Tuesday, July 8, 2014

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence
  • ES pivot 1971.92.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader stands aside.

Well things played out about as I expected on Monday.  The popular reason for the decline was interest rate fears, but you could see it coming when the Dow hit its upper BB after crossing 17K last week.  In any event, this gives us a fresh data point to work on, so let's see how the charts have changed as we look towards Tuesday.

The technicals

The Dow: On Monday the Dow clearly did not have the requisite mojo to consolidate last week's gains.  But just keeping the 17K mark was an impressive accomplishment in its own right.  But with indicators seeming to have peaked on overbought and a bearish stochastic crossover in the offing, Monday's red candle looks decidedly bearish for Tuesday..

The VIX: Holy moly - this one caught me by surprise.  I sure didn't see a 10% gap-up pop in the VIX coming Monday..  That move blew the VIX clear out of its descending RTC for a bullish setup, and squeaked out a bullish stochastic crossover, and sent the other indicators higher off oversold.  But -- this is now 2/3 of a bearish evening star.  So we now have to wait and see how this plays out on Tuesday.  There is much uncertainty here.

Market index futures: Tonight all three futures are lower at 12:16 AM EDT with ES down  0.09%.  ES now looks pretty conclusively to have topped with two red candles in a row.  Monday's action gave us a bearish stochastic crossover and the new overnight is trading outside the rising RTC for a bearish setup.  And with indicators now clearly having topped at overbought and heading lower, this chart just looks bearish.

ES daily pivot: Tonight the ES daily pivot drops from 1975.83 to 1971.92.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  Despite the bullish signs last ngiht the dollar managed to drop 0.02% on Monday.  Still, it traded outside the descending RTC so that's a bullish trigger and the indicators continue to rise off oversold.  But the candles aren't looking bullish at all, so I'm going to defer on this chart tonight.

Euro: Sigh - and of course I was wrong about the euro for Monday also, as it put in a decent green hammer that closed right on the edge of its descending RTC for a bullish setup.  The stochastic is also curving around for a bullish crossover any moment now.  So I'm going to switch sides , go with that and claim the euro goes higher on Tuesday.

Transportation: And finally there was no seeing Monday's reversal in the trans either as they dropped a full percent to fall right out of their rising RTC for a bearish setup.  And a bearish stochastic crossover.  And indicators peaked on overbought.  The only hope here is for a DCB on Tuesday but that's by no means a given.


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       8      10      3           2       0.500    132

July       1       0      0           0       1.000     44

     And the winner is...

Tonight we're seeing a bunch of reversal signs, particularly WRT regression trend channels.  Meaning something's afoot.  It's looking like the uptrend that began June 26th may now be kaput.  Also, I note that Dr. Copper put in a hanging man on Monday after an exponential run-up, always a good sign of a reversal.  And the Morningstar Market Fair Value Index is back to 1.05, as high as its been all year so far.  And the NYSE A/D line has been putting in lower highs and lower lows lately.  And the TLT looks ready to move higher.  So all in all, I think I'm just going to call 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.

No comments:

Post a Comment

Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.