Tuesday, June 10, 2014

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence..
  • ES pivot 1950.25.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night when I called Monday higher I speculated that we might see a doji day.  Without committing hubris, I think Monday's lumpy spinning top for just a 19 point gain in the Dow qualifies.  So with that out of the way, without further ado let's move on to Tuesday.

The technicals

The Dow: The aforementioned Dow exhibited classic signs of ROOG Syndrome on Monday - that's Running Out Of Gas.. We've been clambering up the upper BB for three days now with each day's advance being smaller than the day before.  At some point what goes up must come down.  Monday's asymmetric spinning top is a warning of that, but one which requires confirmation so no call here.

The VIX: Once again we got an unusual positive correlation of the VIX with the market as the VIX rose nearly 4% when everything else was up too.  I wasn't quite sure last night we'd see a gain on Monday but I did note that VVIX was up.  And sure enough, the VIX was higher on Monday.  But confusingly enough, we've now got a completed bearish stochastic crossover, a doji candle, and a rising RSI just coming off oversold.  So another ambiguous chart - no call here either.  I'll just note though that VVIX is once again moving higher, so the VIX bias is to the upside.

Market index futures: Tonight all three futures are lower at 12:12 AM EDT with ES down  0.13%.  Monday's ES action featured a classic spinning top that broke away from the upper BB (finally).  Indicators remain impossibly overbought but the new candle is forming right on the edge of the rising RTC for a bearish setup.  And the overnight action so far confirms the reversal sign, so that makes this chart now look bearish.

ES daily pivot: Tonight the ES daily pivot rises once again from 1945.58 to 1950.25.  But this time for the first time in a while we've now crossed below the new pivot so this indicator now turns bearish.

Dollar index:  Last night I wrote "there's at least a chance of a move higher on Monday."  And it was a good chance indeed as the dollar took a big gap up for a 0.32% gain that blasted right through the 200 day MA.  It also set the stochastic in position to start forming a bullish crossover and sent momentum and RSI moving higher.  So it looks like there could be more upside from here.

Euro: Last night I noted that a dark cloud cover "bodes ill for the euro on Monday."   This is a high-probability pattern and it paid off on Monday with a big red candle that dumped the euro right back through the 200 day MA like it wasn't even there to 1.3588.  It also formed a bearish stochastic crossover.  So with the lower BB not far away at 1.3559 and support at 1.3596 now effectively broken, I'd say we have a good shot at going lower again on Tuesday.

Transportation: On Monday the trans put in a wishy-washy performance on a bearish inverted hammer that just played tag with the upper BB before backing off. Like the other charts, there's a reversal warning here, but one which requires confirmation.


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       4       1      1           0       0.800    142

     And the winner is...

So tonight we have a bunch of reversal signs plus a VIX that has apparently bounced off its lower BB from a very low level.  Dr. Copper continues to look toppy and the TRIN has now turned bearish.  The purely technical call at this point would be for a lower close Tuesday but that just hasn't been working out too well lately - I've seen too many bearish setups just melt away the next day. 

But ah hey what the heck - I'm updating the post I made an hour ago and going for the counter-trend play - Tuesday lower.  No namby-pamby uncertainty for us!

ES Fantasy Trader

Portfolio stats:  the account remains at $112,125 after six trades in 2014, starting with $100,000.  We are now 4 for 6 total, 2 for 2 long, 2 for 3 short, and one push.  Tonight we stand aside. 

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