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- Tuesday lower, medium confidence.
- ES pivot 1542.92. Holding above is bullish.
- Rest of the week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader going short at 1547.50.
That's right - that's about what I figured. A big dump out the gate followed by a retracement. I'll admit I was surprised that we retraced the entire loss by mid-afternoon, but the sellers came back in by the end of the day to save my call for a lower close Monday. Now that we've got the Great Cyprus Bank Catastrophe out of the way, let's get back to reality and see what's on deck for Tuesday. Batter up!
The technicals (daily)
The Dow: If you blinked, you missed it. The Dow cratered in the opening minute and then spent most of the rest of the day retracing before giving back some of those gains for a 62 point loss on Monday. A great day to day trade, swing trade, not so much. But the net result, was a second hanging man in a row,this one falling outside the rising RTC (finally) for a bearish setup. The failure of the Dow to hang on to its intraday recovery is a bit concerning.
The VIX: As you might expect on the weekend news, the VIX shot up 18.23% Monday to form a great big gap-up evening star doji. But it also exited its latest descending RTC for a bullish setup and the indicators are all now rising off oversold. With the evening star only 2/3 complete, we need to see if the VIX is going to fill the gap or continue higher on Tuesday. Unfortunately, there's no call here tonight.
Market index futures:Tonight all three futures are just barely higher at 2:05 AM EDT with ES up by 0.02% or a single tick. Monday's ES candle was a spindly spinning top that fell outside its rising RTC for a bearish setup. The overnight so far isn't showing much enthusiasm for moving higher and with the indicators having now exited overbought and continuing to move lower, the momentum seems to be turning bearish here.
ES daily pivot: Tonight the pivot falls from 1553.75 to 1542.92. .Mostly because of this, we're now above the new pivot, so that's bullish, and by a reasonable six points.
Dollar index: On Monday the dollar gave us a completed morning doji star. But that is at odds with the recent rising RTC exit. So those two cancel each other and there's no call for this chart. Maybe the euro will be a bit more clear..
Euro: Hmmm, not really. On Monday the euro slipped a bit, not nearly as much as you might have expected after the Cyprus news. It continues to trade mostly sideways though something of a shallow downtrend is forming after two consecutive closes below support at 1.3000. The euro may be getting ready to test its 200 day MA at 1.2862.
Transportation: Like the Dow, the trans gave us a second hanging man on Monday for a 0.33% loss. Unlike the Dow, it wasn't enough to bounce it out of its rising RTC. It's also important to note that the trans have not put together a string of more than two losing sessions in a row since last December 28th. So it's still premature to call this uptrend over.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
January 5 7 6 3 0.533 -101
February 3 4 5 6 0.692 131
March 5 3 3 0 0.625 274
And the winner is...
There's a lot of uncertainty out there tonight with dojis galore all over the place. But we've also gotten a few significant RTC exits indicating that various trends may now be over. So far they're just setups. For a trigger, they'd need to continue outside the channel one more day. But the overall feel is shifting from bullish to bearish. So with Dr. Copper taking a dump, TLT moving higher, the currencies dropping, and the ES stochastic falling, I'm going to go way out on a limb and call Tuesday lower. I might be a day early, but this looks more logical than a move higher at this point.
ES Fantasy Trader
Portfolio stats: the account remains at $92,625 after 8 trades (6 for 8 total, 3 for 3 longs, 3 for 5 short) starting from $100,000 on 1/1/13. Tonight we go short at 1547.50. I may live to regret it, because I've not been doing well on the short side lately, but perhaps this one will do the trick.