Actionable ideas for the busy trader delivered daily right up front
- Tuesday uncertain - no point calling a meaningless half-session.
- ES pivot 1356.42 Breaking under is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias down.
- ES Fantasy Trader standing aside.
Last night my call was for "a small down day" and darned if that isn't exactly what we got, with the Dow down a measly 9 points. Tonight I'll run down the charts more with an eye toward the end of the week than the stub session on Tuesday. And keep in mind that one shouldn't attach too much significance to today's action because of the upcoming holiday.
The technicals
The Dow: After Friday's big run-up we got a small doji today on low volume as the indicators continue to rise to overbought levels. This is at least a reversal warning for the rest of the week but one that does reqwuire confirmation. While I suspect Tuesdya's action will be largely meaningless, it should nonetheless be interesting to see in which direction the bias lies.
The VIX: Last night I was expecting a bit more downside here and the VIX obliged by dropping another 1.64%. I'm not quite sure what to make of the pattern though. It's ordinarily a bearish engulfing pattern but that should come at the end of an uptrend, and we just had a big gap down. May not mean much in this context. The futures are becoming oversold but may not be ready to turn around yet, so it's not clear that the VIX is ready to move higher either.
Market index futures: The indecision continues in the futures as YM is unchanged and both ES and NQ are up a bit at 1:41 AM EDT. After a gain earlier in the evening, ES is now up only 0.06% and trending lower. The candle is developing as a doji, mirroring the spinning top we got today.
ES daily pivot: tonight the pivot rises from 1344.00 to 1356.42. ES is now dangerously close to the new line and trending lower since 12:25 AM - a break under would be bearish.
Dollar index: After yesterday's big gap down, today the dollar took a small gap up for a star. The chart is pretty indecisive but the indicators continue to move lower, suggesting a possible lower dollar Tuesday.
Transportation: The trans continue to copy the Dow with a doji today, but they're not as overbought as the Dow yet and we're still 50 points from the upper BB. So while the doji may warn of a reversal, there's also still a bit of room to run higher. Right now this chart's not looking too bearish.
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 0 0 1.000 9
And the winner is...
Tonight, the markets have the feel of a college campus the day before Thanksgiving. The halls are mostly silent and only a few die-hard grad students are to be found still hanging around. With all the dojis and stars running around the charts tonight and an abbreviated session on Tuesday that will obviously be sparsely attended, there's no point in making an official call tonight. I'll simply note that the market in general appears ready to attempt a retracement of Friday's big gains. I doubt it will happen Tuesday though. We might even manage a small gain - I don't know. Me, I'll be out stocking up on hot dogs and hamburgers for the grill and laying in a supply of cold beer in anticipation of some relaxation on Wednesday.
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 once again in anticipation of a nothing day on Tuesday. 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.
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