Tuesday, October 21, 2014

Tuesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday uncertain.
  • ES pivot 1892.25.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

More computer troubles tonight - .  I bought new RAM for my PC on Monday, but despite my best efforts, it didn't work.  The machine refused to even produce a BIOS screen with it, so it's back to the old buggy RM until I figure this out.  And so it's another abbreviated Night Owl as there's just no telling when the whole thing will suddenly lock up.

Meanwhile, back in Marketland, we had a pretty good day Monday.  Even the Dow, dragged down by some IBM numbers not to Mr. Market's liking, managed to end in the green.  So what does this bode for Tuesday.  Let's take a quick look.

The technicals

The Dow:  Small hanging man - bearish warning but needs confirmation.  Trade was a bullish RTC trigger and indicators now rising off oversold is bullish.

The VIX:  Big 15.55% drop Monday disconfirming Friday's spinning top..Falling indicators, just off overbought, back under 20, bearish trigger on rising RTC exit - no reversal signs yet.

Market index futures: Tonight all three futures are lower at 12:32 AM EDT with ES down  0.34%.   Nice, if small, green candle entirely above Friday's for a two white soldiers pattern.  Also broke back above the 200 day MA - bullish.  All indicators now rising steadily off oversold - also bullish.. But - overnight fading and forming a dark cloud cover.

ES daily pivot: Tonight the ES daily pivot ticks up from 1874.58 to 1892.25.  Still above, so bullish.

Dollar index:  Looks like continued sideways here.

Euro: Same here - recent advance seems to be petering out with resistance at 1.2834.

Transportation: Very nice five day run now.  Bullish RTC trigger, back above 200 day MA and steadily rising indicators - all bullish.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       6       4      4           3       0.692    639 August     8       7      2           2       0.588     81 September  6       6      5           2       0.571    376 October    5       5      2           1       0.545    293

     And the winner is...

Most signs are looking bullish tonight but I'm not liking the futures action at the moment.  A lot will depend on continuing earnings on Tuesday.  Accordingly, we call Tuesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside.

Monday, October 20, 2014

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence..
  • ES pivot 1874.58.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Friday was a wild ride on the Street as we finally got the payoff I'd been expecting after two days of major reversal hammers.  Let's quickly move on to Monday because the Night Owl's computer is very sick with some bad RAM and it's crashing at unpredictable intervals (this would happen on a weekend).  So I have to type quick until I can get some new memory for the old beast on Monday.

The technicals

Canceled due to HW issues.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
 
July       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81 
September  6       6      5           2       0.571    376  
October    4       5      2           1       0.500    274

     And the winner is...

I hope the machine stays up long enough for me to say that I'm calling Monday higher.  Hopefully tomorrow we'll have some new RAM in here and be back to normal.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside - I am by policy boycotting the market until the VIX goes back below 20.

Friday, October 17, 2014

Friday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher, low confidence..
  • ES pivot 1845.17.  Holding above is bullish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Thursday provided us with sort of a mini-rerun of Wednesday as the Dow continued to plumb the depths looking for a bottom.  And even thought he Dow ended down a bit both the Nasdaq and SPX managed to post minor gains (that still felt like victories).  So now we move on to the scariest day of the year, October op-ex Friday.  Boo!

The technicals

The Dow: The Dow ended Thursday down just 0.15% with a nice harami hammer to Wednesday' big brother.  With a higher low and right on the edge of the descending RTC, this is an encouraging sign.  OTOH, look what's coming: according to the Stock Traders' Almanac, this Friday was down six in a row from 2006-2010 and it's close to the infamous October massacre when the Dow imploded for a 22.6% one day loss on October 19th, 1987.  Still, with indicators remaining oversold and a completed bullish stochastic crossover, this chart looks like it's got more upside potential than downside risk.

The VIX: Last night I wrote "the VIX is ready for a fall" (though I'll admit I equivocated a bit) and sure enough on Thursday it came back 4% to 25.2.  It's now only in low-earth orbit rather than interstellar space.  But with a tall red bearish engulfing candle confirming Wednesday's tall doji, a completed bearish stochastic crossover and indicators remaining highly overbought, it looks like there's still a lot more downside available here.

Market index futures: Tonight all three futures are higher at 12: 14 AM EDT with ES up 0.28%.  After Wednesday's giant hammer, on Thursday ES gave us a long-legged doji for two reversal signs in a row.  Indicators remain pretty oversold and the stochastic has completed a bullish crossover.  The overnight (so far at least) seems to be confirming that with a decent gap-up.  It's also exiting the latest descending RTC for a bullish setup.  So despite all the Chicken Littles around, I've got to believe we're not looking at more triple digit declines on Friday.

