Tuesday, February 5, 2013

Tuesday higher if ES pivot crossed

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher if ES pivot crossed, else lower.
  • ES pivot 1497.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Wow - I sure didn't see that one coming.  I even came right out and said I wasn't expecting a big move on Monday.  How's that old saying go?  "Fool me once, shame on me, fool me 3,276 times, find another line of business"?  About the best I can say is that did call Monday as "uncertain".  Anyway, moving right along, let's see if we can redeem ourselves for Tuesday.

The technicals (daily)

The Dow: The Dow's big dump on Monday took it back outside the rising RTC and closed there for the first time, and that is a clear bearish setup.  The indicators are also now clearly trending lower towards oversold.  And today's tall red marubozu, part dark cloud cover, part harami, just looks bearish.  Is this the start of the pullback everyone's been waiting for?  Hard to say without at least an RTC confirmation.  That should come on Tuesday.

The VIXAfter gapping down right out of its own rising RTC on Friday, the VIX on Monday gapped right back up again and right back into the RTC.  In fact its 13.72% gain closed right on its upper BB.  The VIX usually reverses when that happens but can spend a day or two climbing the BB.  With the indicators no longer overbought, that's a distinct possibility for Tuesday.

Market index futures:Tonight all three futures are higher at 1:29 AM EST with ES up by 0.13%.  ES is now giving us a bearish RTC breakout and declining indicators, all suggesting a move lower.  Still, we have to note the failure to move lower in the overnight so far.  This may simply be due to the support around 1495 that may crack soon, or it may be renewed buying pressure after Monday's drop.  Hard to say.  This is another chart that requires confirmation before calling a direction.

ES daily pivot: Tonight the pivot drops from 1504.33  to 1497.42. We've now been under the pivot since early Monday morning and remain there even with this drop.  It's just two points now but ES is showing little enthusiasm for testing the pivot.

Dollar index:I did correctly call the dollar higher on Monday.  In fact it gapped up a big 0.55%but ended with an evening star.  Frustratingly, the indicators look bullish so we'll have to wait for confirmation of a move lower from here based on the candle.

Euro: At least the euro/dollar inverse correlation is working.  The euro tumbled on Monday, crashing right out of its rising RTC for a bearish setup.  It's gapping even lower in the overnight and with falling indicators I'd say it's got lower still to go on Tuesday.

Transportation:I blew this one too as the trans gave back most of Friday's gains on Monday, losing 0.63%.  The candle is somewhat bearish but the stochastic seems to be trying to set up a bullish crossover.  And with no RTC now to guide us, I'm just going to have to take a pass on this chart.  I'm not seeing any pattern here.

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.  We've now completed the stats for all of 2012 so we start over with 2013.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy

  1  12/31      40         48        -      -   1402   0/1
  2  1/7        47         30        +      +   1466   1/2
  3  1/14       52         15        +      +   1472
  4  1/22       50         21        +      +   1486
  5  1/28       44         26        +      +   1503
  6  2/5        40         36        +      +   1513
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.  The "Poll" column is how the majority of participants 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 I voted bullish four weeks ago, so both I and the majority were correct.   We therefore continue the year with an accuracy of 1 for 2, or 50%.  I  still expect that number to rise as the year goes on :-)

This week we note the continuation of a now four week trend of declining bullishness and increasing bearishness as the spread now narrow to just four points.  Nonetheless, I continue to vote with the majority, though it may be starting to look risky.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3       0.533

February   1      0      1           0       1.000     149
     And the winner is...

This is a very difficult night.  I'm seeing some bearish indications but all are of the sort that require confirmation.  I'm also a bit wary of calling this market lower when the futures aren't cooperating at this late hour of the night.  But I do believe that if we are to move higher on Tuesday, ES will have to cross its pivot of 1497.42.  So I'm going to make a conditional call: if ES crosses its pivot before mid-morning, we'll end Tuesday higher, else lower.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside again.

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