The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Tuesday uncertain.
- ES pivot 2039.42. Holding above is bullish..
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- YM futures trader: no trade.
Recap
Well shoot - we called the Dow lower for Monday but despite an early drop it nonetheless managed to finish with a modest 22 point gain. A miss, but a small one. And this does change the picture so let's get right to the charts and see what this means for Tuesday. But first:
The technicals
The Dow: On Monday the Dow managed to continue its advance with a small 0.12% gain to remain in a two week-long rising RTC. But we are now closing in on some four-month-long resistance around 17,730 and the indicators remain impossibly overbought with RSI having hit 100. It doesn't get any higher than that. What goes up must eventually come down and to me this chart is looking overdue for at least a bit of retracement.
The VIX: Last night I was pretty sure that after putting in a gap-down doji star that the VIX would go lower on Monday. But it fooled me instead to ending another 1.64% lower to close below 14. That now breaks all of the November lows and puts us all the way back to last October. In the meantime we have a tall near marubozu in bearish engulfing position that leaves all the indicators extremely oversold. But with so much downward momentum and no real reversal candle insight right now I still can't call this one higher yet.
Market index futures: Tonight, all three futures are slightly lower at 1:14 AM EDT with ES down 0.07%. ES made it four up in a row on Monday leaving all the indicators continued extremely overbought and with no reversal candle in sight. I want to say this can't go on forever, but I also don't want to be a tape-fighter. On the other hand, ES is looking tired at the moment.
ES daily pivot: Tonight the ES daily pivot rises again from 2035.75 to 2039.42. That still leaves ES just above its new pivot so this indicator remains barely bullish.
Dollar index: Last night I noted that the dollar seemed to have "more upside potential than downside risk". And that at least was correct as the dollar gained 0.19% on Monday to break free of its lower BB and make it two up in a row. With a new bullish stochastic crossover in place and indicators just barely off oversold, I'd say the dollar looks higher again on Tuesday.
Euro: But last night I let a fake-out rally in the overnight euro get the better of me and despite what looked like a bearish candle pattern I didn't want to commit to that. Too bad because on Monday the euro did indeed get down lower to close back down to 1.1 280. That makes it two down in a row and we are now only recently off of overbought with no bullish reversal candle in sight. And with no help from the new overnight I cannot call the euro higher for Tuesday.
Transportation: Finally, here's the bearish reversal I was looking for last night. On Monday the trans closed exactly unchanged on a perfect doji star sitting right at the top of Friday's gains. Indicators remain extremely overbought and the stochastic is completely flattened out ready for a bearish crossover at any moment. We continue to climb the upper BB but this looks like as good a reversal warning as I've seen in a week here and it also looks like as good as any time for the trans to move at least a bit lower.
Calling tops is a fool's game, so it is with great difficulty that I keep from doing that because it's looking to me like the market is due for a pause any day now. But do the charts really support this idea? I hate to say it, but no, they do not. So I can't in good conscience call the market lower just yet, though I want to. I also think the recent uptrend is fading. So much as I hate to do it I'm afraid I'm going to have to content myself with calling Tuesday uncertain.
YM Futures Trader
No trade tonight..