Tuesday, June 3, 2014

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence.
  • ES pivot 1929.92.  Breaking below is bearish...
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader going SHORT at 1920.75.

Out the gate Monday morning I was worried that perhaps I'd backed the wrong horse by calling the close higher.  But coming around the first turn, Seabiscuit recovered enough ground to prove me right by the closing bell.  So we now turn our attention to the next race, the Tuesday Trotters.

The technicals

The Dow: Well it was a modest 26 point gain on Monday but it came as a hanging man, the second in two days.  The indicators remain quite overbought, but so far all we have is a pattern that requires confirmation though as the saying goes, two hanging men are better than one.

The VIX: The VIX made a valiant effort to push higher on Monday but it eventually mostly failed, though it still ended up 0.70% in a bit of divergence on a day when the Dow and SPX were also higher.  The resultant long-legged red spinning top indicates massive indecision (so what else is new).  The indicators favor a move to the upside but for the time being, we remain stuck in consolidation mode around 11.50.

Market index futures: Unlike last night, tonight all three futures are lower at 12:21 AM EDT with ES down  0.05%.  Of all the charts in the nightly roundup, tonight ES perhaps provides the most clarity.  It gave us a classic doji star on Monday that traded just outside the rising RTC for a bearish setup. Indicators appear to have peaked at extreme overbought levels now and we have finally peeled away from the rising upper BB.  That all looks to me like a setup for a move lower.  And so far at least, the new developing candle seems to be confirming that.

ES daily pivot: Tonight the ES daily pivot ticks up from 1919.33 to 1929.92.  While we're still above the new pivot, it's now by only less than one point so the pivot is in play.  A move below would be bearish.

Dollar index:  The dollar which for all its worth looked to me like it was going lower on Monday instead gained a big 0.46% to bust through its 200 day MA and regain its rising RTC.  This move was powerful enough to bend the stochastic bearish crossover around into a bullish crossover from a high level and that is generally good for a day or two of higher prices.  So now I'm thinking the dollar looks higher still.

Euro: And so of course I got the euro wrong too - it was unable to break through the 200 day MA and on Monday gave up all of last Friday's gains and then some to close right back around support at 1.3593.  Indicators remain oversold but that doesn't seem to account for much in this crazy market.  My best guess at this point is that since we were down big on Monday, to support, that we'll reverse and go up on Tuesday.

Transportation: After a fake-out doji last Friday, the trans rejected it in a big way on Monday, gaining 0.54% to remain solidly in their rising RTC.  The trans are now 7 for 8 and the indicators are extremely overbought..  But the trend is your friend, etc. and it looks like there's nothing that can stop this train, so in the absence of any bearish signs, it's up, up, and away!


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        6       7      6           0       0.462    -67

June       1       0      0           0       1.000     26

     And the winner is...

The toppiness I spoke of in the market last night is looking more pronounced in the charts tonight.  While I don't think this is the start of a major correction or anything, I think there are enough reversal signs now to warrant calling Tuesday lower.

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 go short at 1920.75.  I know these counter-trend plays are quite risky, but the edge finally seems to be there.

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