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- Wednesday uncertain.
- ES pivot 2172.50. Holding above is bullish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- YM futures trader: no trade tonight.
Hmm - I guess the party wasn't quite as close to being over as it was looking last night. On Tuesday the VIX did not rise, it fell another 7.67%. And the Dow did not top after a doji on Monday, it rose another 54 points further into record territory. And the SPX followed suit, now almost to a record high itself. I find this all rather curious indeed. The technical signs were all there last night but we got no follow-through. Well sometimes stuff just happens and in any event the damage was limited. So we now move on to Wednesday as op-ex week rolls on and we wait for the other shoe to drop.
The VIX: The VIX in falling again Tuesday is now extremely oversold and with near-term support not til 12.76, still has at least a bit of room to run lower. Tuesday's red candle is certainly not a reversal sign.
Market index futures: Tonight, all three futures are higher at 12:16 AM EST with ES up 0.10%.
ES daily pivot: Tonight the ES daily pivot rises again from 2162.42 to 2172.50. ES continues above its new pivot so this indicator continues bullish.
Month right wrong no call conditional batting Dow
January 9 5 5 0 0.643 1433
February 9 3 5 3 0.800 1133
March 8 6 6 1 0.600 222
April 6 4 8 2 0.667 416
May 9 3 4 4 0.813 756
June 8 5 7 1 0.643 1393
July 5 6 6 2 0.539 -304
August 1 3 8 0 0.250 120
September 4 5 6 0 0.444 -59
October 10 3 4 1 0.786 314
October 10 3 4 1 0.786 314
November 3 3 4 0 0.500 451
And the winner is...
Hmmm. Is there more room to run? The Morningstar Market Fair Value Index would seem to suggest so. It went below 1.0 on October 26th indicating a market that's oversold and has remained there ever since after hitting 0.96 on November 4th. And Monday's doji in the Dow did not pan out. But we got a second reversal warning Tuesday in the form of a fat hanging man. And there's an even better hanging man in the trans. And while ES is up a bit in the overnight, the candle is shaping up as an inverted hammer. With the Dow now up seven in a row, this streak is getting long in the tooth, and its RSI hit 100 on Tuesday - as overbought as it gets.
I'd still like to call it lower for Wednesday based on how overextended we're getting, but I was wrong about that for Tuesday and I'm a firm believer in fool me one, fool me twice. Whenever I see something as unexpected as this going on, I think it's more prudent to just step back a bit and wait to see if things settle down. Therefore, I'll just have to settle for calling Wednesday uncertain.
YM Futures Trader
No trade tonight.