ES daily pivot: Tonight the ES daily pivot dips from 1847.67 to 1845.17.  That still leaves us above the new pivot so this indicator remains bullish.

Dollar index:  The dollar continues to be a political football with technicals taking a back seat.  Thursday's 0.23% loss confirmed Wednesday's hanging man, but I'm not making anything out of this.  This one can go anywhere on Friday.

Euro: On Thursday the euro exited a descending RTC all the way back to July 2nd for a bullish setup after bottoming on 10/3.  Despite a small hanging man and overbought indicators, I think there's still higher to come here.

Transportation: For the third day in a row the trans outperformed the Dow in a big way with a 1.12% gain on Thursday that sealed the 200 day MA breakout and exited the descending RTC for a bullish trigger. The trans downtrend is now officially over.  And with indicators remaining oversold and a bullish stochastic crossover in full force, we're not done going higher here.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       6       4      4           3       0.692    639 August     8       7      2           2       0.588     81 September  6       6      5           2       0.571    376 October    3       5      2           1       0.444     11

     And the winner is...

Friday is op-ex day, with all the usual machinations that entails.  If I had any sense, I'd just call it uncertain and go home.  But I'm seeing a pretty decent continuation of the bullish reversal signs from Wednesday in the charts tonight.  And the SPX Hi-Lo indicator has now hit zero, which means it's got nowhere to go but up from here.  So I'm going to go out on a limb and call Friday higher, assuming it doesn't get sawn off on me by the ECB, the Greeks, the Ukraine, Ebola, angry Hong Kongers, the Middle East Head Choppers Society, falling oil, und so weiter.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside - I am by policy boycotting the market until the VIX goes back below 20.

Thursday, October 16, 2014

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence..
  • ES pivot 1847.67.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Holy moly!  Mr. Market has just gone stark raving bonkers, completely off the rails.  The talking heads on CNBC were all in a dither on Wednesday.  It's the end of QE.  It's Ebola (which is Alobe spelled backwards).  It's not QE.  It's Germany.  It's Greece (for what, the fourth time?).  Hey, it's exaggerated.  We got some interesting charts tonight for sure though so pull up a seat, break out the popcorn and let's get munching on Thursday.

The technicals

The Dow:  Wow, I sure picked an even worse day to be wrong (again) with the Dow down a massive 460 points at its low to finish "only" 173 points lower.  On Wednesday the Dow appeared to be in free-fall until just after lunch, at which point some traders noticed that the sun was still up in the sky and the earth was still turning, and started buying.  The net result was a giant hammer exiting off the left side of the descending RTC (a bullish sign), very oversold indicators and a bullish stochastic crossover.  That all looks like a bullish reversal to me.  But with the VIX somewhere out in low-earth orbit, who the heck knows.

The VIX:  Earth to VIX!.  You're cleared for re-entry!  With the VIX spiking to just over 31, a level not seen since, uh, the Middle Ages, it put in a perfect doji star on Wednesday that was still a 15% gap-up pop.  Yowsa!  The indicators are now all quite overbought and the stochastic is curving around for a bearish crossover, but the lessons of summer 2011 show that when the VIX gets this irrational, it can stay that way for months on end.  So while technically it may look like the VIX is ready for a fall, I'm now going to require confirmation first.  Seeing is believing.  So there!  Nyah!

Market index futures: Tonight all three futures are higher at 12:16 AM EDT with ES up 0.32%.  ES had a huge move with a big hammer on Wednesday like everything else that looks an awful lot like capitulation.  With indicators remaining oversold and a bullish stochastic crossover in place, an no further losses in the overnight, I'd have to guess that maybe, just maybe, this chart is ready to turn around.

ES daily pivot: Tonight the ES daily pivot plummets from 1877.42 to 1847.67.  But tonight we're finally above the new pivot, thanks to a combination of that big drop and a rising ES overnight.  So this indicator is now back to bullish.

Dollar index:  Huh - so much for Tuesday's big bullish tri-star.  On Wednesday, the dollar took a 0.81% dump on a big hanging mannish thing (it should come after a trend, which we don't have right now).  That curved the stochastic around for a bearish crossover but even with this big move, this chart remains too tough for me.

