Actionable ideas for the busy trader delivered daily right up front
- Tuesday lower, low confidence.
- ES pivot 1411.83. Holding below is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias uncertain.
- ES Fantasy Trader remaining short at 1396.00.
My call last night was "Monday lower if we break below the ES pivot at 1414.58 by mid-morning." And that's exactly what happened. ES gave up the pivot at 10:50 AM and that was that. Don't be fooled by the vain fake-out break-out attempt at 11:50 AM. The volume put the tell on that and by 12:40 PM it was all over with the Dow finishing the day down 60 points. Now let's look at the charts to see if we've got any pin action for Tuesday.
The technicals (daily)
The Dow: Last night I commented that the Dow seemed to be running out of gas. Today the tank ran dry and we lost 0.46% as resistance around the 13,050 level proved too tough to crack. And for collateral damage, we fell out of the rising RTC for a bearish setup, dropped the 13K psychological support level and crashed right through the 200 day MA at 12,996 for the second time in six days. That's three strikes, yer out. And the indicators are still all overbought, though they now appear to have topped (which in itself is bearish). This chart's not looking good.
The VIX: Last night I called for "higher again on Monday" so now I'm two for two as we gained 4.85% here today. Today's tall green marubozu suggests nothing but higher still and there's no resistance til the 200 day MA at 17.55. Also, the indicators are rising but not yet overbought so I'm going to go for the hat trick and call for higher again on Tuesday.
Market index futures: Tonight all three futures are down at 1: 04 AM EST with ES lower by 0.23%. Like the Dow, ES was unable to break a three day resistance line, here at 1420. The bulls appear to be exhausted form the effort and we're finally seeing the pullback I've been expecting for a couple of days now. The overnight declines are just enough to bring us to the edge of the rising RTC for a bearish setup but I'll note that this one has a fairly low Pearson's coefficient of just 0.889, so we might already have exited the trend. With declining indicators it sure looks like we're headed lower on Tuesday here.
ES daily pivot: Tonight the pivot drops from 1414.58 to 1411.83. With ES wandering lower in the overnight we remain a good eight points under the new pivot so that's a bearish sign.
Dollar index: On Monday the dollar gapped down 0.36% and landed on its lower BB with a bullish morning star. With oversold indicators I now believe that we have a chance for a dollar rebound on Tuesday but this sort of move requires confirmation.
Euro: In some impressive divergence, the euro on Monday posted a big gain closing at 1.3059 while our major averages all moved lower.The E is taking a breather in the overnight with the new candle forming as a spinning top suggesting we could see a move lower on Tuesday. That would mesh with my ideas for the dollar.
Transportation: And I got this one right too last night when I said "I'm looking for lower trans again on Monday" as the trans posted their biggest loss since November 14th falling 1.13%. And like the Dow, this was enough to drop us out of a rising RTC for a bearish setup and right through the 200 day MA. The bearish stochastic crossover is confirmed, the indicators remain overbought but have peaked, so all i all this chart's looking lower again..
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 (it's getting pretty long):
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
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 25/42
43 10/22 38 41 - 1433 26/43
44 10/29 36 43 - 1412 27/44
45 11/5 44 33 - 1414 27/45
46 11/12 38 46 - 1380
47 11/19 52 34 + 1360
48 11/26 48 26 + 1409
49 12/3 57 21 N 1416
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 bearish call on 11/5 was just barely wrong, the S&P now being two points higher than then. I'm using the column "Accuracy" to track my calls. So now with just three weeks to go in 2012, I'm 27 for 45 or 60%.
The interesting thing this week is that we set a YTD record for bullish sentiment: 57%, while bearish sentiment tied the record low at 21%. Perhaps people are getting caught up in the Santa Claus ho-ho-ho seasonality. I sure can't understand it. Personally I voted Neutral, for the first time ever, mainly because 30 days from now will be the first day in 2013 and to my mind, whether we';re up or down depends entirely on whether or not we see a fiscal cliff resolution by then. And right now that's pretty much up in the air. With no way to predict that, I can't really vote either plus or minus.
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 7 5 5 0 .583 135
December 1 0 0 0 1.000 60
And the winner is...
Last night I was seeing a few storm clouds on the horizon. Tonight they appear to be gathering as most of the charts ar elooking bearish. And I'll note that the wonderful Rob Hanna is suggesting an edge to the downside now. So I'd say we could get some further declines tomorrow and I'm calling Tuesday lower.
ES Fantasy Trader
Portfolio stats: the account remains, for the time being, at $198,000 after 72 trades (57 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we remain short at 1396.00. This trade is running a bit longer than most but I believe that patience will eventually prevail.
Posts
Michele-
ReplyDeleteA quick question. Above, you wrote “Tuesday lower, low confidence.” My question is why you added the cavaet of “low confidence”. Reading through the analysis, item by item, it seemed that if anything there was an unusual preponderance of conclusions supporting a thesis that today’s strong reversal has a high likelihood of continuing to the downside. (Including a YTD high in bullish sentiment in a poll.)
..As opposed to times when some of the factors you consider are strongly one way, but others are very much the other way...
By the end it seemed your tone was, “--and here’s annudder one, and here’s annudder one...” And I went back to the top of the posting and checked the Trend box, and it’s neutral-- so the prediction isn't even going counter to that directional measure.
Is there some other factor which is giving you pause, but is too inchoate, or too complex, to go into in such a short and concise format?
Otherwise, I too have been reading the nearly universal sentiment that the market HAS to go up for at least another week because “it’s December”. To me this makes it even more vulnerable to any technical weakness, since the initial investor reaction by many will be denial. (This is Santa time, the market now goes up, yes? NO!! Panic.)
Good eye, Daniel. Basically my confidence is going to be low on any moves until we see a fiscal cliff resolution. Until then, the market's going to respond to every talking head that shows up on TV with comments of "progress" or "lack of progress".
ReplyDeleteMichele-
DeleteWas I hallucinating worse than usual? I thought the Trend symbol in the top right corner of your site was the neutral X, as I posted, but I see now that it's pointing down... did it change since I posted my comment, or did I just mis-read it, maybe remembering a prior day..?
Also, what happened to your PI? They've taken it away and left you with a minus sign. Did Blogspot non-renew your license and sell it to the highest bidder, the bastards!?
Took me a moment to notice it was gone...
Ha, yeah well let me tell you what happened. I got this new Android phone and I was setting up my Google stuff on it. During that process, up pops some screen about Picassa and all the albums I have there. So I'm like, I don't use Picassa and I don't need any of that junk so I just deleted everything.
DeleteWell come to find out that while *I* may not use Picassa, that's where Blogspot caches every single image you insert into a blog. So without realizing it, I deleted all of my trend arrows, my user icon, and even my NightOwl title image. Not cool!
Fortunately, I had backups of everything but it still took me a while to a. realize what had happened and b. fix it.
Then I decided that while I was at it I might as well turn the trend arrow from X to down since it's looking like we're now officially in a new downtrend. Live & learn.
Not really sure what sparked this late-night rally but now it looks like we will at least reach ES print of 1424 and possibly go higher before turning down.
ReplyDeleteVery keen to your take on the market. Doesn't bode well for the short position. Reverse and go long here or not is the big question!
Thanks.
I'm looking at that right now. About all I've been able to find is some noise about "technical rebound in the Chinese markets" or something to that effect. I'll have to see what all the charts can tell me. It's an interesting move, I'll grant you that.
Delete