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- Tuesday uncertain.
- ES pivot 1375.83. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
Today we got the rally I was looking for and then some with the Dow jumping 208 points on a mixture of housing numbers and more blather from politicians about how the fiscal cliff might be averted. And notice how well the SPX Hi-Lo indicator played out. Recall that way back last Thursday night I wrote "the SPX Hi-Lo index fell back to 8.33 today, a level from which rallies pretty much always follow. "
Whatever, I'll take it. Now let's see how the rest of this holiday-shortened week might play out.
The technicals (daily)
The Dow: Today's big pop gave us the bullish RTC trigger confirming last Friday's bullish setup. It also brought the indicators all the way out of oversold and on the path towards overbought. And the rally stopped right in the 12,816 area that marked congestion last week. So while technically, this chart looks good, note that more often than not, a big up day is followed by a small doji day. The fact that this is a holiday week increases the liklihood of that.
The VIX: I wasn't ready to call the VIX lower for Monday, but it responded to the bearish weekly chart by gapping down another 7.13% to close at 15.24, below its lower BB. It also drove the indicators more oversold. Interestingly, this is the first time we've touched the lower BB since June. Back then, we had two more days lower and then a big jump. So I'd say that further downside for the VIX is limited from here, though it may not begin rising immediately on Tuesday.
Market index futures: Tonight all three futures are down just a bit at 1:00 AM EST with ES lower by 0.05%. ES put in a tall green marubozu today that significantly sliced right through the 200 day MA in a move reminiscent of the end of last May. It also provided us with a bullish RTC trigger and brought us off oversold. However, what I said about the Dow holds here too: after a big move up, watch for ES to take at least a one day breather.
ES daily pivot: Tonight the pivot jumps from 1353.50 to 1375.83. With ES little changed in the overnight, this now puts us a lot closer to the new number, but unless we break under it, that's still bullish.
Dollar index: Last night I wrote "I'd say the dollar is ready to move lower" and today it finally did, losing 0.48% in a move that gapped down back below its 200 day MA and putting some distance from it for the first time in six sessions. But even that left the indicators still just in overbought territory so I'd say the dollar could move lower again Tuesday.
Euro: Today the euro negated Friday's bearish engulfing pattern with a big gain that stopped just short of its 200 day MA, closing at 1.2811 Then after gapping down at the open this evening, it began climbing again and it's current level of 1.2803 is just enough to get it back into the new rising RTC. Today's gains did bring us into overbought territory but without a reversal candle or RTC trigger, I'd hesitate to call the euro lower just yet.
Transportation: Recall that last night we had two reversal candles on the trans: a doji followed by a strong hammer. And today the hammer came down as the trans jumped 1.89%. But even that was only enough to bearly get us off oversold so I'd say we still have a fair bit of room to run on Tuesday.
Accuracy (daily calls):
October 8 5 8 0 .615 208
November 5 3 4 0 .625 249
And the winner is...
Although there are still no real bearish signs in the charts again tonight, I'll note that the two days leading up to Thanksgiving are historically fairly weak, and given the big run we had on Monday the pattern has been for the market to take a pause the following day. So I'm going to call Tuesday uncertain, not because I can't tell which way we're trending but because I'm expecting a small-range doji day. I'll bet a lot of traders are already wrapping things up if not simply taking the whole week off.
ES Fantasy Trader
Patience was rewarded again today and although I only took a slim 0.75 point profit, it felt like a much bigger win since I was down over $13,000 at one point on Friday Still, this trade had run its course so I decided not to press my luck.
Portfolio stats: the account now rises to $197,750 after 71 trades (56 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we stand aside. I don't think there's much of an edge here and I'm not expecting any big moves on Tuesday anyway.
SLD 10 false ES DEC12 Futures 1377.00 USD GLOBEX 11:04:17
BOT 10 false ES DEC12 Futures 1376.25 USD GLOBEX NOV 14 00:52:49