Tuesday stock market forecast

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

• Tuesday lower.
• ES pivot 2158.67.  Holding below is bearish.
• Rest of  week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: no trade tonight.

Recap

After a small gain last Friday, the Dow put in, yes, another small gain on Monday, this time a whopping 17 points.  But sometimes small moves can have big consequences.  We consult the charts now for answers.

The technicals

The Dow:  The Dow pushed further into record territory on Monday though the pace of the advance is definitely slowing as we got a second spinning top in a row.  The gain was small but it pushed the indicators to extreme overbought levels - RSI has now hit 100.  It doesn't go any higher than that.  We also traded outside the rising RTC again for a bearish trigger.  I still hesitate calling the Dow lower in the face of this recent massive advance but the tide does seem to be running out.

The VIX:  Last night I wrote of the VIX that "there's still room to run lower".and that's just what it did on Monday, now down to 12.44 and levels we haven't seen in a year.  But all the forces in play last night are still there so incredibly I still can't call the VIX higher from here.

Market index futures: Tonight, all three futures are lower at 12:31 AM EDT with ES down 0.16%. On Monday ES managed a small gain but this now makes three days of lower highs indicating we seem to be runing out of buyers at these record levels.

ES daily pivot: Tonight the ES daily pivot rises again from 2153.58 to 2158.67.  And that's enough to put ES be;low its new pivot again so this indicator now turns bearish.

US dollar ($USDUPX) daily

Dollar index: Last night I wrote that "I'd expect another shot at the 200 MA on Monday."  And that's just what the dollar did with an early punch higher.  But that ultimately faded to close back below the MA again for just a 0.03% gain.  The candle was a hanging man so there's some suggestion of a move lower here on Tuesday.  Look at the chart - the MA is the dotted orange line:  Doesn't look too optimistic to me.

Euro:  The euro's dump down through its 200 day MA last Friday came to naught as it had no pin action on Monday, closing back up to 1.10965 on a fat green spinning top.  The new overnight is forming a dark cloud cover for what it's worth.  Meanwhile the euro just continues a trendless three week-long oscillation about its 200 day MA.

Transportation:  On Monday the trans confirmed Friday's dark cloud cover with a 0.15% loss on a small gap-down doji star.  That also completed a bearish stochastic crossover and traded outside the rising RTC for a bearish trigger.  I'd say the selling's not done here yet.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
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       3      3       3           1       0.571    -232

     And the winner is...

The market has definitely been slowing the past few days and we've been seeing some technical reversal signs, but they just never seemed to pan out.  Well with the Dow's RSI now finally at 100 (and the SPX at 97) it may finally be time for a down day.  So I may live to regret it but I'm going to go out on a limb and call Tuesday lower.

YM Futures Trader

No trade tonight.