Actionable ideas for the busy trader delivered daily right up front
- Tuesday uncertain.
- ES pivot 1553.25. Holding below is bearish.
- Rest of week bias higher technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader remains long at 1553.75.
It wasn't looking good early on when the Dow headed south right out the gate on Monday, but then Mr. Market must have read the Night Owl and realized that I called the close higher, so at 10:35 AM we reversed course and finished the day up 20 points. Sometimes you just have to stick with your convictions. Now let's see if logic will prevail on Tuesday as we scour the charts in search of truth.
The technicals (daily)
The Dow: On Monday the Dow gave us another tall doji, very nearly a hammer. This closed just short of a descending RTC exit, so no bullish setup here just yet. However, RSI went oversold and the stochastic is now just about to form a bullish crossover. So overall, this chart is looking fairly bullish now.
The VIX: Last night I wrote "this chart looks ready to move lower again" and so it did, dropping another 3.87% on Monday. That move was enough to complete a bearish stochastic crossover and keep the VIX below its 200 day MA. So with two red candles in a row, it's certainly possible we might see another one on Tuesday.
Market index futures:Tonight all three futures are lower at 1:08 AM EDT with ES down by 0.22%. Monday's green candle provided a bullish RTC setup and a completed bullish stochastic crossover. So technically that looks positive, but we've been drifting lower all evening so far.
ES daily pivot: Tonight the pivot rises from 1544.50 to 1553.25. This gain combined with ES drifting lower now puts ES below the new pivot. However, it just took a stab at moving back above, right at 1 AM, but that was rejected. Failing to break above would be a bearish sign.
Dollar index: I thought the dollar might move higher Monday but instead it lost all of 0.03%. But the resulting candle was a dark cloud cover and we got a stochastic just about to form a bearish crossover. So now I'm thinking the dollar goes lower on Tuesday.
Euro: The euro seems to have lost its mojo and has been noodling about aimlessly for three days now. The indicators suggest the next move should be higher, but who knows. I'm taking a pass on this chart tonight.
Transportation: On Monday the trans gained 0.29%, outperforming the Dow again with a spinning top that also provided a descending RTC bullish trigger. We also now have a completed bullish stochastic crossover so this chart continues to look positive for Tuesday.
Sentiment: Once again it's time (actually it was time two nights ago) 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 7/11
12 3/18 41 37 + + 1561 8/12
13 3/25 31 38 + - 1557 8/13
14 4/1 38 38 + x 1569
15 4/8 32 50 - - 1553
16 4/15 33 50 + - 1589
17 4/22 19 63 - - 1555
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 that was a miss for me (though only by two points), but the majority of the poll which voted bearish was correct.. We therefore continue the year with an accuracy of 8 for 13, or 62%. The poll as a whole though improves to 9 for 13, or 69%.
This week we see something quite extraordinary. Bullish sentiment was chopped nearly in half from a week ago to its lowest level of the year while bearish sentiment jumped to its highest level in two years. I'll admit I switched my vote back to bearish this week but this makes me nervous. The TickerSense poll participants are admittedly better than average, but when readings hit these sorts of extremes I have to wonder if that isn't a contrarian bullish indicator. I guess we'll see in a month.
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 6 2 4 2 0.800 464
And the winner is...
Technically, the charts continue to look bullish tonight but there's some more housing news coming out on Tuesday. And judging by the effect that Monday's news had on the market, I'm not sure I want to stand in front of that particular bus. I think the bias remains positive, but tonight the Night Owl is going to do the Chicken Dance and call Tuesday uncertain.
ES Fantasy Trader
Portfolio stats: the account remains at $98,250 after 10 trades (8 for 10 total, 3 for 3 longs, 5 for 7 short) starting from $100,000 on 1/1/13. Tonight we remain long at 1553.75. I don't think this upward move is quite played out yet.