Tuesday, January 28, 2014

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence.
  • ES pivot 1778.25.  Holding above is bullish.
  • Rest of week bias higher.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader goes long at 1781.25.

Well we were close.  I thought the Dow was going to end its slide on Monday and indeed it actually did start to move higher around noon until a late wave of selling blew in just 45 minutes before the close to ruin my call.  But I think the primary thesis remains intact so let's see where Tuesday may lead us.

The technicals (daily)

The Dow: Monday saw another 41 points down in the Dow but it came in the form of a spinning top at the bottom of Friday's big dump  While these generally require confirmation, with RSI now extremely oversold, the stochastic moving into position for a bullish crossover, and the fact that the entire candle was under the lower BB, I'm even more optimistic for a reversal now.

The VIXAnd the VIX put in a doji of its own, dropping 3.97% on Monday.  But even that left the entire candle above its upper BB - highly unusual.  And with the indicators remaining way overbought, I'm thinking this one still has more downside to go.

Market index futures: Tonight the futures are mixed at 12:45 AM EST with ES up by a nice 0.31%, YM up even more, but NQ down a big 0.66%. ES gave us a classic spinning top on Monday and RSI looks to have bottomed now.  THe stochastic is flattening out in preparation for a bullish crossover.  The developing candle is bullish engulfing and the move so far is already enough to qualify as a bullish RTC setup.  OBV has also bottomed, so this chart is definitely looking bullish now.

ES daily pivot: Tonight the pivot falls from 1796.67  to 1778.25.  Unlike last night, this drop was enough to put ES above the new pivot so this indicator now turns bullish.

Dollar index: On Monday the dollar gave us a small gain on a bullish engulfing candle that confirmed Friday's spinning top reversal.  Indicators are now just about oversold and the stochastic is nicely set up to form a bullish crossover in a day or two so I see more upside here..

Euro: After a big jump last week the euro has been consolidating in the upper part of that move around 1.3684.  After two doji days we're seeing a small gain in the overnight, but we're also getting a bearish stochastic crossover, so this chart looks like it's going to drift lower.

Transportation: On Monday the trans dropped another 0.82% on a stubby spinning top that bounced off their lower BB and drove the indicators oversold.  The last five times the trans have hit their lower BB, they've reversed the next day.  I see no reason why Tuesday should be any different.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    3      9      5           0       0.273

     And the winner is...

Monday had the characteristics of a bottoming day .  All of the bullish technical signs in the charts last night are still there tonight but even more so, so I'm just going to claim that we'll close Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $100,000 as we go long tonight at 1781.25 for our first trade of 2014.

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