Actionable ideas for the busy trader delivered daily right up front
- Tuesday uncertain - turn-around doji possible.
- ES pivot 1568.58. Holding below is bearish.
- Rest of week bias higher technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
I thought we were going lower on Monday but I wasn't expecting to see another 140 points drop off the Dow, though that was at least better than the morning lows that were another 100 points lower than that. So the broad-based selling goes on (and on and on). Tonight we search for the light at the end of the tunnel - and pray it isn't the proverbial oncoming train.
The technicals (daily)
The Dow: Mr. Market continued his wayward ways on Monday, first dumping 240 points, then recovering nearly all of it before giving half of that back. In the end, we got what had been looking like a promising hammer but morphed into just another non-descript red candle that kept us locked in a steeply descending RTC as we continued dribbling down the lower BB. RSI finally did go oversold and the stochastic began to flatten out a bit, but it's still a few days away from a bullish crossover. Bottom line - this chart's not looking any prettier than it did last night.
The VIX: I'm glad I didn't go for the tempting doji bait last night since it was non-confirmed in a big way as the VIX jumped 6.4% Monday on a long-legged red spinning top whose real body traded entirely above the upper BB - most unusual. We're now above 20 for the third time in three days, a level not seen since last December as everyone was wringing their hands over that fiscal cliff baloney. At this point, I'm thinking the VIX is about ready to come back down, especially since VVIX put in an evening star on Monday that was stopped by a strong resistance line. I'm ready to give better than even odds that the VIX moves lower on Tuesday.
Market index futures: Tonight all three futures are lower at 1:32 AM EDT with ES down by 0.21%. There's really nothing good to say about this daily chart. We remain in a descending RTC in a four day losing streak with the new candle looking to make it five. The good news is that there's a measure of support at 1560, RSI has finally gone oversold, and the stochastic has just now eked out a bullish crossover (though that's contingent on no further declines). We are now below the levels from which other recent reversals have come so I have to think we're starting to be due for one - maybe not on Tuesday but soon - though I guess it might not be til next Monday since the first of the month is historically strong.
ES daily pivot: Tonight the pivot tumbles from 1583.92 to 1568.58. ES just can't catch a break - every time the pivot drops, so does ES and tonight is no different. We're still below the new pivot by a good six points, so that remains bearish.
Dollar index: Last night I wrote "the dollar could continue to move at least a bit higher on Monday". And the dollar put in a strange gap-up red marubozu that nonetheless did result in a 0.14% gain.. That also just barely exited the steeply rising RTC for a bearish setup. RSI is pretty overbought now (86) and the stochastic is starting to flatten out for a bearish crossover, so it's looking like the dollar's recent uptrend may be coming to an end, if not Tuesday then on Wednesday.
Euro: And last night I also wrote "we could see more downside here on Monday. I'd not be surprised to see the 200 MA tested." That would be 1.3071. Well the low on Monday was 1.3065. Bada bing! After that test failed, we ended up with a green hammerish looking thing that indeed closed down on the day at 1.3130. That leaves us still in a descending RTC but RSI is now more oversold and the stochastic just squeaked out a bullish crossover. The overnight is just meandering around unchanged so I'd say at this point we might see a higher euro on Tuesday. That would reinforce my guess that the dollar is getting ready to move lower.
Transportation: The trans continue to guide the way lower, losing another 1.96% on Monday to remain in a steep descending RTC. RSI here is now well into oversold (12.96) and the stochastic is low and finally starting to flatten out for a bullish crossover. Still it's a bit too early to call a reversal here.
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 3 4 6 4 0.636 85
June 4 5 4 0 0.444 279
And the winner is...
I believe we're starting to see signs on a number of charts that the current downtrend is becoming played out. I'd like to show you today's SPX hi-lo index, courtesy of stockcharts.com (click on the image to enlarge).
|$RHSPX daily, from stockcharts.com|
Notice how we hit 38.46 on Monday, almost equal to the low of 38.36 on February 28th. The Dow went on an eight day winning streak after that. The market was also up shortly after every other downward spike on this chart too. This reinforces my view that we're due for a rally soon. However, we're not in the business of catching falling knives here (been there, done that, got the scars to prove it), so I'm going to compromise. Rather than calling the market lower once again, I'm going to declare Tuesday uncertain, since it looks like we could be near a turning point but I'm not quite sure if it will be right away or not. Tuesday could be the turnaround day - watch for a doji.
ES Fantasy Trader
Portfolio stats: the account remains at $108,250 after 13 trades (10 for 13 total, 5 for 5 longs, 5 for 8 short) starting from $100,000 on 1/1/13. Tonight we stand aside on the "uncertain" call. I think the majority of the current run is over and this is not the time to be getting short.