Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher, low confidence.
- ES pivot 1472.25. Holding above is bullish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Well here we are again, on the eve of yet another holiday shortened week. Last Friday the Dow simply continued marching higher, and volume continued to rise too. At this point we have handily cleared last year's highs, we have totally erased the losses of the Great Recession, and we're fast closing in on the Dow's all-time highs of 2007. Time to get nervous? Let's ask the charts.
The technicals (daily)
The Dow: The Dow continues to defy all the indicators and remains entrenched in a rising RTC that now goes back to January 8. All that hanging man action of last week was for naught and we've now closed above last year's highs. And we still haven't touched the upper BB, which is now at 13,726. The weekly upper BB is even higher, 13,800. So I'm not going to fight this tape - this chart looks ready to more upside.
The VIX: And would you look at that VIX! After consolidating for seven days around the 13.65 area, on Friday it just took a massive 8.18% dump down to 12.46. The last time we were here was the beginning of June 2007 just as the VIX was starting to ratchet up before hitting 90 a year latter. Not that that's going to happen again, but with the VIX now down around 12, you have to wonder how much lower it can go. On the other hand, it seems in no particular hurry to move higher. The monthly indicators are nowhere near oversold and even the daily indicators, already oversold seem to be trying to move lower. After trying to call the VIX higher last week, I'm giving up on this idea now. I see nothing but lower, or at least consolidation ahead here.
Market index futures:Tonight all three futures are higher at 12:42 AM EST with ES up by 0.24%. This is already more than all of last Friday's gains and keeps us solidly inside the rising RTC. I see nothing bearish on this chart right now.
ES daily pivot: Tonight the pivot continues to rise from 1472.25 to 1476.83. We were above before and remain so now, ergo bullish.
Dollar index:On Friday the dollar gave us a nice gap up evening star suggesting the possibility of a move lower Tuesday. This worked the last time, and if I had to guess, I'd say the dollar's going lower Tuesday, but it's by no means a sure thing.
Euro: And the euro which moved lower on Friday, is now on the rebound in the Monday overnight, up 0.17% so far from last week's close. This keeps it in its recent consolidation range. There is a suggestion of a developing symmetrical triangle but we'll have to see how Tuesday's candle plays out. In the meantime, there's no real good guidance tonight for this currency.
Transportation:Ho hum. nothing new here either as the trans continued their seemingly endless march higher last Friday, tacking on another 0.25% to close at 5695. What was different this time is that we got a classic hanging man. Of course, reversal candles have counted for bupkiss lately, so we definitely require confirmation of this one before clling a top in the trans. In the meantime, we remain solidly inside the rising RTC and it's up, up & away!
Accuracy (daily calls):
And the winner is...
I'll be the first to admit it - I don't get it. The indicators are totally pegged at overbought, the SPX Hi-Lo index has been stuck on 100 longer than I've ever seen it, we're at multi-year highs all over the place, and yet still no pullback. What's fueling all this? Is it the retail crowd that has finally realized that bonds are not going to make them any money so they all suddenly want stocks?
Beats me. It's almost looking like irrational exuberance to me. But hey, you can't fight the tape, right? And right now the tape is moving higher, so I'm just going to call Tuesday higher.
ES Fantasy Trader
OK, OK, Uncle! I give up, I'm throwing in the towel, the washcloth, and the bathmat too. As Major Hochstetter says, BAHHH! There's such a thing as taking heat and there's such as thing as being just plain pig-headed. So with that we take a hideous 21.25 point pounding. I always seem to make at least one really stupid trade every year. Hopefully, we've now got that one out of the way for 2013.
Portfolio stats: the account now drops to $93,125 after 2 trades (1 for 2 total, zero for zero longs, 1 for 2 short). Tonight we stand aside, having just exited a trade.
BOT 10 false ES MAR13 Futures 1482.50 USD GLOBEX 00:43:00