Tuesday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Tuesday lower.
• ES pivot 1880.67.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: still long at 16,434 .

Recap

Hey Rocky, take a look at this!

Well I'm certainly glad I didn't call Monday higher just because last Friday's charts looked bullish as on Monday the Dow did an about-face and marched right back down 208 points, relinquishing all of Friday's gains and then some.  I figured hte market might have a tough time extending its gains, but I sure didn't anticipate another triple digit decline.

Now it's time to go to the tape again as the Rocky month of January thankfully nears its conclusion.

The technicals

The Dow:  Bah - after a promising two day gain, the Dow fell on its face Monday with a 1.29% plop on the opposite of a bullish piercing pattern - what is that, a bearish piercing pattern?  Indicators are still well shy of overbought but Monday's ugly action just put the kaibosh on the whole party.  Foo.

The VIX:  After its biggest gap down in two years last Friday, the VIX bounced back on Monday with an 8.1% bounce and a green hammerish candle.  Indicators continue to fall though so that all leaves this chart rather indeterminate tonight.

Market index futures: Tonight, all three futures are lower at 12:17 AM EST with ES down 0.31%.  On Monday ES put in a big dark cloud cover that retraced ost for Friday's gains.  That was enough to send all the indicators lower before ever evne hitting overbought and start the stochastic narrowing around for a bearish crossover.  None of that looks good and the overnight pin action is just plain awful.

ES daily pivot: Tonight the ES daily pivot drops back from 1885.75 to 1880.67. But that leaves ES considerably below its new pivot so this indicator now turns bearish.

Dollar index:   After its recet visits to the upper BB the past two days, on Monday the dollar gave it up witha  quarter percent drop that nevertheless still left the indicators just overbought.  There's not much to go on with this small spinning top.  My guess is that the selling's not done yet.

Euro:  After a big drop Friday last night I called the euro higher for Monday and whadaya know about that - it bounced right back up to 1.0849,  That sent all the indicators moving higher before ever hitting oversold and also sent the stochastic around in preparation for a bullish crossover.  So my money's on a further gain Tuesday for the euro, a thesis that is supported by further gains in the new overnight.

Transportation:  And finally on Monday the trans badly underperformed the Dow to confirm Friday's inverted hammer and complete a bearish evening star of sorts  Indicators are now confused between oversold and overbought but the general impression here is distinctly bearish.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      3       4           0       0.727    1318



     And the winner is...

The general tenor of the charts tonight is fairly bearish, so Bullwinkle and I call Tuesday lower.

YM Futures Trader

Nothing new again here.

Monday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday uncertain.
• ES pivot 1885.75.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: still long at 16,434 .

Recap

Last Friday the technicals (finally) moved in the expected directions and by the end of the day the recent picture had changed considerably.  Let's now go right to the charts to see what's new and which way Monday is headed.

[Blogspot's spell checker is on strike again so I apologize in advance for any typos].

The technicals

The Dow:  On Friday the Dow finally exited its year-long descending RTC for a bullish trigger.  Indicators are finally off of oversold and continuing to rise.  With a solid green marubozu on the books, there's nothing bearish about this chart tonight.

The VIX:  Last Thursday night I noted that the VIX was difficult to call but that the pattenr looked bearish.  That was borne out on Friday with a  big 16.3% gap-down red marubozu decline.  Indicators continue falling off overbought and there's just nothing bullish about this chart tonight.

Market index futures: Tonight, all three futures are higher at 12:11 AM EST with ES up 0.12%. On Friday, ES had its biggest day of the year with a tall green marubozu to close right back up to 1899.25, its best finish in a week.  Indicators are all rising smartly off oversold but atill nowhere near overbought.  My only concern here is that we might be in for a pause on Monday after such a big one day move.

ES daily pivot: Tonight the ES daily pivot rises from 1860.17 to 1885.75. Even at that, ES remains above its new pivot so this indicator continues bullish.

Dollar index:   The dollar fooled m elast Friday by refusing to go lower.  Instead it gained a big 0.53% to disconfirm its upper-BB piercing inverted hammer.  This move brought us almost back to the upper BB and left indicators fairly overbought.  We're also right on month-long resistance so it's not clear the dollar has the oomph needed to advance on Monday.

Euro:  At least I got the euro right last Friday when I said that more downside was available.  And it certainly was as the curo crashed back to 1.0804 on a tall red marubozu.  Indicators ar enow wandering around bwetween oversold and overbought so this one is a difficult cal.  The trend lately has been to retrace big moves so I'd not be surprised to actually see something of a move higher on Monday.

Transportation:  Much like the Dow, the trans had a great day on Friday, up 1.32% for a bullish trigger on a descending RTC exit.  Indicators continue to rise off of oversold but the candle is an inverted hammer which lends a note of cation here.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      3       3           0       0.727    1318


     And the winner is...

There are no real particularly bearish signs on the charts tonight but we're only seeing modest gains in the futures.  It's not unusual for the market to take a breather after running as hard as it did last Friday and I think that's what's going to happen this time.  This also begins another Fed week and there's likely to be some hand-sitting in advance of that.  So I'm not going to try to play the hero here and will simply call Monday uncertain.  Could possibly be a doji day.

YM Futures Trader

We managed to recoup a lot of our paper losses here on Friday and are now close to break-even on this trade.  Who knows, patience may prevail in the end.