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- Tuesday uncertain.
- ES pivot 1911.92. Holding below is bearish..
- Rest of week bias higher technically.
- Monthly outlook: bias lower.
- YM Futures trader: sold at 16,226, trade closed..
Whew! Last night I said I'd eat my hat if the Dow didn't close higher on Monday. Well after an encouraging pop out the gate, I watched in horror as it gave it all back dragged down by oil until by 2 PM I started warming up the oven (I never said I'd eat it raw). Then finally a late afternoon rally came to my rescue and the Dow finally broke its crazy 7 for 8 losing streak with a modest, though welcome 52 point gain. So with that out of the way, let's move on to Tuesday as this crazy op-ex week rolls on.
The Dow: On Monday the Dow finally gave us what we've been waiting for since the beginning of the year: a green hammer, crazy oversold indicators (RSI = 4.66) , and a stochastic that is within microns of a bullish crossover. This looks like one of those back up the truck moments and it finally appears that the Dow is ready to reverse course.
The VIX: Once again what I keep saying about the VIX proved to be true on Monday. It rarely spends more than a day or two above its upper BB. And after trading above it last Thursday and Friday, it fell 10% on Monday to close back down to 24.3. That's still pretty elevated but at least we are now coming back into low Earth orbit. Indicators remain overbought but they are also beginning to decline and the stochastic is curving around in preparation for a bearish crossover. With a bearish inside harami completed, it looks like there's more downside in store for the VIX on Tuesday
Market index futures: Tonight all three futures are higher at 12: AM EST with ES up %. ES has finally given us the candle we've been waiting for. On Monday it finished with a long-legged green spinning top to arrest a six out of seven day losing streak. That was enough to stop the relentless decline of the indicators, and the stochastic is now in prime position for a bullish crossover. Unfortunately, we're seeing a resumption of the downtrend in the new overnight, disconfirming the reversal signs.
ES daily pivot: Tonight the ES daily pivot falls again from 1928.75 to 1911.92. We remain below the new pivot so this indicator just continues bearish.
Dollar index: After a monster dark cloud cover on Friday, the dollar surprised me Monday by actually gaining 0.19%. That caused the indicators to stop their descent off of overbought though the the stochastic continues falling towards oversold. That all leaves this chart in something of a muddle so I'm not calling it tonight.
Euro: At least I got the euro right last night. After a tall hanging man it dropped right back down to 1.0890 on Monday on a large bearish engulfing pattern. That also stalled the indicators from their mark higher and caused a brand new bearish stochastic crossover. That is all a clue of a move lower on Tuesday and is also supported by the overnight which is currently moving lower by 0.17%.
Transportation: And finally we got a bit of bearish divergence in the trans which fell 0.46% on Monday compared to the Dow's 0.32% gain. However this may just be a case of one day late because the candle was a nice hammer nonetheless. Indicators are also crazy oversold here with RSI at 1.75. And the stochastic looks like it is just about to form a bullish crossover. We remain in a steep descending RTC but that could change at any minute. This looks like it could very well be a short term bottom for the trans.
Month right wrong no call conditional batting Dow
January 4 2 0 0 0.667 804
And the winner is...
I don't know what's going on here. All the charts look ready to reverse but the futures are having none of it tonight, and to a degree that has me worried. Perhaps oil is reasserting itself again - I'm not sure what's going on here. I think the market is testing for a bottom but with the general craziness lately and this being op-ex week, I think I'm just going to step back tonight and see what happens. Therefore, the call is for Tuesday uncertain. I still think we're overdue for a significant rally, but I no longer believe it's coming on Tuesday.
YM Futures Trader
With a decent profit from last night and the futures fading fast, I'm exiting this trade. For now we're going to sit back and watch.
SLD 1 false YM MAR16 Futures 16226 USD ECBOT 00:18:48
YTD stats: 1 trade, 1 win, 0 losses, 1/1 long, 0/0 short, P/L +103 YM points