Actionable ideas for the busy trader delivered daily right up front
- Tuesday uncertain.
- ES pivot 1697.25. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Turns out some positive sounding blather from the Washington Clowns helped the Dow end the day in the green on Monday as the market continues to discount the possibility of a federal default. Personally, I have to agree. I don't think this bunch of venal politicians can really be so stupid as to torpedo the entire country just to save their own jobs ... could they? Well we can't control that, but we can look at the charts, so let's see where Tuesday's headed.
The technicals (daily)
The Dow: We now have a decent three white soldiers rising RTC going on the Dow. We're now near overbought but still a long way from the upper BB. Monday's candle was a hanging man but with no resistance til 15,424, there's no reason to believe this chart won't continue higher.
The VIX: Monday was a very odd day for the VIX. First, it rose 2.23% even as the broader market was also up. But it did that with a tall red candle in bearish dark cloud cover position that leaves the overall downward gestalt intact. Indicators have also yet to reach oversold so overall, this chart remains bearish.
Market index futures: Tonight all three futures are barely higher at 1:39 AM EDT with ES up by 0.03%. Monday's action in ES was quite positive, keeping us in a new rising RTC. However, the overnight is forming as a topping inverted hammer that has the indicators peaking just short of overbought. After three strong days, we could be in for a pause.
ES daily pivot: Tonight the pivot rises from 1690.75 to 1697.25. We remain above the new pivot so this indicator remains positive.
Dollar index: On Monday the dollar continued its reluctant filling of last weeks' big gap up with yet another doji, the fourth in a row good for a 0.17% gap down. Indicators are now almost overbought so I'd be wary of calling this one higher just yet. More downside seems more probably at this point.. Oh, and the stochastic just formed a bearish crossover, helping that thesis along.
Euro: Meanwhile the euro put in a fat little spinning top on Monday but failed to break out of a now week long trading range. Even with this sideways action we remain in a larger descending RTC so it looks like more of the same is in store for a day or two.
Transportation: On Monday the trans gave us a hanging man, though still well inside the rising RTC. Indicators have yet to hit overbought too and we're nowhere near the upper BB, so this is the sort of warning that requires confirmation. I can't call this chart lower just yet.
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 11 3 6 2 0.813 687
September 8 3 3 3 0.800 485
October 3 2 3 1 0.800 506
And the winner is...
The power of the headlines was evident Monday as the markets managed to erase an early gap down and close higher on more vague news of a "possible deal" coming soon... maybe. So with the debt deadline of the 17th fast approaching I think there's not too much point in relying on the technicals. I don't really see any bearish signs right now but with the continuing uncertainty, that's the call - Tuesday uncertain.
ES Fantasy Trader
Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17 total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13. Tonight we stand aside once again amid the continuing insanity down in Clownington DC.
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