Tuesday uncertain

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

• Tuesday uncertain, pending election.
• ES pivot 1414.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

It wasn't looking too promising early on as the Dow sank right out of the gate, but then it slowly ground its way higher to finish up all of 19 points, thus redeeming my call for a higher close.  Tonight's even tricker, with our one chance to send Emperor Nerobama into retirement finally on our doorstep.  How will Mr. Market react?  He'll no doubt try to play it coy, but the charts don't lie so let's get to them.

The technicals (daily)

The Dow: Today the Dow was back to its doji ways, handing us a spinning top, the fifth reversal signal in seven sessions.  But it remains stubbornly  rooted to the 13,100 area, having opened or closed there for eight straight now.  So what I said last night remains true tonight - with this level acting as support and with indicators still only just coming off oversold, the Dow seems to have more upside potential than downside risk from here.

The VIX:  Last night I said the VIX "could go lower" today.  Right now I have no idea why I said that as the VIX instead gained 4.72% today, vaulting right back over its 200 day MA.  But in doing so it formed a very clear evening star doji.  On the other hand, this move also bumped it right out of the descending RTC for a bullish setup and the stochastic formaed a bullish crossover today.  So all in all, I need to take a wait & see attitude towards this, esepcially considering that tomorrow is Election day.

Market index futures: Tonight all three futures are up at 1:00 AM EDT with ES higher by 0.09%.  ES is now pretty congested in a range from 1400 to 1415.  The only tendency I can spot is that we've been putting in higher lows for the past five days.  The only downward sign I see is that the stochastic just formed a bearish crossover so I'm a bit leery of calling ES higher at this point.

ES daily pivot: Tonight the pivot drops from 1414.00 to 1410.00 even.  That, combined with ES drifting higher in the overnight now puts us above the pivot for the first time in a while - a bullish sign.

Dollar index: Last night I wrote "it's possible the dollar could still go higher on Monday" and it did, tacking on another 0.20% on a gap-up evening star that formed entirely above the upper BB.  Combined with highly overbought indicators, I'd say the dollar is getting kind of overextended here and is due for a pullback on Tuesday.

Euro: Meanwhile, the euro's decline continues unabated, remaining in a descending RTC back to October 17th.  After breaking under the 200 day MA on Friday, it was unable to recover today, closing at 1.2793 and continuing lower again in the overnight.  And while the indicators are oversold, they're not that oversold and the euro has no support until around 1.2714 so it's not out of the question that the slide could continue again on Tuesday.

Transportation: I was right about the trans moving higher today too, as they rose 0.27%.  That was just enough to remain inside the rising RTC.  However, we were stopped just shy of the 200 day MA and the stochastic is beginning to form a bearish crossover.  And it looks like there's a double top forming around  resistance at 5165.  So tonight it's questionable whether the trans can move higher again 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  23/39

 40  10/1       39         39        -     1441  24/40

 41  10/8       52         34        +     1461  24/41

 42  10/15      41         32        -     1429 

 43  10/22      38         41        -     1433

 44  10/29      36         43        -     1412

 45  11/5       44         33        -     1414

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 10/8 was wrong, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with 8 weeks to go in 2012, I'm 24 for 41 or 59%.

This week we got a sentiment reversal after two weeks of a bearish majority, basically putting us back where we were on October 15th.  I voted bearish again, putting me in the minority of participants. I note though that the SPX is now near some monthly support and the weekly chart looks like it may be turning bullish soon.  If this continues, I may change my vote to bullish next week.

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    8      5      8           0        .615     208 
November   1      1      1           0        .500    -120

     And the winner is...

I'm not really seeing much enthusiasm technically for going either up or down tonight.  No doubt lots of people (me included) are just sitting on their hands waiting for some election results to give the market some direction.  Because of this, I'm just going to call Tuesday uncertain.

One possibility is that the market will go higher once the results are announced no matter who wins.  There's been a lot of blather on TV about how the outcome could be a tie, but I think that's just pundits with too much time on their hands.  So I'd be wary of going short here but I'm not quite ready to commit to the long side either.  It's just more wait & see.

ES Fantasy Trader

Last night's long trade wasn't looking too healthy early on this morning, but it eventually went profitable so I figured it was time to get going while the getting was good.  Good for just three quarters of a point perhaps, but hey, I'll take it.

Portfolio stats:  the account now rises to at $194,250 after 69 trades (54 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside in the face of Election Day.  There's no point trying to second guess this one..

SLD    10    false    ES    DEC12 Futures     1409.25    USD    GLOBEX    11:03:16
BOT    10    false    ES    DEC12 Futures     1408.50    USD    GLOBEX    01:16:14