Actionable ideas for the busy trader delivered daily right up front
- Tuesday lower, medium confidence.
- ES pivot 1696.58. Holding below is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1695.50.
Monday was a good example of why the futures don't always predict, well, the future. They were up last night at this late hour but we closed lower anyway, a move predicted on all the other charts. So that worked out OK. Now we move on to Tuesday. Will the traditional September funk finally assert itself? Let's take a look.
The technicals (daily)
The Dow: The Dow just continued lower form where it left off on Friday, dropping another 50 points on Monday for a bearish RTC trigger. It was enough to finally bring the indicators off overbought as they cycle back to oversold. And we now have a new descending RTC so this chart continues to look bearish.
The VIX: Last night I wrote "we could finally see a move higher on Monday" and did we ever. The VIX put in a 9% gap-up pop that tested its 200 day MA intraday to end with an inverted hammer. So now we have a reversal candle, a big unfilled gap and some resistance close above. But the indicators aren't supporting a move lower so we might see another test of the 200 MA on Tuesday.
Market index futures: Tonight all three futures are lower at 12:31 AM EDT with ES down by 0.16%. Monday handed us a two black crows pattern and a bearish RTC setup. The overnight is following lower so that would make it a bearish trigger unless we can close above 1715 on Tuesday which seems unlikely. The indicators continue their march from overbought to oversold and with support at 1697 broken, this chart remains firmly bearish.
ES daily pivot: Tonight the pivot drops from 1707.75 to 1696.58. But that drop wasn't enough to bring ES back above the new pivot, so this metric remains bearish. Indeed, ES is showing no inclination to mount an assault on the pivot.
Dollar index: The dollar is now congesting around the bottom of last Wednesday' big dump. But with a small gain on Monday we got a bullish RTC trigger suggesting the month-long downtrend is over. With highly oversold indicators, I'm expecting a move higher next,.
Euro: Last night I wrote "This chart is looking toppy". And on Monday we got the break with a bearish engulfing candle that also qualified for a bearish RTC trigger while peeling away from the upper BB. Indicators remain highly overbought so this chart continues to look weak.
Transportation: Last night I wrote "this one's looking lower Monday" and so it was, down another 0.61% on a bearish RTC trigger. And even that wasn't enough to bring the indicators out of overbought. With support at 6667 cracked, this one continues to look bearish.
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 6 5 6 0 0.545 543
July 10 2 4 4 0.875 486
August 11 3 6 2 0.813 687
September 6 3 3 1 0.700 289
And the winner is...
All the bearish indications from last night remain in play tonight, only more so. Being as I see nothing bullish on any chart, the only logical all is for Tuesday lower.
ES Fantasy Trader
Well patience paid off once again as we managed to turn an ugly Fed-fueled loss on this short trade into a modest three point profit after covering mid-day Monday.
Portfolio stats: the account now rises to $110,000 after 16 trades (12 for 16 total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13. Tonight we stand aside waiting for the next trend change.