Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Tuesday higher, low confidence.
  
• ES pivot 1690.00 .  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

Hmm - it's starting to look from Monday's results that this rally might just finally be running out of gas.  On the other hand, we've seen this movie before and it didn't pan out.  So which is it - is this yet another fake-out pseudo-top or are we really at long last ready for the pullback everyone's been waiting for.  Only the charts can say, so let's take a gander at them without further delay.

The technicals (daily)

The Dow: The Dow appears to have fallen back into the had to call small-range sideways action that bedeviled us last week, gaining all of 1.81 points on Monday with a perfect doji star.  Since the indicators have already begun moving lower off extreme overbought levels, I'm more inclined to give some credence to this reversal warning.  But given the recent lousy track record of dojis here, I can't call the Dow lower without confirmation on Tuesday.

The VIX:  The VIX fell again on Monday, down another 1.99% to give us two overlapping red candles.  There are a number of bullish reversal patterns that start this way, but they're all three-candle patterns, so we need one more day to call a reversal.  In the meantime the indicators are just barely oversold, there's no support until 12, the lower BB keeps falling away, now down to 11.37, and VVIX also shows no signs of a reversal, so there's definitely still room to run lower here.

Market index futures: Tonight all three futures are once again higher at 1:04 AM EDT with ES up by 0.25%.  After a perfect star on Monday, the overnight has resumed its march higher to remain easily inside its rising RTC.  And while RSI remains overbought even as it inches lower, the stochastic is forming a little concavity at a high level indicative of further upside to come.  So I don't really see anything bearish here tonight.

ES daily pivot: Tonight the pivot rises again from 1685.08  to 1690.00 even.  And once again, we remain above the new pivot, so this indicator remains bullish.

Dollar index: The dollar continued its choppy move lower with another gap down on Monday for a 0.48% loss ending with a hammer.  With the indicators now appearing to have bottomed at oversold, we have at least a suggestion of a move higher on Tuesday.

Euro: Meanwhile the euro put in a second day of gains to close at 1.3192 on Monday.  And we're continuing higher from there in the overnight, now up another 0.08%.  With the upper BB providing the next meaningful stopping point at 1.3264, there's still some room to run here on Tuesday.  And I like those odds better than the dollar's moving higher, so maybe my dollar call is wrong.

Transportation: For the third day in the row, the trans were unable to pass the 6608 level and in fact formed a bearish dark cloud cover on a 0.13% loss Monday.  Indicators remain quite overbought and with what's now looking like a sideways ricochet off the upper BB, a move lower looks likely from here.

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.  Note that I've corrected the data in the accuracy columns due to a mistake I made in week 13 but only just noticed now.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

  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    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643   13/24  11/21

 25  6/17       32         40        +      -   1627   14/25  11/22

 26  6/24       13         46        -      -   1592   14/26  11/23

 27  7/1        25         42        -      -   1606

 28  7/8        42         29        +      +   1632

 29  7/15       48         22        +      +   1680

 30  7/22       42         19        +      +   1692 

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 both I and the majority of the poll voted bullish  four weeks ago, so we were all wrong.  Therefore we  continue the year with an accuracy of 14  for 26, or 54%.   The poll as a whole drops to 11 for 23 or 48%.  We are now, embarrassingly enough, in coin-flipping territory as far as accuracy goes.

This week I voted bullish once again, as did the majority of the poll.  I'm looking at weekly and monthly SPX charts and candlestick-wise there's not a bearish sign to be found.

Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

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       6      5      6           0        0.545    543
July       8      1      1           3        0.917    474

     And the winner is...

Tonight I'm only seeing one bit of bearishness, on the trans chart.  Everything else is either indecisive or bullish, so the balance of the argument goes to the bulls.  Therefore I call Tuesday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we remain short at 1643.00.  Nothing new here.