Tuesday, August 26, 2014

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence.
  • ES pivot 1994.50.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

After a down Friday, the Dow rebounded on Monday with a 76 point gain to keep the uptrend intact.  We also saw the SPX hit the 2000 mark for the first time, an historic moment.  So as the rally off the July Putinoia lows marches on, let's see now if we can keep it going on Tuesday.

The technicals

The Dow: The Dow shot up out the gate on Monday. before retracing about half the gains, still good for a 0.44% advance.  The high was just short of resistance and the upper BB, both around at 17,143.  Indicators remains highly overbought and useless.  Once they hit the end stop, there's no way to tell if they mean anything anymore.  So since we remain inside the rising RTC, I have to think there's still more upside left here.

The VIX:  But the VIX was a different story.   It ended up 2.01% in an unusual move higher on a day when the market was also higher.  The candle was a clear hammer that perched right on the edge of the descending RTC for a bullish setup.  RSI has also been rising for over a week now and is now just off oversold.  So the takeaway here is that the VIX is due for a move higher on Tuesday..

Market index futures: Tonight all three futures are lower at 1:14 AM EDT with ES down  0.06%.  On Monday ES rejected last Friday's hanging man with another leg up that nearly hit the upper BB.  Indicators are all broken at overbought and we remain in the center of the rising RTC.  However, it looks like ES is confirming Monday's inverted hammer.  It looks as if it may be needing a rest after the exertion of Monday's record high.

ES daily pivot: Tonight the ES daily pivot rises from 1986.92 to 1994.50.  That jump, coupled with the decline in ES now puts us below the new pivot, so this indicator turns bearish.

Dollar index:  Wow - on Monday the dollar took a big boing, gapping up 0.26% on a green marubozu that left the upper BB in the dust. Indicators are now highly overbought and this big gap suggests a possible retracement Tuesday.

Euro: And of course the poor downtroden euro gapped down on Monday to close at 1.3194  I had to back out to the weekly chart to find the last time we were here - it was September 2013.  We remain inside a descending RTC and while indicators are now highly oversold, there's really nothing here to suggest a move higher.

Transportation: On Monday the trans put in a decent 0.29% gain but remain in a congestion zone with resistance at 8470.  Friday's doji yielded Monday's spinning top, but with a bearish stochastic crossover.  I'd say the odds now favor a move 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       8      10      3           2       0.500    132

July       6       4      4           3       0.692    639 August     7       6      2           1       0.538     69

     And the winner is...

We're now seeing a bunch of bearish signs in the charts.  And it's not uncommon for markets to take a breather after setting record highs.  In particular, SPX 2000 is a notable milestone.  So I think I'm going to call Tuesday lower.

ES Fantasy Trader

Portfolio stats:  the account remains $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.

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