Tuesday higher

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

• Tuesday higher, low confidence.
  
• ES pivot 1633.67.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside..

Recap

It's nice when the technicals assert themselves and Monday's action was pretty much picture perfect as the Dow tacked on another 89 points to make a three day winning streak.  But with some growing flashing yellow lights, is this the end of the road or are we just getting started?  The charts will tell...

The technicals (daily)

The Dow: Last night I wrote "There is now some minor resistance at 15,177 but by and large this chart is now looking bullish".  Well the Dow made short work of that level and closed at 15,225 on Monday.  And speaking of resistance, the next level is at 15,246, then 15,316.  With three days of increasing volume, rising indicators (even though now overbought), and a bullish RTC exit of a weekly channel, I'd say this chart continues to look positive.

The VIX:  Last night I wrote "I'd not be at all surprised to see the VIX want to check [out the lower BB] on Monday.  But we could be in for a bounce in a few days".   Well we got a small 0.74% decline but on an inverted hammer that tested the 200 day MA and failed.  It also drove RSI to very oversold (2.72) so now I'm thinking the odds for a reversal on Tuesday may have gone up, even thought we haven't quite hit the lower BB yet.  OTOH, support for VVIX collapsed on Monday implying no hint of a rise in VIX.  So a VIX turnaround may be coming soon, but it's still not clear it will be on Tuesday.

Market index futures: Tonight all three futures are higher at 12:55 AM EDT with ES up by 0.37%.  After another decent green candle on Monday, ES is showing no signs of slowing down and is tracking up the left side of its rising RTC.  No resistance until 1647 and then the upper BB at 1653.57.  I think a visit to the former is not out of the question for Tuesday.

ES daily pivot: Tonight the pivot rises again from 1622.08  to 1633.67. Just like last night, after having spent the whole day above the pivot we remain comfortably above the new number so this indicator remains bullish.

Dollar index: On Monday the dollar gave us a textbook bearish harami that broke away from the upper BB.  It also traded outside the rising RTC for a bearish trigger.  I thought we might go higher but resistance at 57.95 proved impossible to crack.  At this point I see more downside risk than upside potential here.

Euro: Meanwhile the euro managed to retrace just a bit of Friday's big dump as support around 1.2828 held up.  But with indicators just barely oversold that's not enough to declare a new uptrend yet.  And the euro is in fact trading lower in the overnight once again, down another 0.10% already.  We could be in for another consolidation period right around the 1.2850 level here.

Transportation: The trans are starting to lag the Dow a bit, up just 0.13% on Monday.  More worrisome was the nature of the candle - a gap up doji for 2/3 of a bearish evening star pattern.  However, this remains a reversal warning, one which requires confirmation.  With no resistance still until 6345, I suppose another move higher wouldn't be out of the question.

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 

 26  6/24       13         46        -      -   1592

 27  7/1        25         42        -      -   1606

 28  7/8        42         29        +      +   1632

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.   Therefore we  continue the year with an accuracy of 13  for 24, or 54%.   The poll as a whole remains 11  for 21 or 52%, since there was a dead tie four weeks ago between the bulls and bears (that's why there's an "x" in that column).

This week we see an almost complete flip-flop in the numbers, from 42% bearish to 42% bullish.  I changed my own vote and so remain with the majority.   I can't speak for why the others voted the way they did, but I'm seeing a weekly bullish stochastic crossover and a bullish monthly RTC exit, both of which I consider significant.


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       2      1      0           1        0.750    193

     And the winner is...

I'm still not seeing any real "go" signs for the bears on tonight's charts.  So while I'm becoming a bit cautious (Tuesday is historically a weak day) the preponderance of evidence continues to indicate that the logical call is for Tuesday higher.  So sez I.

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 stand aside again because I don't like getting on a bus that has already traveled so far in the evening before getting to my stop at 1 AM.  Patience is a virtue.