Tuesday a bit lower but watch Greek news

The Hoot 
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• Tuesday lower, low confidence.
• ES pivot 1336.58.  Breaking under is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1334.00.

Recap

I figured we'd go lower today and so we did, although the entire drop came right out the gate and the market spent the rest of the day playing catch up, finishing down just 17 points despite renewed rumblings from Greece.  I find it interesting that the sort of news that last summer would have resulted in a triple digit dive, today barely moved the needle.  Can we continue pushing higher on Tuesday?  Let's consult the crystal ball.

The technicals

The Dow: Today the Dow gave us a little toy hanging man for a candle.  Is this a reversal sign?  Well, during the current uptrend, the last two hammers were actually followed by moves higher.  With the clear positive bias to the market this year so far, I'd hesitate to call Tuesday lower on the basis of this candle.  Note also that we're still not overbought in any of my Fave Five indicators.

The VIX:  My call for a higher VIX today worked out nicely with the VIX up 3.86% stopping just short of its resistance at 18.  But what to make of the big tall hammer, or is it a hanging man.  With no clear trend, it's hard to say.  Even the indicators aren't particularly clear at this point.  I'm going to have to take a pass on where the VIX goes tomorrow, which is a shame since that's normally one of my favorite markers for the next day's movement.

Market index futures: All three are just barely in the red at 1:40 AM.  ES is down just a quarter point at 1338.75.  It also put in a small hanging man.  However, tonight's action neither confirms nor dispels that, and we do remain within the rising RTC.  The only reversal warnings I see are from the indicators which are now all overbought.  But recall they can stay that way for a while before the trend ends.

ES daily pivot: Rose from 1333.67 to 1336.58 tonight.  With ES running basically flat since the close today, that now puts us very close to this level, though still above, which is a good sign.

Dollar index: In keeping with the odd action of late, the dollar today gained 0.16% on a big red gap-up candle.  It's acting like it wants to rise but isn't quite up to the task.  So we remain stuck in the range going back to January 27th.  No real guidance here.

Morningstar Market Fair Value Index: No update given on the MS web site.


History: According to The Stock Traders Almanac, Tuesday historically has no significant bias either way.

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   2/2

1/17        41        33        +     1289   3/3

1/23        46        32        +     1315

1/30        48        31        +     1316

2/6         56        30        +     1345

Again, 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.  This week we see that my bullish call on 1/17 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 3 for 3.  And of course that means that since I voted with the majority, the poll as a whole was also correct that week.  So far, the contrarian "majority is always wrong" theory still isn't looking too good.


I note that the bullish sentiment is back to 56% while the bears barely changed.  So we're still not seeing the sort of decline in bearish sentiment that would lead to a contrarian bearish call.  I voted positive again this week, but this may be the last time for a while. 



     And the winner is...


If this was a weather forecast, it would be "light and variable".  I'm still not seeing any signs of an imminent decline, but the market is also clearly having some trouble getting past the 12,850 level.  The old crystal ball is just a bit murky tonight.  My best guess is that the current pause may continue another day or so, so I'll call Tuesday's close slightly lower.  But, and this is a big but,, there's supposed to be some more news from Greece coming out and that's sure to have an impact on prices.  No chart can predict that, so keep one eye on the news ticker for that.

ES Fantasy Trader

Tonight we remain short at 1334.00.  If this doesn't pan out tomorrow, I will seriously consider giving up on it..

Portfolio stats: the account remains $114,500 after 9 trades (7 wins, 2 losses) starting from $100,000 on 1/1.