Tuesday higher

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

• Tuesday higher, low confidence.
  
• ES pivot 1683.58..  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader remains short at 1643.00.

Recap

The dog days of summer roll on as Mr. Market appeared to be snoozing under a shady tree on Monday, ending with small losses.  But is that a rustling I hear in the woods?  Perhaps a hungry black bear?  Let's load up the .44 magnum as we go chart hunting for Tuesday.

The technicals (daily)

The Dow: The Dow remains in a descending RTC but on Monday RSI finally hit oversold and we got a nice doji star that just touched its lower BB intraday, so there's at least a warning of an impending reversal here.  Also, support at 15,408 has now held two days in a row.  But none of this is an unequivocal buy, so we'll need confirmation on Tuesday of a move higher.

The VIX:  On Monday the VIX truly surprised me by moving not up as I had thought, but down 4.47% on a class bearish engulfing pattern.  This leaves us in a rather wide rising RTC (Pearson's only 0.709) but moved the stochastic into position for a bearish crossover.  And VVIX has had a nice run up and looks ready to move lower too.  So now I have to think the VIX will be moving lower on Tuesday.

Market index futures: Tonight all three futures are higher at 1:39 AM EDT with ES up by 0.12%.  On Monday ES remained inside its descending RTC but put in a class hammer.  RSI has now gone oversold and the stochastic is ready to put in a bullish crossover.  With positive pin action in the overnight so far, I'd say we now have a shot at moving up on Tuesday.

ES daily pivot: Tonight the pivot falls from 1688.33  to 1683.58.  ES actually broke above the old pivot just before midnight and that leaves us even more above the new one, so this is definitely a positive sign.

Dollar index: The dollar gapped up 0.25% on Monday trading entirely outside the descending RTC.  That's a bullish trigger.  RSI is now back to oversold and the stochastic has just completed a bullish crossover.  So all signs are pointing to higher again on Tuesday..

Euro: Last Friday I said the euro was going lower on Monday and it did, falling out of its rising RTC for a bearish setup and completing a bearish stochastic crossover.  The overnight is continuing modestly lower, now down another 0.06%.  I'd say the euro has a good shot at continuing lower on Tuesday, which squares with my call for a higher dollar.

Transportation: After three big down days last week, the trans have been consolidating in the 6497 area.  Friday's harami was confirmed with a big dump right off the open on Monday but they then bounced back to finish up 0.23% in a positive divergence to the Dow's 0.04% loss.  This was good for a descending RTC exit  and a bullish setup.  RSI is now oversold and the stochastic is now very close to forming a bullish crossover.  So this chart now looks poised for further upside on Tuesday.

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.

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   14/27  11/24

 28  7/8        42         29        +      +   1632   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692 

 31  7/29       39         17        +      +   1692 

 32  8/5        46         27        +      +   1710 

 33  8/12       32         41        -      -   1691

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 once again both right.  Therefore we continue the year with an accuracy of 16  for 29, or 55%.   The poll as a whole improves to 13 for 26 or 50% but remains in coin-flipping territory as far as accuracy goes.

This week the poll flips to bearish by 32% to 41%.  And I remained with the majority again, shifting my vote to bearish.  I'm looking at a bearish RTC exit on the weekly SPX and a bearish stochastic crossovvr.  And the monthly candle is forming up as a doji star, indicating the recent gang-busters advance may be petering out.  Finally, a month from now puts us smack in the middle of September, historically generally a terrible month for stocks.

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      10      2      4           4        0.875    486
August     7      0      1           0        1.000    379

     And the winner is...

Tonight the charts are looking a lot more positive than they were last night.  We're seeing some reversal warnings plus outright bullish indications.  So logic dictates that we switch our call to 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.