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- Tuesday uncertain.
- ES pivot 1641.66. Holding below is bearish.
- Rest of the week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
I was expecting a small gain for Monday and that's what we got - for about the first tow hours. Then we moved a bit lower and the Dow closed down all of 9.5 points. That's what I get for not calling "uncertain": when I'm expecting a small move. But not matter, this result is still interesting and we now investigate what it means for Tuesday. Read on...
The technicals (daily)
The Dow: On Monday the Dow gave us a doji sitting on top of last Friday's big run up. While this signals a possible reversal, these haven't been doing too well this year and we're still a long way from overbought on the indicators. So this is just a flashing yellow light at this point.
The VIX: The VIX surprised me on Monday by not following through on its previous two days of losses, gaining instead 1.98% as its 200 day MA provided some support. But the indicators continue to fall off overbought and we do now have a bearish RTC trigger so I think any upside moves will be limited.
Market index futures: Tonight all three futures are lower at 1:42 AM EDT with ES down by 0.14%. Monday's candle was a bearish inverted hammer. But it came outside the descending RTC and that's a bullish setup. Also, the indicators are only about halfway from oversold to overbought, so this chart is pretty murky tonight.
ES daily pivot: Tonight the pivot rises from 1633.50 to 1641.66. This jump, combined with ES's move lower now puts us below the new pivot - a bearish sign.
Dollar index: The dollar put in early gains on Monday only to give them back as they day wore on, leaving behind a red candle sitting above Friday's green for a dark cloud cover. But - the indicators remain oversold so it's not clear how this will play out..
Euro: I missed this one - rather than going lower, the euro put in a strong bullish engulfing candle on Monday and we're getting some positive pin action in the overnight. This keeps us inside a rising RTC so despite highly overbought indicators, I can't say I see a move lower here now.
Transportation: The trans on Monday gave us a small red spinning top pretty much as expected. But it was enough to put a damper on the indicators which actually turned lower before even reaching overbought. But with a bullish RTC setup the picture on this chart is decidedly mixed. I'm going to wait & see on this one.
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 1 3 2 0 0.250 52
And the winner is...
This is one of those nights where we're seeing a combination of reversal (lower) warnings that require confirmation along with internal conflicts in the charts, at least according to my system of analysis. Bottom line - there's no real clear-cut direction right now. So, much as I hate to wimp out because I still see something of a positive bias, the only choice I have in this situation is to call Tuesday uncertain.
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 with the "uncertain" call.