Tuesday could go higher

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

• Tuesday higher, low confidence.
• ES pivot 1381.25.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I wrote "we're due for a doji day or even a small loss following such an impressive run."  This time I was right - we got a tiny 3 point loss on the Dow forming a small doji.  But these things generally require confirmation.  Is there any in the charts?  Let's scout out the opposition as we go for the gold.

The technicals (daily)

The Dow: Today's doji ended right on the upper BB.  However, the stochastic (which I ignored yesterday and lived to regret that) has yet to form a bearish crossover.  Therefore it is too early to call the Dow lower based solely on this chart.

The VIX:  While I thought the VIX might go lower on Monday, it instead gained almost 8%.  Now one has to think that the VIX might go higher on Tuesday.

Market index futures: Tonight all three futures are running in the green by non-trivial amounts with ES now up 0.40% at a:21 EDT, keeping us inside the latest rising RTC.  This is basically canceling today's doji and indicating the potential for more upside on Tuesday.  Apparently, traders are expecting some positive news from Uncle Ben and the Europeans (hey that would make a good band name).

ES daily pivot: Tonight the pivot bumps up from 1373.42  to 1381.25.  We were above before and thanks to the continuing overnight gains in ES, we're still above the new number, so that's a positive sign for Tuesday.

Dollar index: Last night this chart looked pretty indeterminate. Today confirmed (sort of) yesterday's spinning top as the dollar gained 0.12% but did it on a gap-up red candle.  Still, with indicators now having bottomed near oversold and the stochastic getting ready for a bullish crossover I'd say we're within a day or two of some more upward dollar action.  Ergo, bad for stocks.

Euro: Technically, the euro looks ready to move lower on Tuesday, having now exited its rising RTC and its stochastic just completing a bearish crossover.  However, I think the financial news this week is going to trump the technicals for this currency.

Transportation: While the Dow was nearly unchanged today, the trans dropped 0.28% on a red spinning top.  There's at least the hint of a downward move here but one that requires confirmation.  Also, we're now back above the 200 day MA which served as support today and likely will do so on Tuesday too.

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  16/24

 25  6/18       39         26        -     1343  16/25

 26  6/25       38         46        -     1335  16/26

 27  7/2        41         40        -     1362  16/27

 28  7/9        42         38        -     1355

 29  7/16       44         32        -     1357

 30  7/23       33         42        -     1363

 31  7/30       43         22        +     1386

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 7/2 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 27 .  After an impressive start this year, my monthly calls have now been wrong for 8 weeks running.   For the record, I switched my vote to bullish this week, for the first time since April 30th, based on my reading of the SPX monthly and weekly charts.

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   12      1      6           1        .929     984
“You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct.”  

               - Warren Buffett


     And the winner is...

Sunday night I tried to anticipate the top and paid the price for it.  With the charts not really looking any closer to topping tonight than a day ago, no really bearish signals in sight, and with the futures showing some strong gains, I'm going to have to call Tuesday higher.  But I have to add the caveat that I think the next few days are going to be more news-driven than technically directed.  That's just how it is sometimes.

My trades today: bought OXF at 8.90, sold DHY at 3.18 and bought RSO at 5.43.

ES Fantasy Trader

Tonight the more prudent course of action seems to be to simply give up on last night's short attempt, taking a 6.75 point loss rather than run the risk of some announcement from the Fed or the Europeans running the market any higher later this week.

Portfolio stats: the account falls to $172,625 after 54 trades (42 wins, 12 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside in the expectation of coming uncertainty Tuesday.

BOT    10    ES    false    SEP12 Futures     1384.25    USD    GLOBEX    00:52:43   

SLD    10    ES    false    SEP12 Futures     1377.50    USD    GLOBEX    JUL 30 01:48:23   


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.  Act accordingly.