250 after 5 trades (3 wins, 2 losses)