Tuesday lower

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

• Tuesday lower, low confidence..
• ES pivot 1391.00.  Holding under is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader going short at 1390.50.

Recap

Last night I called Monday's close as "uncertain".  But there are two different types of uncertainty - one in which you expect the market to move but are not sure which way, and the other, where I wrote "I expect little change [on Monday]".  In the latter case, there's not really much point in calling a close "higher" or "lower" when there isn't going to be much price movement.  And I think today fit the bill, with the Dow finishing up just 21 points (and my calls are always for the Dow).  Accordingly, I think I'm going to add this one to the "right" column in my daily accuracy section but I won't accumulate the Dow points since I didn't call a direction.  Anyway, let's see now where Tuesday may go.

The technicals (daily)

The Dow: Today's small gain was in the form of a long shooting star - a bearish reversal pattern, coming as it did at the top of a big up-day and just touching the upper BB.  And RSI actually peaked on Friday and has begun moving lower, still overbought.  Plus the stochastic's attempted bullish crossover was canceled and the stochastic is now all threaded out.  So overall, this chart looks ready to roll over.

The VIX:  Of the VIX, last night I wrote "I'm not seeing much more downside left".  Turns out there wasn't any downside left and the VIX gained 1.98% on a little inverted hammer.  But that was enough to hook RSI upward from oversold and drive the stochastic into a position from which to form a bullish crossover Real Soon Now.  And the futures's stochastic did just form a bullish stochastic crossover on a double hammer pattern today.  Verdict: more upside to follow.

Market index futures: Tonight all three futures are actually up, but by the slimmest of margins, with ES up just a single tick at 1:33 AM EDT.  Today's candle was a classic doji with ES closing just one tick below where it opened.  Coming as it did at the top of Friday's tall green candle, there is, like the Dow chart, the suggestion of lower to come.  RSI and OBV have both already started down from overbought levels.

ES daily pivot: Tonight the pivot jumps from 1379.83 to 1391.00 even.  Because of this we just broke below the new number.  Unless ES can break back above by morning, this is a negative sign for the market.

Dollar index: The dollar put in a small hammer on Monday entirely below Friday's big drop, at least suggesting the possibility of a reversal on Tuesday.

Euro: Meanwhile the euro put in a totally classic bearish long-legged starthat closed right on the upper BB.  The follow-through in the overnight so far seems to be guiding lower and the euro just broke under its own pivot.  This chart suggests lower to come.

Transportation: Always worth watching, the trans today dropped 0.08%, seemingly stymied in their attempt to cross the 200 day MA on a long shooting star, just like the Dow's.  The indicators are kind of in disagreement, no doubt as aftermath to Friday's big run-up, but I'm not liking the combination of 200 MA failure and the shooting star.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points

April   7      9      2                    .438
May    10      7      3           2        .632  
June    8      6      6           1        .600     632
July   11      2      6           1        .857     917
August  3      0      1           0       1.000     125


     And the winner is...

I dunno - tonight I'm just not feeling the love, baby.  I'm seeing a bunch of doji's out there and indicators at extremes that suggest to me that the market's going to be wanting to retrace some of last Friday's big gains.  Accordingly, I'm calling Tuesday lower.  I also took out some SDS again today at 14.76 to hedge my longs.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $180,375 after 55 trades (43 wins, 12 losses) starting from $100,000 on 1/1/12. Tonight, with the market looking tired, we go short at 1390.50.

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.