Tuesday uncertain

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

• Tuesday uncertain.
• ES pivot 1414.08.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Well last night I wrote "Monday is going to be another one of these doji days like we saw last week" and sure enough the Dow delivered a nice dragonfly doji, ending the day down just 3.5 points.  While the bears made a valiant effort early on to knock 'em down, the bulls battled back - but were unable to move past the resistance that marks the highs for the year.  So is this a top or are we back to last week's sideways motion?  Let's check out the charts.

The technicals (daily)

The Dow: The dragonfly doji is certainly a reversal indicator, though not the greatest, particularly in the current environment when we've seen so many reversal warnings come to naught.  After crying wolf so often, this market will have to show me the downturn before I believe it.  And with a bullish stochastic crossover just completed, I don't see any real indications of a big drop on the way here.

The VIX:  Like the Dow, the VIX gave us a doji, this one a spinning top that gained 4.24%.  Coming inside yesterday's red candle, this is pure indecision.  I though we were going lower today, but that option still isn't off the table for Tuesday.

Market index futures: Tonight all three futures are up just a bit at 1:12 AM EDT with ES higher by 0.05%.  Here's another daily chart with a doji on it.  Of interest here though is that while the overnight is slightly positive so far, the new candle has taken us right to the very edge of the rising RTC.  Moving below 1415.50 on Tuesday will cause a bearish setup while moving above this number will keep us inside the RTC.  Along the same lines, the stochastic is trying to form a bearish crossover.  A move lower in ES will complete it, while a move higher will cancel (or at least delay) it.  Tomorrow will tell this tale.

ES daily pivot: Tonight the pivot ticks down from 1414.25 to 1414.08.  With such a small change and continued sideways action in the overnight, we remain in bullish mode here but need to continue watching for signs of a break below the pivot.

Dollar index: The dollar remains mired in a range on the $USDUPX between 56.83 and 57.20.  Down 0.2% today, it's sort of just bouncing around those two levels like a ping pong ball in a paint mixer.  We did get a bearish engulfing pattern and a bearish stochastic crossover, for what they're worth.  So more dollar declines are possible, but far from certain.

Euro: Meanwhile, the euro seems to be forming an ascending triangle.It looks nearly complete which means that an upside breakout could happen Tuesday.  After nice gains earlier on Monday, it continues to rise in the overnight.  This would be good for stocks.

Transportation: And to cap it all off, one last doji in the trans - a spinning top that lost just 0.08% on Monday.  But we do have a stochastic that looks like it's just about to execute a bearish crossover and a very elevated RSI at 96.39.  So it looks like the downside is favored here, but whether that will happen on Tuesday is impossible to say.

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  16/28

 29  7/16       44         32        -     1357  16/29

 30  7/23       33         42        -     1363  16/30

 31  7/30       43         22        +     1386 

 32  8/6        52         28        +     1391  

 33  8/13       43         21        +     1406 

 34  8/20       46         31        +     1418

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 7/23 was wrong, the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 30.  After an impressive start this year, my monthly calls have now been wrong for 11 weeks running.   For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.

This week both bullish and bearish sentiment increased, as some people got off the fence.  But the big change was that bearish sentiment increased 10 full points, but we remain bullish on the whole.

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  6      3      4           1        .700      85


     And the winner is...

After one big pop last week, the market seems to have gone right back into its waiting game.  All the factors that were in play then are in play again.  We've still got the same resistance we had last night and the same lack of immediate downside warnings.  We're seeing dojis all over the place but they're not counting for much, not tonight at least.  However, we are on the edge of a few important RTC's, so I think Tuesday should provide some more clarity here.  There are certainly some bearish indicators out there, but not enough for me to commit to the down side just yet.

So in the absence of a definitive indication one way or the other, I'm once again going to guess that we're in for another doji day and therefore that makes Tuesday uncertain.  The wild card of course is the FOMC minutes.  There's never any telling how the market is going to react to that but my personal wild guess is that they're not going to have a big effect this time.

ES Fantasy Trader

Portfolio stats: the account remains at $166,625 after 57 trades (43 wins, 14 losses) starting from $100,000 on 1/1/12.   Since like last night I don't really see an edge either way tonight, we're just going to stand aside again.  Patience is still a virtue.

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.