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- Tuesday uncertain.
- ES pivot 1401.08. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
As has been the pattern of late, the Dow hasn't been able to put together two consecutive big up days and today took a breather in the form of a 42 point loss. But with a number of factors in play now, including the usual end of year seasonality, news from Europe, news from China, and the endless fiscal cliff, we're at an interesting juncture. Let's see if the charts can point out the road to success.
The technicals (daily)
The Dow: Once again, the Dow was stymied by its 200 day MA, briefly crossing above intraday only to retreat and close back under at 12,967, also giving up the 13K support level in the process. And the indicators got more overbought although the stochastic is still not forming a bearish crossover yet and we still remain inside the rising RTC. Today's candle was a hanging man, but that's the kind of reversal warning that requires confirmation, so I'm hesitant to call this chart lower Tuesday on that basis alone.
The VIX: Last night I called for "a higher VIX on Monday" and we got it, with the index gapping up for a 2.38% gain. But it did it with a bearish shooting star. So we now have a bearish candle but highly oversold indicators somewhat at odds with each other. I'll note that the futures continue to look bearish so I'm going to be cautious about the prospects for further VIX gains on Tuesday.
Market index futures: Tonight all three futures are up at 1:06 AM EST with ES higher by 0.25%. Today's ES candle was almost a dragonfly doji and it drove the indicators to a highly overbought level with RSI now at 93.5 and the SPX Hi-Lo indicator hitting 100, all bearish signs. But - we remain inside the rising RTC indicating that the uptrend is not over yet and we're not seeing any downward pressure in the overnight so far so I'm cautious about being overly pessimistic on this chart.
ES daily pivot: Tonight the pivot bumps up from 1400.00 to 1401.08. We broke above the old number around 2 PM Monday and have been drifting higher ever since, so that's a bullish sign.
Dollar index: On Monday the dollar gained just 0.04% but did it with a little red hammer that kept the chart oversold. Like the other charts above, this one is somewhat lacking in direction and I'm not taking a stab at it.
Euro: Continuing the theme of ambiguity, the euro gave us a small red spinning top on Monday. My guess is that while the indicators may be overbought, they're becoming overbought-broken and the candle is suggesting some underlying support that's preventing a breakdown. Indeed, the new developing candle is currently a doji but one that's sitting 0.21% above Monday's candle. And all this action remains well within the rising RTC. This may be the clearest chart tonight and I'm thinking the euro could move higher again on Tuesday.
Transportation: The trans continued their winning ways today to the tune of 0.65% even as the Dow sank 0.33%. This keeps them solidly inside their rising RTC. This was enough to just send them into overbought but the stochastic is nowhere near going bearish. And there's no resistance until the 200 day MA at 5116. Last night I called this chart "pretty good" and I'd have to say it's still looking good tonight.
Accuracy (daily calls):
October 8 5 8 0 .615 208
November 7 4 4 0 .636 242
And the winner is...
This is looking like a sneeze market. You know how someone goes "ahh.. ahhh..." and you keep waiting for the "choo" only it doesn't happen? Technically, the charts seem to be looking toppy here and ready to roll over. But I'm thinking Tuesday may be more a function of the IMF news on Greece that just came out. We also have some good news on Chinese industrial profits as well as good US holiday consumer numbers. And Tuesday is historically quite bullish and the strongest day of this week.
All of which sort of leaves us hanging between the Scylla of good news and the Charyibdis of bearish technicals. And that can only leave me with one possible verdict: Tuesday uncertain. I'm going to just sit back and wait for the break either way. That's all she wrote.
ES Fantasy Trader
I was actually thinking of pulling the plug on last night's short tghis morning and then figured I'd just check my email first. Of course by the time I came back, most of my gains had evaporated so I settled for just half a point profit. Still, I'm glad I got out when I did because ES just kept going higher from there. Oh well - they can't all be home runs.
Portfolio stats: the account now rises to $198,000 after 72 trades (57 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we stand aside.
BOT 10 false ES DEC12 Futures 1398.50 USD GLOBEX 11:56:36
SLD 10 false ES DEC12 Futures 1399.00 USD GLOBEX 01:35:52