Tuesday possibly higher

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

• Tuesday higher, low confidence.
• ES pivot 1409.75.  Holding above is bullish.
• Rest of week bias higher, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I was calling for a higher close today, which we got, but I was expecting us to be bound by the Dow's 13,250 resistance line.  Today's close at 13,264 just breaks that.  Is this significant?  Let's see what's "up" with that.

The technicals

The Dow: I think it is significant.  Today we closed above a level that had been hit only three times intraday so far this year.  We have now comfortably cleared the highs of 2011 and are still not as overbought as we were back then.  The monthly upper BB is at 13,524. I think we've finally cleared out all the people who bought in the spring of 2008, rode the market all the way down and swore they'd sell if they ever got back to even, so there's not much standing in the way of the next 300 or so points.  Then of course there's the big barrier at 14,000 and the Dow's all-time high of 14,198.10 from October 2007.

The VIX:  For the fifth day in a row, we had a VIX that made a large excursion only to return almost exactly to the 15.5 level, closing up 0.9% at 15.64 today.  But this gain came on a big red candle, and its intraday high was lower than the two previous days that moved above 15.5.  The VIX is seemingly unable to gain any real traction here, which is good for stocks.  The futures seem to support this, having gained just 0.05% today on a red hanging man.

Market index futures: All three futures have just turned slightly positive at 1:06 AM EDT.  ES is now up 0.04%.  After today's fat green star, it is encouraging to see the overnight trading around the day's close rather than moving lower.  That said, there's resistance nearby at 1415, then again at today's high of 1417.75, so while some more upside is possible, it may be getting harder to come by than today.

ES daily pivot: Tonight the pivot jumps from 1401.75 to 1409.75.  With ES basically flat since the close, we remain above the new number, though not as much as earlier today.  Still, holding above is positive.

Dollar index: As I expected, the dollar moved lower today, giving up all of Friday's gains and a bit more.  With the lower BB falling away and the dollar stuck in a descending RTC back to March 14th, there's nothing here to suggest a move higher any time soon, also good for stocks.

Morningstar Market Fair Value Index: Beginning tonight, I am no longer going to comment on this number.  It seems to change from day to day (meaning that previous numbers get revised randomly) so I have no use for it.  I think it still makes a reasonable longer term indicator, but there's no point watching it every day, especially if you can't believe the numbers.  Beginning tomorrow, I'll be commenting on the transportation index, $TRAN, in this spot.


History: According to The Stock Traders Almanac, this whole week is historically quite bullish.  In fact, April is number one ranked month of the entire year for the Dow.

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  10/10

 11  3/12       46         32        +     1371

 12  3/19       46         29        +     1404

 13  3/26       39         29        +     1397

 14  4/2        42         21        +     1408

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 3/5 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 10 for 10.  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 as all year long so far, I again voted bullish this week.  With the year now one quarter gone, I'm still not seeing any immediate technical reversal indicators on the monthly SPX chart.  However, I am seeing signs that a turnaround is coming, possibly next month.  This may be a good time to sell in May, as they say.

This week we see that bullish sentiment increased a little, but the big change was the drop in bearish sentiment from 29% to 21%.  Apparently, some of the pessimists are now throwing in the towel and moving to the sidelines.  Is this a contrarian sign of impending doom?  I don't think so.  The 21% bearish is still only equal to the previous low on January 3rd, and the 42% bullish is actually the second lowest bullish reading so far this year.

     And the winner is...

I think there's still some more room to run higher, particularly given the historical bias in the first week of April.  So I'm going to say we close higher Tuesday, though possibly not by much, in view of several resistance levels not too far above current prices.

ES Fantasy Trader

Last night's long was profitable and even though I missed the opening pop we still brought home 3.75 points.  Tonight we're going to stand aside, because I'm not seeing a big edge.

Portfolio stats:  We begin the month and the second quarter with $131,750, after 27 trades (21 wins, 6 losses) starting from $100,000 on 1/1

SLD    10    ES    false    JUN12 Futures     1411.25    USD    GLOBEX    11:37:58   

BOT    10    ES    false    JUN12 Futures     1407.50    USD    GLOBEX    00:47:55