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- Wednesday uncertain.
- ES pivot 1524.08. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
I'll be honest (heck, I'm always honest) - I sure didn't see today's 54 point gain coming in the Dow. In fact I couldn't figure out just where we were going. But at least it wasn't (for once) yet another doji and that just might have some implications for Wednesday. Let's get out our magnifying glasses and see what those might be, eh Watson?
The technicals (daily)
The Dow: Today's gain may have been "only" 54 points, but I think it was 54 important points. First off, it was a marubozu, the first time in three days we haven't seen a doji. Second, we recaptured 14K. And third, today's close of 14,036 also finally broke through the resistance at 14,012 that's been bedeviling us all month long. Now it did just barely push us into overbought territory with an RSI at 70.29, but it also formed a bullish stochastic crossover from a high level and those are often good for a day or two of further gains. It's still too early to declare this a breakout, but this chart is now looking more bullish than it was last night.
The VIX: Last night I wrote "I see no reason we can't revisit [support at 12.41]". Well not only did we revisit that today but we kept right on going, ending at 12.31. So support at 12.41 is now history and the next stop is the lower BB at 11.83. Often, the VIX likes to touch its lower BB before heading higher and I think that's what's going to happen here. It's worth adding that the VIX is now back to levels not seen since April 2007 and is in the middle of the range it stayed in between 2004 and 2007. And note what happened to the market during that time - not a whole lot, and certainly not a crash.
Market index futures:Tonight all three futures are just barely higher at 1:09 AM EST with ES up by 0.03%. Today's tall green marubozu, the biggest since February 5th, kept us from falling out of both rising RTC's I discussed yesterday. It also broke through the upper BB, and that's a bit concerning, because ES has been respecting the upper BB quite well all year. But one more day higher here is not at all out of the question as this chart isn't looking bearish, candlestick-wise.
ES daily pivot: Tonight the pivot rises from 1516.67 to 1524.08.. We were above before and remain above the new number despite this jump, so that's a positive sign for Wednesday.
Dollar index:The dollar meanwhile has established a new trading range around the 55.44 level on the $USDUPX.It's been putting higher highs in for three days now but always gets dragged back down to close near that number. With no real trend in sight, I can only guess we're in for more of the same.
Euro: On Tuesday the euro gave us a bullish engulfing candle and the overnight trading is confirming that, up 0.18% so far. It's looking like the euro's downtrend that began this month, is over.
Transportation:Last Friday's doji was pulverized by the trans on Tuesday as they posted a 1.25% gain, the biggest of the current rally, to remain in their rising RTC and outperforming the Dow. I see nothing bearish on this chart.
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.
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 2/3
4 1/22 50 21 + + 1486 3/4
5 1/28 44 26 + + 1503
6 2/5 40 36 + + 1513
7 2/11 43 25 + + 1518
8 2/19 21 43 - - 1520
And also this week I switched my vote from positive to negative after six consecutive bullish weeks. And apparently I was on the same wavelength as a bunch of other people, as we saw the biggest shift from bullish to bearish I've seen since I started tracking these numbers over a year ago. It was literally a mirror image as we went from 43 to 25 bullish to 43 to 21 bearish. I'm not sure why everyone else switched, but I based my call on my reading of regression trend channels in the weekly and monthly SPX charts.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
January 5 7 6 3 0.533 -101
February 2 2 3 4 0.714 140
And the winner is...
I still think the Dow is getting ready to take a look at its all-time high of 14,198 - that's just 162 points away now. And I don't think we're going to see a pullback until that happens. With the trans flying high, the euro's downtrend arrested, and the VIX having fallen and can't get up, the only logical call here is for Wednesday higher. Of course with housing starts, PPI, and Fed minutes all coming out on Wednesday, that could all change, but technically I'm not seeing a pullback quite yet. On the other hand, I'm not seeing a lot of gas in the tank for a real big move higher right away either.
ES Fantasy Trader
Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13. Tonight we just continue to stand aside.