Tuesday maybe lower

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

• Tuesday lower - low confidence.
• ES pivot 1395.25.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1386.75.

Recap

I'm starting to think that whatever direction I think the market is going the next day, I should just announce the opposite and I'd get better results.  Heck, at this point, flipping a coin would give better results.  At least the Dow tried to end on a positive note today and a 14.7 point loss isn't that bad.  Still a miss is a miss.  Maybe the market will settle down in May.

The technicals

The Dow: Today the Dow confirmed yesterday's bearish shooting star with a hanging man.  Its indicators are also all now topping out at overbought levels.  And finally, we traded entirely outside the rising RTC - a definite bearish sign.  All indications of a chart that's going lower.

The VIX:  The VIX continues to pop corn its way along, today gapping up for a 5% gain on the makings of a bearish evening star.  A move lower tomorrow would confirm this.  However, its stochastic just formed a bullish crossover today, suggesting more upside Tuesday.  The futures seem to support this idea.  And a higher VIX would be bad for stocks.

Market index futures: Tonight we're seeing a mixed picture with ES and YM up a bit and NQ down a hair.  ES is up 0.11% at 1:43 AM EDT.  The picture is muddied a bit by the news tonight that Australia is lowering interest rates.  That caused a brief spike in ES but that was quickly retraced.  Today's candle was a bearish engulfing pattern that confirmed yesterday's spinning top.  And like the Dow, ES is now outside its rising RTC and has indicators that have topped at overbought.  This all suggests a move lower.

ES daily pivot: Tonight the pivot dips from 1396.00 to 1395.25.  We were below the pivot most of the day and we're still below the new level, except for a brief blip when the Australian interest rate news hit the wires.  In any case, holding below the pivot is never a good sign.

Dollar index: Today the dollar gained 0.12% but did it on a red candle that kept it below the 200 day MA which is now resistance.  With the recent advance in the euro stalling out, this could encourage the dollar to move higher - if it can get past the 200 MA.  Tuesday will tell the tale.

Transportation: Here we got a bearish engulfing pattern today and a stochastic that's about to form a bearish crossover.  Looks like more downside to come for $TRAN.


History: According to The Stock Traders Almanac, Tuesday is historically very bullish.

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  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398

 16  4/16       26         48        -     1370
 17  4/23       30         48        -     1379   

 18  4/30       44         32        +     1403

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 4/2 was wrong once again, though just barely, the S&P now being a bit lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 14.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  Despite being wrong three times in  a row now, 11 for 14 still isn't that bad.

This week we see a dramatic change of fortunes, with the bull and bear numbers just about trading places.  And I was one of those who switched their vote back to bullish this week.  What was looking like a fairly ominous monthly candle for the SPX ended up being  more of a hanging man rather than a dark cloud cover.  Although that still indicates a possible reversal, the stochastic ended the month by unwinding what looked like a near certain bearish crossover.  And while anything's possible, right now it looks like the earlier threat has receded, at least for the time being.

Performance:

Here are my performance stats so far for 2012.  The first two columns are for my trading account.  The next, "ESFT", is the ES Fantasy Trader.  Following that I've now added the results for my IRA.  The last is the Dow, my reference benchmark that I try to match or beat.

 Date    Trading, Month  Tr. YTD  ESFT YTD   IRA YTD   Dow YTD

1/31/12       7.41%        7.41%   -0.50%     6.18%     3.41%

2/29/12       3.67%       11.35%    7.88%     9.02%     6.02%

3/31/12       1.76%       13.31%   29.88%    10.05%     8.16%
4/30/12       2.35%       15.97%   41.75%    10.90%     8.17%

It's interesting to see the risk/reward in action.  My IRA, which I treat most conservatively, has the lowest return, whereas the ESFT, which I trade with reckless abandon (since it isn't real money), has the highest.

Accuracy:

Month right  wrong  no call

April   7      9      2

It was clearly a difficult month for forecasting with more consolidating than trending going on, making daily calls treacherous.  At least we're still making money, and that after all is the name of this game.

     And the winner is...

I'm almost afraid to write anything at all here after being so consistently wrong lately, but given the look of the charts tonight, I'm going to have to call for a lower close Tuesday, interest rate cuts or not.  The damage may be limited though, in view of the fact that tomorrow is the first of the month, historically a bullish day.

ES Fantasy Trader

Portfolio stats:  the account remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are still not giving up on this trade and remaining short at 1386.75.

Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.  But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post.  Also keep in mind that these trades run with no stops and no preset targets.