Euro: I had the sense to stay away from the euro last night and it was just as well since I wasn't expecting a big jump to 1.2781 o Wednesday.  That was good for a bullish stochastic crossover and we're seeing positive pin action int he overnight so now I'm saying there's more upside to come on Thursday.

Transportation: Dow Theorists take note - in a second day of bullish divergence, the trans gained an impressive  0.23% on a day that everything else on the planet was getting hammered. In fact they exited an 8 day descending RTC for a bullish setup with oversold indicators and a completed bullish stochastic crossover.   They also held on to Tuesday's breakout above their 200 day MA.  This all spells higher in my book.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132

July       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376
October    3       5      2           1       0.444     11

     And the winner is...

I notice that TLT put in a monster inverted hammer at the end of a big run-up on Wednesday, a bullish sign.  OTOH, Dr. Copper remains in the toilet, and for the foreseeable future.  But we've now got some pretty good reversal signs on the charts involving giant hammers and those are among the highest probability candles.  But we've also got a VIX now at 26.25, a level I'd classify as "moderately schizophrenic" and just short of "armed and dangerous".

What to do?  Well since we're getting such wild swings lately, and with the futures looking higher, it might be worth a shot to call Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside - I am by policy boycotting the market until the VIX goes back below 20.

Wednesday, October 15, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence..
  • ES pivot 1877.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

My call for a higher close was doing really well until an afternoon fade hit the Dow and the bell rang just a few minutes too late to save it.  At least the SPX and Nasdaq did finish higher.  So the fundamental thesis was correct.  But yet again, we've got interesting charts tonight, so let's take a gander at them, shall we?

The technicals

The Dow: Looking at the previous three days of the Dow, one might conclude that the end of the world was at hand.  But one would be wrong, for on Monday the Dow gave us a nice long-legged doji that combined with oversold indicators (finally), a negative exponential run and a reasonable excursion below the 200 day MA all make me think that a reversal could be at hand.  Of course with the VIX still above 20, nothing is certain, but I feel a bit better about this tonight.

The VIX:  And speaking of the VIX, it was foolish of me to abandon my long-standing thesis that the VIX rarely spend much time above its upper BB, because it came right back down 7.51% on Monday for a bearish harami doji.  Indicators remain overbought and the stochastic has now finally curved around in preparation of a bearish crossover.   So I'd say lower looks likely from here.

Market index futures: Tonight the futures are mixed at 12:44 AM EDT with ES down  0.05% but YM up 0.04%  On Tuesday ES gave us a green inverted hammer as it seemed to find support at 1865.

ES daily pivot: Tonight the ES daily pivot ticks down from 1878.42 to 1877.42.  After a drift lower this evening, ES is now back below the new pivot so this indicator returns to bearish.  The new overnight, while down a bit is actually trading just outside the latest steep descending RTC so that's a bullish setup.  And the stochastic has just made a bullish crossover from a very oversold level.  Overall, this chart actually looks fairly positive to me.

Dollar index:  On Tuesday the dollar completed an unusual pattern called the bullish tri-star with a 0.25% gap up gain.  It's also trading entirely outside its descending RTC for a bullish trigger and it has formed a bullish stochastic crossover.  So all signs seem to point to a higher dollar Wednesday.

Euro: After a breakout attempt early Tuesday the euro gave up and closed at 1.2654, just below Monday's close to give us a tall red marubozu.  The overnight is guiding lower but with a skittish five day pattern, there's really no calling this one.

Transportation: And finally in a bit of bullish divergence, the trans vastly outperformed on Monday gaining a big 2.61% on a Day the Dow was flat.  This upside bullish piercing pattern also broke back up above the 200 day MA and completed a bullish stochastic crossover even as indicators remain oversold.  SO this chart now clearly looks ready for more upside on Wednesday.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132 
July       6       4      4           3       0.692    639  August     8       7      2           2       0.588     81  September  6       6      5           2       0.571    376  October    3       4      2           1       0.500    184

     And the winner is...

Tuesday was a day of bullish reversal signs across the charts.  The conservative approach would be to wait  it out for confirmation, but what the hey - I'll throw all caution to the wind and just call Wednesday higher, with the usual caveat that with the VIX still pretty high, all it will take to derail this is one negative comment from some central bank or Fed Head, or another case of Boola-Boola in America.  We live in crazy times.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside - I am by policy boycotting the market until the VIX goes back below 20.

