Tuesday, March 27, 2012

Tuesday slightly higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday slightly higher, medium confidence.
  • ES pivot 1407.67Holding above is bullish.
  • Rest of week bias uncertain, technically.
  • Monthly outlook: bias up.
  • ES Fantasy Trader standing aside.

Sunday night I wrote that I was "cautiously optimistic" about today.  Turns out the caution was unnecessary.  I've got to thank Uncle Ben for turning a cautious day into a roaring bull run.  The big question after a big up day of course is always whether or not it can keep going.  I think the charts will tell us, so let's see what they have to say.  Speak, charts, speak.

The technicals

The Dow: Today we got a big pop right out the gate, and it only got better from there, thanks to Uncle Ben.  The resultant jolly green giant candle took us clear out of the Dow's six session descending RTC, for the mother of all bullish setups.  The indicators have all now clearly bottomed and the important stochastic just completed a bullish crossover today.  This sort of chart is canonically bullish.

The VIX:  Today the VIX gave us a gap-down inverted hammer that brought us right to the bottom of its 10 day range for a 3.78% loss.  But... its indicators are all still on the way down from overbought, including a stochastic that just completed a bearish crossover.  With the futures still stuck in a now-8 day descending RTC, it looks like there's still more downside possible here.  In particular, note that the lower BB is now at 13, over a point away.  I see nothing here not to like.

Market index futures: Today ES provided us with a tall green candle that didn't just retrace last week;s losses, it completely blew the door off the resistance at 1405 that stopped us cold then, as well as providing a major bullish seteup with a dramatic exit from the descending RTC.  As a bonus, we got a completed bullish stochastic crossover today.  Right now, at 1:35 AM EDT, all three futures are in the green with ES up 0.09%.  There's really nothing to dislike on this chart..

ES daily pivot: Tonight the pivot jumps from 1389.92 to 1407.67.  This big gain means that even though ES rose considerably right around the close today, we're now closer to the pivot than before.  But still, a seven point spread isn't bad and still provides a fairly comfortable cushion.

Dollar index: Today the dollar took a big gap down on a solid red candle to lose half a percent.  And yet even at that, we're still not close to either support or the lower BB.  There's still nothing in this chart to suggest a higher dollar, and that's good for stocks.  The indicators are now all in oversold-broken mode and have therefore lost their predictive power.

Morningstar Market Fair Value Index: The index did not update today.  I expect that tomorrow's number will show at least a one tick gain.

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

Sentiment: Once again it's time for the latest weekly 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   7/7
  8  2/21       44         32        +     1361   8/8
  9  2/27       48         24        +     1366   9/9
 10  3/5        43         26        +     1370
 11  3/12       46         32        +     1371
 12  3/19       46         29        +     1404
 13  3/26       39         29        +     1397

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 2/27 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 9 for 9.  And of course that means that since I voted with the majority back then, the poll as a whole was also correct that week.  Once again the Ticker Sense bloggers continue to bat 1000.  And once again, I voted bullish this week.  With the year just about one quarter gone, I'm still not seeing any technical reversal indicators on the monthly SPX chart

I find it interesting that while bearish sentiment remained unchanged this week at 29%, bullish sentiment declined to its lowest level of the year, leaving us also with the narrowest point spread of the year - just 10 points.  If you believe that the TS bloggers know what they're talking about (and history this year seems to support that), then it appears that some of them are thinking the rally may be near its end.  On the other hand, market tops are generally accompanied by a major increase in bullish sentiment.  To see bullish sentiment actually decrease like this could be considered contrarian bullish.

     And the winner is...

Often after a big run-up like we saw today, the market will pause and have a small range day the next day.  That's pretty much what I'm expecting tomorrow.  So with no real negative signs on the charts, I'm going to call for a small up day Tuesday.

ES Fantasy Trader

Last night's long turned out well, with a tidy 9.5 point profit. Portfolio stats::the account now goes to $129,375, after 25 trades (19 wins, 6 losses) starting from $100,000 on 1/1.  Because I'm not seeing a big edge right now either way for Tuesday, tonight we're going to stand aside.  At this stage, I'd rather leave some money on the table than risk a loss of similar size.

SLD    10    ES    false    JUN12 Futures     1404.75    USD    GLOBEX    11:13:30   
BOT    10    ES    false    JUN12 Futures     1395.25    USD    GLOBEX    01:03:00   


No comments:

Post a Comment

Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.