Tuesday uncertain

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

• Tuesday uncertain.
• Rest of week bias uncertain technically. 
• ES pivot 1450.25.  Holding above is bullish. 
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

We were looking for lower today and got it, albeit on yet another tiny move as the Dow lost just 20.55 points and extended its streak of uncertainty to seven straight sessions now.  That now beats the similar pattern we had last month that only ran for six days in a row.  These sorts of runs are the hardest to call because with little candlestick guidance, there's no telling which way the market will move when the break finally comes.  So we'll see what the other charts have to say as we set up for Tuesday.

The technicals (daily)

The Dow: Yet another doji for the Dow today, this one a little spinning top.  Of course in this environment, that counts for little.  About all there is to see on this chart is that the indicators have now exited overbought territory and seem headed down to oversold, suggesting a move lower for the Dow.

The VIX:  And the VIX gave us a 1.22% gain but did it on a funny red candle that traded entirely above yesterday's doji to leaves us right back in the middle of its trading range.  The VIX has closed between 13.6 and 14.2 for five days straight.  Today's action did bring us off oversold levels though and continuing gains in the futures suggest that the VIX could move higher still on Tuesday.

Market index futures: Tonight all three futures are up at 1:36 AM EDT with ES higher by 0.21%. ES is pretty much doing what the everything else is doing - just trading sideways in a narrow range.  And today's small spinning top was no exception.  What today's drop in ES did accomplish was to send it into oversold territory for the first time since August 30th.  However, the overnight gains so far remain firmly inside the trading range.  I need to see ES break above 1455 to believe we're going to see some real upside.  Right now it's not clear that that will happen on Tuesday.

ES daily pivot: Tonight the pivot drops from 1454.92 to 1450.25.  This now leaves us above the pivot for the first time in a few days, a positive sign.

Dollar index: Like the VIX, the dollar gave us a funny gap-up red candle that resulted in a 0.23% gain and kept us inside the rising RTC.  There are no reversal indicators here yet, so one must expect further gains for the dollar.

Euro: And as the dollar rose, the euro continued its decline on Monday remaining solidly inside its descending RTC.  Then after drifting higher in after hours, it suddenly dove again at 1:10 AM, I think on some Chinese news.  So although the euro has now fallen all the way to oversold, it looks like it can run lower still.

Transportation: Last night I expressed some skepticism about the ugly looking recent decline in the trans and sure enough today they rose a solid 1.02% on a bullish piercing pattern.  And the stochastic has now flattened out and looks close to executing a bullish crossover, most likely tomorrow.   I'd say that the trans look likely to move higher Tuesday.

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  17/31

 32  8/6        52         28        +     1391  18/32

 33  8/13       43         21        +     1406  19/33

 34  8/20       46         31        +     1418  20/34

 35  8/27       39         29        +     1411  21/35

 36  9/4        31         38        +     1407

 37  9/10       54         29        +     1438

 38  9/17       63         22        +     1466

 39  9/24       52         30        +     1460

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 bullish call on 8/27 was right again, the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 21 for 35, or 60%.  For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.

Of interest this week is that the bull-bear spread narrowed from the considerable 41 points last week to just 22 points this week.  This takes some pressure off the contraraian bearish stance.

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    8      6      8           1        .600     -78
September 6      5      4           0        .545     -86

     And the winner is...

So tonight is pretty much a rerun of last night, except that I'm not quite as bearish.  The failure of the market to move lower today after seemingly be primed to do so makes me wary of calling it lower.  On the other hand, with no convincing indications of buying pressure, I can't really get on the bandwagon for a move higher.  So all that leaves is uncertain for Tuesday, once again.

My feeling though is that Tuesday is going to set up for some non-trivial gains on Wednesday, but that remains to be seen.

ES Fantasy Trader

Well it wasn't much of a trade, but at least it wasn't a loss.  With ES seemingly knowing that my entry point was resistance, I decided to call this one in when it gave me a quarter point sliver of profit.  And I was glad I did, because ES then moved higher.

Portfolio stats: with no trade last night the account now inches up to $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight with no good directional edge, we're standing aside.

BOT    10    false    ES    DEC12 Futures     1,448.250    USD    GLOBEX    13:30:38
SLD    10    false    ES    DEC12 Futures     1,448.500    USD    GLOBEX    SEP 20 01:26:46

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.