Tuesday, May 6, 2014

Tuesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday uncertain.
  • ES pivot 1872.08.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

We were right about Monday going lower - for the first 15 minutes.  From there it was just a slow grind back up to above water for an eventual gain of a whopping 18 points.  Such is the nature of forecasting.  No matter - it was an interesting candle so let's examine the fallout for clues to Tuesday.

The technicals

The Dow: On Monday the Dow gave us a tall hammer.  However, the indicators continue to look bearish.  And the overall impression continues to look negative here.

The VIX: Amazingly, for the third day in a row, the VIX has been trading in positive correlation to the market - this time up 2.94% even as both the Dow and SPX were higher on Monday.  Now it was on a tall red candle that popped out of the descending RTC before nearly dropping back in... OK, hey I just don't get this.  I'm going to have to go into observation mode only here.

Market index futures: Tonight all three futures are higher at 12:21 AM EDT with ES up 0.16%.    On Monday ES put in a long-legged doji that traded outside its rising RTC for a bearish setup.  Also, the indicators  are now overbought.  But the question is, is this star signaling a reversal of the last two days of declines, or the longer four day rising trend?  The pin action in the overnight would seem to suggest the former.

ES daily pivot: Tonight the ES daily pivot drops from 1877.33 to 1872.08.  This fall is mostly responsible for ES now being above the new pivot, but that turns this indicator bullish anyway.

Dollar index:  After a big failed breakout attempt last Friday the dollah settled for a tiny star on Monday, down just 0.04%.  Being as we're now still oversold and near some good support, I'd have to say this means a move higher on Tuesday.

Euro: Like the rest of the market, the euro is in something of a holding pattern lately, with just a small star on Monday right around the 1.3878 resistance line.

Transportation: Some bearish divergence on the trans on Monday as they dropped 0.30% even as the Dow rose, giving us a hammer to follow Friday's hanging man.  This evinces confusion more than anything else.  The stochastic, often a better indicator, is about to form a bearish crossover - and a bearish RTC exit, so that's what I'm going with.  Trans lower on Tuesday.


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      9       3      5           0       0.750    482

May        0       2      1           0       0.000    -40

     And the winner is...

We seem to have another rubber duckie market on our hands right now.  The bears try hard to push him underwater, but he just keeps popping back to the top of the tub  The technicals are mostly bearish tonight, with the one exception of the futures.  And because the bears seem to be having so much trouble taking over lately, I'm just going to call Tuesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 short.  Tonight we stand aside.

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