Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher if ES pivot holds, else lower.
- ES pivot 1557.83. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Once again, the pivot proved crucial as ES dove under right at 10:30 AM and never resurfaced. Net result - a lower close. And the market did provide me with a pleasant surprise that wasn't an April Fool's as my holdings in BGCP (Bug Sip) suddenly took off for a 32% one-day gain. Of course, I've had my share of one-day downers so it's nice to be on the other side for a change. Now let's see which side Tuesday will land on.
The technicals (daily)
The Dow: The see-saw continues. The Dow has alternated one day gains and losses for ten straight days now. Monday's long-legged doji took a bit of wind out of the sails of the technicals which turned downward as the stochastic inched closer to a bearish crossover. But not being overbought makes it hard to call a top here, and don't forget the historical strength of this week. On the other hand, there's a rather ominous rising wedge developing on the daily chart and that definitely bears watching.
The VIX: Sometimes simple ideas, some might say simplistic, actually work. Last night I suggested the VIX could go higher just because it was sitting at the bottom of its recent sideways channel. And sure enough, on Monday the VIX gapped up 6.93, right to the top of that range with a green spinning top. And that was enough to complete a bullish stochastic crossover. But with the indicators in conflict with the candles, I'm not going to call this one either way.
Market index futures:Tonight all three futures are just a bit higher at 1:00 AM EDT with ES up by 0.03%. I was calling ES a bit bearish last night and tonight it's looking a bit more so after a bearish engulfing pattern and a completed bearish stochastic crossover on Monday. However, we clearly remain in an uptrend. And ES has not put in more than one consecutive down day since January 31st. So I'm still a bit cautious about calling this chart lower for Tuesday, especially since ES isn't showing much desire to head that way in the overnight, at least so far.
ES daily pivot: Tonight the pivot inches up from 1559.00 even to 1557.83. We were below before and remain below the new pivot, so that's bearish. But we're definitely within striking distance, so that merits watching.
Dollar index: Last night this chart was iffy, but Monday's big 0.33% drop gave the dollar its third consecutive loss, established a new downtrend, and formed a bearish stochastic crossover. That spells lower again for Tuesday in my book.
Euro: On Monday the euro posted a second day of solid gains, exactly touching the 200 day MA before closing a bit lower. But the overnight is continuing higher again, up 0.11% at the moment. It looks like the euro is getting ready to challenge the MA. Unfortunately, Esignal is not giving me my 5-minute chart for the euro tonight. I don't know if that's a glitch or if it's yet another service they're yanking in the hopes of making me pay even more for their already overpriced service. If it is the latter, I may just dump the euro and start following the Swiss franc instead. At least that's still showing intraday charts.
Transportation: After outperforming on Friday, the trans gave it all back on Monday, ad then some, dropping 1.49% on a bearish engulfing marubozu. I missed this one badly. We're now right back in the middle of last week's consolidation area around 6160 and this chart has turned ugly in just one day. Now I'm thinking more downside is possible here on Tuesday.
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 4/5
6 2/5 40 36 + + 1513 5/6
7 2/11 43 25 + + 1518 6/7
8 2/19 21 43 - - 1520 6/8
9 2/25 30 52 - - 1516 6/9
10 3/4 29 39 - - 1518 6/10
11 3/11 41 26 + + 1551
12 3/18 41 37 + + 1561
13 3/25 31 38 + - 1557
14 4/1 38 38 + x 1569
This week we find a dead heat with the bulls and bears tied at 38%, and that holds right down to two decimal places - 38.46%. I had to come up with a new symbol for this. The "x" in the +/- column means a tie score. Overall this means a few other people have joined me in being bullish but it's all as uncertain as ever as evidenced by the long string of up/down closes we've been seeing.
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 7 5 2 0.500 121
April 0 0 0 0 0.000 0
And the winner is...
Despite this week's historical strength, I'm starting to see some flashing yellow caution lights in the charts. I'd like to call Tuesday lower on the basis of the VIX, the trans, and the doji in the Dow, but with the futures hanging in there and the euro continuing to rise, that's a limb I'm not willing to go out on. So in the face of such contradictory signals, I'm just going to call Tuesday uncertain. Sometimes that's all you can do.
ES Fantasy Trader
Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13. Tonight we stand aside given the "uncertain" call.