Tuesday, April 15, 2014

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence.
  • ES pivot 1817.00Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Hmm - interesting.  Last night I suspected we were nearing a reversal at some point this week but I didn't think it would come on Monday, hence I went with the patterns I saw which suggested lower.  Turns out we got our reversal after all, ostensibly on some economic news - whatever.  As I said last night, I'm always glad to be proven wrong on a bearish call since I'm always net long.  So the underlying thesis worked out but the timing was a bit off.  But then calling the bottom is probably the hardest thing to do - even more than calling tops.  So now we have to ask whether this reversal's got legs or if it's just another fakeout breakout like we got last Wednesday.  To the charts!

The technicals

The Dow: Just last night I talked about the pivot.  Had I been awake at 9:30 AM on Monday I would have seen the Dow jump above its daily pivot right out the gate.  And that was all it took as we finished with a nice 146 point pop that completely erased Friday losses.  The candle is sort of piercing line meets engulfing pattern but bouncing off the lower BB as it did, it sure looks bullish to me.  RSI looks to have bottomed and the 16K round number support was never even threatened.  So suddenly this chart turns bullish.

The VIXLast night I wrote "it looks like a lower VIX is coming soon" and it came sooner than I thought, down 5.4% on Monday on a big (and unusual) gravestone doji.  For my money, this completes the bearish evening star from Friday and with indicators still overbought, I now think there's more downside to come here on Tuesday.

Market index futures: Tonight, all three futures are higher at 12:18  AM EDT, with ES up by 0.07%.  On Monday ES put in a class bullish piercing pattern and money flow turned higher for the first time since April 3rd.  The stochastic is still pretty jumbled but after two days closing and then opening under the lower BB, this chart now looks positive to me.

ES daily pivot: Tonight the pivot inches up from 1817.00 to 1818.58.  Thanks to its amazing late afternoon rally, ES is now well above the new pivot so this indicator is bullish.

Dollar index: On Monday the dollar had a big gap-up but small range day that was enough to generate a nice bullish stochastic crossover.  These big yawning gaps always want refilling though some I'm going to guess that some sort of gravitational attraction will pull the dollar back modestly on Tuesday.  Longer term though, we now have a completed bullish RTC trigger so I'm looking for higher later this week.

Euro: And on Monday the euro took a dump, falling out of its rising RTC for a bearish setup and a bearish stochastic crossover.  With indicators still overbought, I claim there's more downside left here on Tuesday.

Transportation: On Monday the trans posted a somewhat less impressive gain than the Dow with a little inside harami spinning top.  Having also bounced off their lower BB with oversold indicators, this chart now has a suggestion of a move higher.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
February   5       2      2           1       0.750    107

March     12       3      6           0       0.800    431
April      4       2      3           0       0.667     50

     And the winner is...

Both the SPX Hi-LO index and the NYSE A/D line rebounded nicely on Monday.  And we're seeing more concrete reversal signs of a move higher tonight than last night.  The VIX in particular is teetering on its upper BB and seems more likely to move lower than higher from here.  I think I missed Monday by not having enough conviction in my position so tonight I'm just going  say I believe that we see Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

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