Wednesday uncertain - listen to Uncle Ben

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

• Wednesday uncertain.
• ES pivot 1370.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Finally.  Hallelujah, the Dow managed to close above 13,000.  I was reading an interesting piece by someone who observed that it seems like everyone is now expecting a pullback (and I'll plead guilty to that too) and reminding us that whenever everyone gets on one side of the market, it generally goes in the other direction.

In any case, we just continue to see the same thing we've seen all year so far - a pretty constant grind upward with numerous dojis, stars and hanging men that signal but never quite seem to generate a reversal.  Will Wednesday be the day?  Read on...

The technicals

The Dow: Case in point - yet another star today for a 24 point gain.  Only this time we have 13K below us so that now becomes support.  The indicators are all completely broken, so we have no real technical indication on this daily chart of a reversal.

The VIX:  The VIX, which has had so much trouble putting in a green candle lately failed to do so once again today, dropping 1.26% to close back under 18.  And this despite indicators that are coming off oversold levels.   As with the Dow, these indicators no longer seem to be indicating much.

Market index futures: Unlike last night, all three futures are down at 1:26 AM, though just barely, with ES dropping only 0.04%.Meanwhile, after an unremarkable green candle today, ES remains inside its rising RTC.  Still no indications of any reversal here right now.

ES daily pivot: Tonight the pivot rose from 1363.67 to 1370.00.  Even at that, we continue to hold above the new number, which is good for stocks  at least as long as we hold above.

Dollar index: As expected, the dollar continued lower today and remains inside its descending RTC.  It did hit its lower BB today but that's not seeming to count for much lately.

Morningstar Market Fair Value Index: The index has extended its streak stuck at 0.96 to seven now.


History: According to The Stock Traders Almanac, Leap Day is historically fairly bearish.

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 the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343

  8  2/21       44         32        +     1361

  9  2/27       48         24        +     1366

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 1/30 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 6 for 6.  And of course that means that since I voted with the majority back then, the poll as a whole was also correct that week.  After six straight weeks of being correct, the contrarian "majority is always wrong" theory is really looking bad.  The Ticker Sense bloggers continue to1000.

This week we see that bullish sentiment gained 4 percent back to the same level as two weeks ago while bearish sentiment dropped 8 percent to the second lowest level this year sp far.  My take is that these still aren't the sort of extreme numbers that precede a reversal.  And for the record, once again I voted bullish.  I'm still not seeing any reversal indicators even on the monthly SPX chart.

     And the winner is...

Technically, I still see no reversal in the daily charts.  But, and this is a big but, Uncle Ben is talking tomorrow and that's what's going to move the market, not the tehnicals.  Since I have no way of knowing what he's going to say, it's tough to make a reasoned call.  My guess though is that he's going to say something that Mr. Market won't like and that will send us lower.  On the other hand, we now have 13K as support for the Dow, though that may not count for much.  I don't often just give up, but tonight's one of those times.  We might get another doji of indecision, but who knows.  Perhaps Wednesday will bring more clarity to the charts.

ES Fantasy Trader

Given the mixed picture and the Bernanke Uncertainty Principle, I'm not putting on any trades tonight.  ES will just have to muddle through without me.

So the account remains $107,875 after 16 trades (12 wins, 4 losses) starting from $100,000 on 1/1.