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- Tuesday lower, low confidence.
- ES pivot 1348.00. Holding below is bearish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
We got the upside move I was expecting for Monday in the form of 72 Dow points, thanks to the Greek austerity vote. We seem to be back into this European news-driven mode that plagued us so much last year. And tonight we've got a round of ratings downgrades from Moody's to contend with. Where will this take this Moody market? Hmmmm....
The technicals
The Dow: While today's near total retracement of yesterday's loss was welcome, it didn't do much to advance the bulls' cause. We've got the same bearish RTC trigger here as in ES (see below) and the stochastic has now completed a bearish crossover. Not so good.
The VIX: Last night I called the VIX lower and sure enough it lost 8.42% today completing a bearish shooting star pattern. Its indicators have also peaked from overbought and its stochastic is about to make a bearish crossover. This all points to a lower VIX, implying higher stocks.
Market index futures: Just as we were up last night on Greek austerity news, tonight we're similarly down on Moody's downgrades, with all three futures trading lower. ES is down a non-trivial 0.30% at 1:15 AM EST. ES has been trying to break resistance around 1349-1350 unsuccessfully for four days now, giving us reversal indicators every day but nothing in the way of a real reversal.
However, we have guidance tonight from the RTC. ES traded across the rising RTC on Thursday - the bearish setup. Today we traded entirely outside and that was the bearish trigger. Overnight action provides the confirmation. I'm not liking this chart.
ES daily pivot: Tonight the pivot jumps from 1340.83 to 1348.00. Because of this and also since ES has been wandering lower in the overnight, we are now 3 points below this pivot, a negative sign for stocks.
Dollar index: The dollar today completed something akin to an evening doji star, a good bearish reversal pattern. This would imply a lower dollar and therefore higher stocks Tuesday.
Morningstar Market Fair Value Index: till no update on the MS website. Don't know what's up with them.
History: According to The Stock Traders Almanac, Tuesday is historically fairly bearish.
And the winner is...
Despite the bullish indications from the VIX and the dollar, the recent range-bound pattern coupled with today's ratings downgrades and the bearish Dow chart leads me to think that we may go lower Tuesday. Right now it appears that while the uptrend is broken, no new trend up or down has yet been established. So I'm pretty much in wait-and-see mode until Mr. Market decides which way he wants to go. I'm not seeing much guidance either way right now so I'd be wary of going long or short until things sort out.
ES Fantasy Trader
We closed out today's long trade for just a one point profit. I didn't see much more upside happening and didn't want to risk any potential downside. Tonight we stand aside, in view of a lack of clear guidance from Mr. Market. I'm not seeing much of an edge either way for Tuesday.
Portfolio stats: the account increases to $112,625 after 13 trades (10 wins, 3 losses) starting from $100,000 on 1/1.
SLD 10 ES false MAR12 Futures 1348.50 USD GLOBEX FEB 13 13:16:56
BOT 10 ES false MAR12 Futures 1347.50 USD GLOBEX FEB 13 00:38:37 
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