Tuesday, January 29, 2013

Tuesday higher if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher if ES pivot holds, else lower..
  • ES pivot 1496.08.  Holding above is bullish...
  • Rest of week bias uncertain  technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well the Dow's winning streak is snapped at six and it took my call for a higher close with it after a late afternoon slip sent us negative on the day.  But a meager 14 point loss is hardly worth writing about..  Or is it?   Let's stir up the chart anthill and see what climbs out.

The technicals (daily)

The DowSo we got a small spinning top on Monday.  Sure it's a reversal sign, but we've seen five of these over the course of the last thirteen sessions and not a single one of them panned out.  So I'm a little skeptical of getting bearish just because of this, in particular because we remain in the rising RTC and still haven't touched the upper BB yet.  So this chart is going to have to show me a solid red candle before I believe it's a pullback.  And that means closing under 13,767 on Tuesday (the RTC edge).  Think we're in for a 114 point tumble Tuesday?  Me either.

The VIX:  Then again, the VIX finally posted a real gain on Monday, gapping up 5.28% to send the indicators off oversold and confirming the bullish stochastic crossover.  So why isn't the market going lower? I wish I knew.  This is highly unusual.  Rob Hanna commented on this himself today in his Quantifiable Edges post here.   Perhaps people are simply anticipating the top and getting their puts in early.  

Market index futures:Tonight all three futures are just barely higher at 1:06 AM EST with ES up by 0.07%.  ES gave us a small spinning top today but the overnight doesn't seem to be confirming it.  Still, unless we can pack on a few more points, this is moving us closer to the right edge of the RTC.  If we close below 1492.50 on Tuesday, that will be a bearish setup.  Or, ES may just be gearing up for an attack on 1500.  Either way, I'm still not seeing a pullback yet on this chart.

ES daily pivot: Tonight the pivot inches up from 1493.92  to 1496.08.  The situation is almost identical to last night at this time.  We were above the old pivot all day (aside from a brief test around 10 AM) and we remain above the new number, but a bit less so.  Still, that remains bullish unless we break under.  With just a two point spread now, the pivot is definitely in play and bears watching.

Dollar index: The dollar continued its random walk today, gaining all of 0.06% and remaining range-bound.  Stuck halfway between the BB's, with indicators halfway between overbought and oversold, and without an RTC there continues to be zero guidance from this chart..Maybe there's a clue in the euro.

Euro: Hmm, there might be.  The euro put in a tall spinning top today near the top of Friday's tall green candle.  And the overnight action is headed lower, confirming (so far anyway),  the reversal candle.  The indicators here are now on the move lower off overbought, so I'd say a lower euro on Tuesday is definitely possible.

Transportation: It looks like the phenomenal rally in the trans may finally be sputtering to a halt as they managed to gain just 0.09% on Monday.  And did it on a hanging man, making it two in a row.  Volume has also been declining for three days suggesting buyers may be getting wary at these heady levels.  So I'd say we may be near a pullback, but without seeing a red candle and an RTC exit, I still can't pull that particular trigger.  We might just get some consolidation for a few days.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      6      6           2       0.500

     And the winner is...

On the one hand we have the proximity of ES to its pivot tonight, a rising VIX, the fact that the Dow failed to advance on Monday, and the trans may be signaling an end to their rally.  On the other hand, we've seen this movie before and the market just picked right back up the next day.  Therefore, I'm making another conditional call tonight.  Watch the ES pivot.  If we manage to stay above 1496.08 by mid-morning (say the 10-11ish area), then we'll close higher Tuesday.  Else lower.  So sez I.

ES Fantasy Trader

Portfolio stats: the account remains at $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Now I'm glad I did not go long last night, but with the doji, it didn't really make much difference anyway.  Once again, I'm just going to sit on my hands waiting for the long overdue pullback.

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