Tuesday, April 30, 2013

Tuesday lower if ES pivot broken

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower if ES breaks under its pivot, else higher.
  • ES pivot 1584.75 Breaking below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Sigh - I called the market lower for Friday and ti went higher, but I was just a little wrong.  Then on Monday I did the same thing, but this time I was very wrong, to the tune of a 106 point pop in the Dow.  But this is the kind of mistake I don't mind since I'm always net long, so I ended up making money anyway.  And at least I had the sense to avoid going short in the ESFT.  Now let's see how Monday's action changes the map for Tuesday.

The technicals (daily)

The Dow: What a difference a day makes.  Sunday night the Dow was looking ready to roll over.  But Monday's tall green marubozu was enough to bring us all the way back into the rising RTC and thereby canceling the bearish setup.  It also canceled the incipient bearish stochastic crossover.  The indicators now seem to be headed back to the state they were in for much of the last quarter - completely pegged on overbought and therefore meaningless.  With the upper BB now at 14,879 and resistance at the same level, it looks like the Dow may be on its way to check it out.

The VIXMonday was another odd day for the VIX.  On a day when the Dow gained 0.72%, the VIX was also up, and also by almost the same amount, 0.73%.  But the candle was a star, the third in four days.  RSI is now very low and the stochastic just squeaked out a bullish crossover, so there's a chance for more upside on Tuesday.

Market index futures:Tonight the futures are mixed at 1:08 AM EDT with ES down by 0.05% but both NQ and YM up by 0.04%.  There's little guidance from this sort of flat-lining in the overnight, but Monday's decent green marubozu put ES back into the center of its rising RTC with a decent bullish engulfing pattern.  It also canceled what looked like a new bearish stochastic crossover.  My only concern is that we're sitting right at resistance from April 11th/12th.  Tuesday is make or break for ES.  Pass Go and we're headed for the upper BB at 1599.  But a loss would exit the rising RTC and put an end to the uptrend.  At the moment I have no way to tell which one it will be.

ES daily pivot: Tonight the pivot jumps from 1577.17  to 1584.75.  And even with that pop, ES is still above the new pivot, though only by a few points.  Still, it's bullish as long as we don't break below.

Dollar index: Wow - I sure didn't see this one coming.  The bottom fell out of the dollar on Monday as it gapped down 0.45% to end with a small inverted hammer.  But even this drop leaves it not yet oversold and still above its lower BB.  Still, the tendency for the dollar after big gap-down days has been to refill the gap immediately and that's what I'm expecting here on Tuesday.

Euro: I was at least right about the euro moving higher as it gapped up to close at 1.3101 to exit a descending RTC for a bullish trigger.  The indicators continue to rise off oversold and the overnight is just wandering aimlessly, so I'd look for continued upside on Tuesday.

Transportation: On Monday the trans, which had been very close to the edge of their rising RTC, scored a 0.56% gain to get right back into the middle of the channel.  Like the Dow, the indicators are now pegged at overbought and so provide no guidance.  Resistance is close by at 6184. The trans have been making lower highs for two months now.  If we can get through this level, we have a good shot at visiting the upper BB is at 6209.  Either way, there's no immediate reversal signs on this chart right now.

Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121 

April      7      5      5           2        0.643    328

     And the winner is...

The last day of the month is often historically bullish, but not for April.  However, the charts are looking less bearish than last night, not more so.  But a lot of them also finished Monday right at key resistance levels with overextended indicators so it's not clear if they have enough gas in the tank to punch through without a rest first.  Because of this uncertainty, I'm going to make a conditional call: if ES breaks below its pivot of 1684.75 by mid-morning, we close Tuesday lower.  If ES stays above, then it's Tuesday higher.

ES Fantasy Trader

Portfolio stats: the account now rises to $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside again in view of the conditional  call.


  1. With up to $5.25 billion of POMO today, I can't imagine a normal situation where we go down...

    "And at least I had the sense to avoid going short in the ESFT."
    Considering I am short in all my accounts, this stung a little... I am beginning to believe I do not have any sense and need to quick this market timing non-sense and just buy and hold...

    Good Luck Michele!!

    1. oops, "quit", meant quit... not quick

    2. Thanks, and good luck to you too. Counter-trend plays are always risky and this year the trend obviously has been up, up, and away.

      I know you didn't ask for any advice, but I will say this. What I did some years back when I was losing badly was to step back, stop trading, stop following other peoples' recommendations, and focus on just paper trading and developing a reliable system of my own.

      I'll also suggest - to everyone actually - go back and read Dr. Steenbarger's TraderFeed blog.

      Hey - if it was easy, everybody would be doing it :-)

    3. Lost badly last year because I was jumping around and doing stupid stuff. Doing much better this year overall, just frustrated and tired of taking crap off the buy and holders who are all smiles and giggles...

      I will check out the TraderFeed blog.

      Thanks and good luck to you!

    4. Well you must certainly be happy with the way Wednesday turned out :-) Dow down 139, SPX down 15.


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