Tuesday higher

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

• Tuesday higher, low confidence.
• ES pivot 1429.50.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

Last night I played it conservatively.  The most I was willing to commit to was "uncertain" but with a positive bias.  Turns out we were positive alright - a positive 95 points to snap the Dow's five day losing streak.  So was this a one-off or is there more upside to come?  Let us now round up the charts to give them the full treatment and get the answers we're looking for, whether they like it or not.

The technicals (daily)

The Dow: Today's 0.72% advance decisively broke us out of the descending RTC for a bullish setup and a 95% chance that the downtrend is over.  The bullish stochastic crossover is also now complete.  Money flow and OBV have also now hooked upwards.  All of this suggests continued upside on Tuesday.

The VIX:  Yesterday the VIX has posted two consecutive gains, but I pointed out that the bearish stochastic crossover was usually a pretty good indicator.  And if paid off today as the VIX dropped 5.39%.  We also have a bearish RTC trigger now and declining futures, so more downside is possible for the VIX on Tuesday.

Market index futures: Tonight all three futures are up at 1: 40 AM EDT with ES higher by 0.17%.  Today's big gains in ES gave us a decisive bullish RTC trigger marking the end of the recent downtrend.  In addition, the bullish stochastic crossover is now nicely complete and we're seeing encouraging follow-through in the overnight.  I see more upside left in this chart for Tuesday.

ES daily pivot: Tonight the pivot rises from 1425.33 to 1429.50.  We were above before and remain above the new number, so this continues to be bullish.

Dollar index: I'm going to punt on this chart tonight.  The dollar just looks like it's being jerked around by politics of some sort.  Regrettably, I see no technicals clues here as to where we may be going next.

Euro: Like the dollar, the euro is sort of rattling around right now looking for a direction.  It moved lower today in regular trading but is now back above the day's highs in the overnight at 1.2980.  The best clue here comes from the indicators which are now rising off oversold and seem to suggest continued higher on Tuesday.

Transportation:Last night I wrote of the bullish stochastic crossover from a high level that "these are good indicators of higher to come".  And so we were in fact transported higher today, by 0.41%.  Our close at 5065 also broke through resistance at 5055.  I think there's still at least a little gas left in this particular tank to continue higher on 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  22/36

 37  9/10       54         29        +     1438  23/37

 38  9/17       63         22        +     1466  23/38

 39  9/24       52         30        +     1460 

 40  10/1       39         39        -     1441 

 41  10/8       52         34        +     1461

 42  10/15      41         32        -     1429

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 9/17 was wrong after a string of rights, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with 10 weeks to go in 2012, I'm 23 for 38  or 61%.

This week I switched my vote back to bearish.  This is mainly because the monthly SPX candle for October has now turned into a perfect star doji.  I have the feeling that these candlestick reversal patterns work better on longer time frames, like the monthlies, so I'm willing to give more credence to a half-baked candle like this one.  And even more telling, at 1440 the SPX has now fallen out of a rising monthly RTC going back to June and that is a bearish setup.  If the SPX can manage to end October above 1470, then this setup is canceled.  If not, then I do think we're going lower.

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  8      6      5           0        .571     -19
October    4      4      3           0        .500    -116

     And the winner is...

After two days of indecision, Monday delivered the bullish confirmation I've been waiting for.  So with no real negative signs in the charts tonight the logical course is to declare Tuesday higher.

ES Fantasy Trader

 Last night I wrote that "I still have confidence that [this trade] will turn profitable tomorrow."  And so it did.  Patience paid off and we turned a loser into a five point winner.  Although I still think ES has more room to run higher, I decided to book this profit now rather than let it ride simply due to the strange way the market's been behaving lately and the general riskiness associated with October.  We can always get in again later.  Oh, and Tuesday is historically weak

Portfolio stats: the account rises to $185,000 after 67 trades (52 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside.  While I do believe that we're going higher on Tuesday, I think the move will be smaller than we saw today and there's always the possibility that by the time I'm up, ES will have reversed course.  Ordinarily I'd take this trade, but not in October.  .

SLD    10    false    ES    DEC12 Futures     1436.25    USD    GLOBEX    15:57:57   
BOT    10    false    ES    DEC12 Futures     1431.25    USD    GLOBEX    OCT 12 01:24:05


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.