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- Tuesday higher, low confidence.
- ES pivot 1650.75. Holding below is bearish.
- Rest of week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
We called last Friday's mostly meaningless session "uncertain" and the results certainly seem to reflect that: Dow up all of 8.6 points, SPX down 0.91 points. There's no way to call a winner there and it didn't much matter anyway. But it did throw an interesting wrinkle in the charts, so without further ado, let's get down to it.
Reminder: the Night Owl will be travelling this week, so tonight's post is it for a few days. Check back again Thursday night.
The technicals (daily)
The Dow: While the net move wasn't much, the dragonfly doji looked like it warrants some attention. With two back-to-back dojis and the indicators now considerably off overbought, it looks like the Dow is now in rubber duckie mode - you can push down but it just bounces back up. So despite a technical bearish RTC trigger, this chart doesn't look all that weak to me.
The VIX: Last Friday I wrote "all the signs are in place for a lower VIX on Friday" and it did not disappoint, dropping another 0.57% to close back under 14, just, on a second bearish marubozu. This also brought the VIX back under its upper BB, caused an RSI peak at overbought and a bearish stochastic crossover. So look for lower still here on Tuesday.
Market index futures: Tonight all three futures are significantly higher at 1:01 AM EDT with ES up by 0.33%. On Friday we got a small green spinning top here for three dojis in a row, each one putting in successively higher lows. That also caused an exit of an admittedly short descending RTC for a bullish setup and the pin action in the overnight is providing a bullish trigger as well as a bullish stochastic crossover. So I'd say this chart is looking rather strong for Tuesday.
ES daily pivot: Tonight the pivot rises modestly from 1646.75 to 1650.75. We broke above the old number early Friday morning and have continued higher ever since. The small rise in the pivot means we remain almost six points above the new pivot, a decent bullish sign.
Dollar index: With two dojis in a row for the dollar too, a reversal may be in order here shortly as the buck looks for some footing. This chart though is not as bullish looking as the others, so I wouldn't be surprised to get a third doji here on Tuesday. It doesn't quite look ready to move higher..
Euro: After some volatility early last week, the euro rejected its 200 day MA and then put in a small spinning top on Friday suggesting that it's recent strength may be sagging. The overnight is forming a hanging man and the stochastic is about to form a bearish crossover so I wouldn't be surprised to see a lower close on Tuesday. But like the dollar, this chart is far from clear.
Transportation: On Friday the trans lost 0.53% but delivered another classic hammer, making it two in a row there to go along with indicators now close to oversold. I'd be looking for a reversal here quite soon, perhaps on Tuesday.
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 7 5 5 3 0.667 328
May 2 4 6 4 0.600 -17
And the winner is...
The day after Memorial Day is historically bullish, though not extraordinarily so. But what I've been seeing over the course of the last few days is a number of attempts by the bears to knock 'em lower, all of which have been rejected. With many indicators now nearing oversold levels, a whole army of dojis on the march, the TLT in the doldrums, the VIX having hit a hard stop, and the futures looking strong, the logical call is for Tuesday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13. Tonight we stand aside again because I think we missed the majority of the move. The time to go long was early Monday evening, not now. It is, if nothing else, a good way to exercise patience.