Tuesday, August 5, 2014

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence..
  • ES pivot 1928.08.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias neutral.
  • ES Fantasy Trader standing aside.

Huh - when I got up Monday morning at the crack of 11 AM I was shocked, shocked I say to see the market so badly in the red and wondering how all my favorite technical indicators could have been so wrong.  But patience paid off in the end and that turned out to be the low of the day as Mr. Market crawled out of his hole and the Dow finished the day with a decent 76 point gain.  I told you right here last night - that SPX Hi-Lo indicator is awesome - it's better than sonar for finding bottoms.  So with all that excitement now out of the way, we turn our sights to Tuesday.

The technicals

The Dow:  On a purely candlestick basis, on Monday the Dow confirmed Friday's stubby hammer with a .vaguely bullish engulfing pattern..  It also caused RSI to begin coming off oversold and continued squeezing the stochastic for an imminent bullish crossover.  Bottom line - this one is looking bullish for Tuesday.  Also of interest - support on the lower edge of a long-running rising RTC held, so we dodged a bullet there.

The VIX:  Last night I wrote "this chart is looking to me ready to come down on Monday" and come down it did with an 11.22% thud that confirmed Friday's big spinning top and brought us back under the upper BB.  Once again, the upper BB was key here.  So now we have indicators just coming off overbought, a completed bearish stochastic crossover and a bearish candle - that all spells lower Tuesday in my book.

Market index futures: Tonight all three futures are lower at 12:22 AM EDT with ES down  0.10%.  On Monday ES confirmed Friday's spinning top with a nice advance that solidified a bullish stochastic crossover and kept the indicators rising slowly off extreme oversold.  We also closed above the lower BB for the first time in three days.  However, the overnight trading seems to suggest that ES may be taking a breather on Tuesday.

ES daily pivot: Tonight the ES daily pivot rises from 1920.33 to 1928.08.  We're still above the new pivot though only by two points now.  But this indicator still remains nominally bullish.

Dollar index:  While I was expecting a lower dollar Monday and the eventual spinning top did trade in the lower end of Friday's tall red candle, it ended gaining 0.03%.  But with a completed bearish stochastic crossover, indicators still just coming off overbought, and a three day downtrend going, I'm going to guess that the dollar goes lower on Tuesday - this time for sure.

Euro: And so of course the euro was down just a bit on Monday but the trade was entirely outside the descending RTC for a bullish trigger.  With all the indicators now rising smartly off oversold, I still have to think this chart looks bullish.

Transportation: And finally, the trans on Monday confirmed Friday's spinning top with a 0.35% green hammer that successfully tested the lower BB. Like the other charts, this was enough to start the indicators moving back up from oversold and off the BB.  We don't quite have an all-clear yet as we remain in a descending RTC but any move above 8155 on Tuesday will be bullish - and we're real close to that now.


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       6       4      4           3       0.692    639 August     1       1      0           0       0.500      6

     And the winner is...

All the positive signs that were in place last night are still there tonight, along with a bunch of confirmations.  I don't like the fact that the futures are all lower in the overnight but everything else looks bullish so I guess I just have to go ahead with that and call Tuesday higher.

ES Fantasy Trader

People ask how I get in and out of these trades.  To recap, I have no targets or stops.  The idea is just to get in late at night and then back out before the close the next day.  Last night I saw what seemed to be a good opportunity with all of my favorite signals, especially the SPX Hi-Lo index lining up, so I got in.  I was kicking myself Monday morning and wondering how I could have been so wrong.  But patience paid off in the end and we turned a respectable 2.5 point profit, all the better considering the hole we had to climb out of to get it.  I even left some on the table but I had to go out and couldn't sit in front of my screen all afternoon.  I figured it was best not to get too greedy and risk seeing my profit evaporate in the hopes of grabbing some extras points.  And that's how that worked.  Here's the trade:

SLD    10    false    ES    SEP14 Futures     1927.50    USD    GLOBEX    14:26:12   
BOT    10    false    ES    SEP14 Futures     1925.00    USD    GLOBEX    00:37:59 

Portfolio stats:  the account now rises to $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.


  1. Great trade nightowl. I got caught up in the whipsaw early yesterday morning and dismorning. But so far this week altogether I am up a great $12. LOL. But better than a loss and great learning oppurtunity as well. I will get there.

    1. Hey - in this environment, I'd say you're doing pretty good. I've actually been cutting back on trading recently. I don't like this herky-jerky action. It feels more like a VIX at 27 rather than 17.


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