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- Tuesday higher, low confidence.
- ES pivot 1877.00. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
On Monday we got a modest advance in the market but with an interesting candlestick that we will now examine in further detail as we examine the consequences for Tuesday.
The Dow: The Dow gained 21 points on Monday but did it with a tomahawk (a hanging man with a bit of an upper shadow sticking out). This gain caused the indicators to pause on their march towards oversold. Of particular interest is that OBV has now been rising for three straight days. So we have a reversal candle along with some bullish indicators. That's a wash in my book so we take a pass on this chart tonight.
The VIX: Last night I wrote "I think we could be in for more downside on Monday". Good thinking, Night Owl as the VIX dropped another 0.16% on Monday.. The pattern isn't classical but reminds me of a bearish two crows so that will have to do. The RSI moved lower and the stochastic squeezed a bit as if to prepare for a bearish crossover from a low level which often precedes a move lower. With no support still until the 12-ish area, this chart does not look bullish tonight.
Market index futures: Tonight the futures are mixes at 12: 13AM EDT with ES down by just one tick but YM up 0.02%. Like last night, we're essentially flat on the evening as the futures are giving up precious little guidance. The ES daily on Monday did exit its descending RTC for a bullish setup. ES would need to trade below 1870 on Tuesday to cancel that and I just don't see that in the cards. We also now have a completed bullish stochastic crossover to go with indicators still a long way from overbought And having now cleared resistance at 1879, I think this chart continues to look bullish.
ES daily pivot: Tonight the ES daily pivot rises from 1870.58 to 1877.00. Despite this bump we are, once again above the new pivot so this one remains bullish.
Dollar index: Last night I wrote "I still say the dollar's looking lower" and good thing too because the dollar gapped down 0.07% on Monday, though on a stubby green hammer. Still the indicators remain quite overbought, the bearish stochastic crossover is complete and we have a new descending RTC so this chart still looks lower to me.
Euro: Last night I wrote "the euro seems to have found some stability around 1.3700". And that was basically the story on Monday. Not much new here - the rising indicators seem to favor the upside but the momentum isn't all that strong.
Transportation: LNIW (Last Night I Wrote) "this chart is now looking higher on Monday": And that's where they went, handily outperforming the Dow 0.77% to 0.12% and stopping only on their upper BB for a bullish RTC trigger. But that now leaves us back at all-time high resistance along with indicators back to overbought. There's not much gas left in the tank for any further advance but this chart is overall too tough for me tonight.
And the winner is...
Tonight the charts are looking basically bullish. The SPX Hi-Lo indicator has just returned to 100, which is a not-bearish sign, the NYSE A/D line is unremarkable and the Morningstar Market Fair Value Index is at 1.03 which is overbought but not extremely so. Dr. Copper seems to have hit a short-term bottom and tellingly, the TLT took a big dump on Monday and looks quite bearish. So to me that all spells Tuesday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $121,500 after four trades in 2014, starting with $100,000. We are now 4 for 4 total, 2 for 2 long, 2 for 2 short. Tonight we stand aside.