Tuesday charts, Thursday outlook

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

• Thursday call  here tomorrow..
• ES pivot 1364.25.  Holding above is bullish..
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Last night I said of today, "We might even manage a small gain".  Well 72 points in the Dow isn't exactly small, but it was definitely a gain.  It's hard to tell how much significance to attach to this though, given that the major players are all on vacation right now.  What's interesting though is that for the third day in a row, buyers came in for a last minute rally to knock 'em higher - did you notice that?  Buying into the close before a holiday??  Hmmm.  Ah well, let's turn out attention to the rest of the week after the Fourth.

The technicals

The Dow: In a sparsely attended abbreviated session, the Dow gained 72 points.  This is more than I would have expected and while I hesitate to read too much into such pre-holiday half-sessions, I think it's noteworthy that the Dow managed to gain this much despite already being fairly overbought.  We'll go way out on a limb tonight to see if any of this means anything for Thursday.

The VIX: Please indulge me some more quotes, for last night I wrote "it's not clear that the VIX is ready to move higher".  And so we dropped another 0.83% today on a small star.  Oddly enough, we're still not close to the lower BB (at 15.61) and the stochastic is still not close to even starting a bullish crossover.  Today's move also broke last month's support.  I'd say here that we have a possibility of a reversal but it requires confirmation Thursday - something I'm not sure we'll get.

Market index futures: The market may have closed early today but the futures plod on into the night.  Tonight all three are just slightly higher with ES up a mere 0.09% at 1:29 AM EDT.  Today's green candle for ES today canceled yesterday's doji and the fact that we're now running up the upper BB suggests that the market may be willing to ignore the extreme overbought condition of the indicators - for now.  RSI is now at 95.65 and that's higher than it was even just before the big drop in May.

ES daily pivot: Tonight, for what it's worth, the pivot rises again from 1356.42 to 1364.25.  With ES meandering through the night, we're still above the new number but not by much.  Still, remaining above it bullish.

Dollar index: Last night I wrote "possible lower dollar Tuesday."  And the greenback obliged with a 0.17% drop on a big bearish engulfing pattern.  Though the indicators are now closer to oversold than overbought, there's nothing her to suggest ay reversal yet so more downside is possible Thursday.

Transportation: The trans today rejected yesterday's doji, advancing another 0.59%, pretty robust given the shortened session if you ask me.  Today's green candle took us higher into overbought territory, though we're sill below the upper BB at 5274 and the stochastic is still several days away from executing a bearish crossover.  So it looks like this chart still has a bit more room to run.

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  12/15

 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353  16/20

 21  5/21       30         52        -     1295  16/21

 22  5/29       35         42        -     1318  16/22

 23  6/4        32         48        -     1278  16/23

 24  6/11       28         40        -     1326

 25  6/18       39         26        -     1343  

 26  6/25       38         46        -     1335

 27  7/2        41         40        -     1362

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 bearish call on 6/4 was wrong (again), the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 23 .  And of course that means that since I voted with the majority back then, the poll as a whole was also wrong that week.  So with half the year gone now the poll's accuracy drops to 70% YTD.

This week we see that with a slight gain in bullish sentiment and a drop in bearish sentiment, we're essentially in a tie.  I believe this reflects all the contradictory numbers, indecision, and market instability we saw last month.  For the record, I voted bearish once again   I'm still watching the SPX monthyl stochastic, and it doesn't look to be ready to set up a bullish crossover until the end of August if it continues on its present two year cycle.  Looking closely though, I do detect a slight flattening of the %K line.  It is possible, I suppose, that it may just make a bullish crossover from a high level rather than dropping all the way down near zero the way it normally does.  This sort of cycle short-circuiting does happen on occasion and would be quite bullish indeed.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632 
June    8      6      6           1        .600     632   +$330
July    1      0      1           0       1.000       9

     And the winner is...

Well since there's no market on the Fourth, there's no call tonight.  I want to see how the futures run and what news and rumors may cross the ticker before Thursday.  But I did at least want to run down the charts tonight.  Tune in again Wednesday night for the exciting conclusion.

I will say though that while we might still eke out one or two more days of gains, it's looking to me like we're getting a bit overextended here and may be in for another down day, perhaps next Monday.

ES Fantasy Trader

Portfolio stats: the account remains at $140,375 after 48 trades (37 wins, 11 losses) starting from $100,000 on 1/1  Tonight we stand aside again ahead of the holiday.  Reminder: you can track these trades live on Twitter @nightowltrader.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.