Tuesday, June 24, 2014

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence
  • ES pivot 1954.25.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader stands aside.

Ooh, close but no cigar.  I called Monday higher but the market meandered just ever so slightly underwater most of the day and we ended with the Dow down all of 10 points.  Now the Naz was up a whopping 0.64, but the call is for the Dow so this was a miss.  Not a bad one, fortunately.  So we continue to teeter on the brink.  Will Tuesday bring any resolution?  Let's check the charts as we do every night.

The technicals

The Dow: Jeez - we now have three reversal candle sin a row here - a hanging man, an inverted hanging man and on Monday yet another hanging man.  The indicators remain extremely overbought, the stochastic keeps us in antici...........pation of a bearish crossover and yet the market refuses to break lower.  It's looking like we'll need a bearish RTC exit before we get any downside action going here and for the time being, that ain't happening..

The VIX: Ahh, el VIXmo.  The chart which is el mucho importanto.  Last night I wrote "my guess is that the VIX is due to rise on Monday" although I then qualified that with some hedging.  Well it all turned out to be right as the VIX rose 1.20% on Monday, but on a gap-up red candle.. So we now have a bullish stochastic crossover by the slimmest of margins (the %K moved above the %D by a giant 0.01) and an oversold RSI.  But the chart looks like 2/3 of an evening star.  Duh-ya!  It would seem like a coin-toss but I'm going with the indicators here and calling the VIX higher again on Tuesday.

Market index futures: Tonight all three futures are lower at 12:27 AM EDT with ES down  0.12%.  On Monday ES had a canonical doji star.  Along with highly overbought indicators and a just-completed bearish stochastic crossover, this looks like a chart ready to move lower.  Note that the overnight is trading outside the rising RTC and that's a bearish setup.  The overnight supports this idea so far with a gap-down doji star.

ES daily pivot: Tonight the ES daily pivot rises from 1952.75 to 1954.25.  We fell below the pivot on Monday and remain below the new number so this indicator turns bearish.

Dollar index:  Dang!  I blew the dollar too last night.  It did not go higher but instead fell 0.13% on Monday with a gap down red candle that now looks like a bearish evening star.  That keeps the dollar in a long-running descending RTC and despite oversold indicators I see no sign here of a move higher.

Euro: Last night I wrote "the euro appears to have found a new trading range about the 1.3605 level" and guess what - hey Mikey, he likes it, as the euro spent Monday trudging over the exact same ground with a second spinning top in a row.  Meanwhile the indicators are drifting higher into overbought so my guess is that the break, when it comes will be lower.

Transportation: Oops!  Last night I thought the trans were going higher but instead they shifted into reverse for a 0.52% drop.Dow theorists take note!  This move also left us outside the rising RTC for a bearish setup, the stochastic curving around for a bearish stochastic crossover, and the indicators all overbought.  And the resistance I mentioned last night at 8222 proved insurmountable.  So this chart now looks lower.


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       7       5      3           2       0.643    140
     And the winner is...

We had some signs of a move lower last night but I chose to go with the futures instead, much to my chagrin.  Tonight the charts are turning more definitively bearish so I feel a bit better about calling Tuesday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

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