Tuesday, October 14, 2014

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence..
  • ES pivot 1878.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Ooh!  Ahh!  Watching the market on Monday was like watching the fireworks on the Fourth of July.  Ooh!  Look at the VIX skyrocket!  Ahh - watch the Dow dive!  And why?  Because a few thousand people croaked in some countries in Africa most people couldn't even find on a map?  Not to diminish the personal tragedies for those personally involved, but PG down 1.56% on Monday?  Are people going to start brushing their teeth 1.56% less often because of Ebola?  Clearly Mr. Market is not just off his meds but he's having an all-out psychotic attack  Can the charts make any sense of this lunacy?  Let's put on our snowy white hazmat suits and find out.

The technicals

The Dow:  Yowza!  This is called taking the heat, with the Dow down 223 in one day for a three day losing streak.  Of course that still leaves us exactly where we were eight days ago but it triggers a few, mostly bad, uh, things.  First we've now got a down Friday followed by a down Monday - bearish.  Second, we did not bounce off the 200 day MA - instead we cratered  on it - very bearish.  Also we broke support at 16,364.  And the indicators are all just off overbought, even after this massive drop.

The only good piece of new here (and it may be the determining one) is the fact that the Dow is now going negative exponential.  And these things always, and I mean always end pretty quickly.

The VIX: Ja ja, on Monday the VIX gained another 16%.  And it's now clearly going exponential, trading entirely above its upper BB.. The last time we were here was June 2012.  The indicators are now quite oversold (RSI = 90.5) and the stochastic is about to swing over for a bearish crossover.  It's not at all clear to me that the VIX can keep this up much longer.  At these levels I'd be a lot happier going short than long the VIX.

Market index futures: Tonight all three futures are significantly higher at 12: 19 AM EDT with ES up 0.56%.  On Monday ES, like just about everything else, smashed through its 200 day MA.  But that isn't always fatal and that seems to be the case here as it appear that buyers are showing up in the overnight.  The move appears to be more than a garden variety DCB and definitely bears watching.

ES daily pivot: Tonight the ES daily pivot dives further from 1906.25  to 1878.42.  However, this time while we are still under the new pivot, we're now very close, just two points under.  That puts the pivot in play.  For the moment, it' bearish, but just, uh, barely.

Dollar index:  And what's out pal the dollar up to?  Not much, with a funny green gap-down 0.35% mini-hammer on Monday.  The result is an evening star that cancels Friday's bullish RTC exit.  But with indicators still just offo oversold, this chart becomes too tough to call.

Euro: Meanwhile the euro continued meandering higher on Monday after exiting its descending RTC last week.  It has now hit overbought but also formed a bullish stochastic crossover.  This is indicative of the fact that the euro is more a political football these days than a legitimate trading instrument.  Stay away!

Transportation: Boom!  The trans went completely off the rails on Monday, crashing right through their 200 day MA with a 2.22% loss on greatly increased volume. And this was the first such break since November 2012.  There's absolutely nothing bullish about this chart but with the indicators now quite oversold, It seems like the bottom is near.  Sniff sniff - smells like capitulation.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132 

July       6       4      4           3       0.692    639 
August     8       7      2           2       0.588     81 
September  6       6      5           2       0.571    376 
October    3       3      2           1       0.571    190

     And the winner is...

I don't know - the macro picture may or may not be changing but in the short term it seems to me that there's a lot of irrational hysteria in the market and that the latest three day crater  was vastly overdone.  And given the recent craziness in the VIX, a turnaround could happen at any moment.  And the futures seem to be suggesting that for Tuesday.  So instead of taking the rational course which would be to take the rest of the month off, I will go way out on a limb and call Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside - I am by policy boycotting the market until the VIX goes back below 20.

Monday, October 13, 2014

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1906.25.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Last Friday's losses did some important technical damage.  I'm short on time tonight and I'm having some serious computer issues (as in random BSOD serious) but but I do want to quickly review the highlights before the next crash (of my computer that is, not the market - though that may be coming too).  With another op-ex week coming up and a sort-of holiday on Monday, things will no doubt be, uh, interesting this week.

The technicals

The Dow:  The Dow broke its up/down/up pattern Friday with two triple digit losses in a row.  But the really bad part is that it busted right through its 200 day MA without even trying to bounce off like it did back in August.  And while the indicators continue moving lower, they are, amazingly enough still not oversold.  This chart isn't looking good, Jack.

The VIX:  Meanwhile, it is clear that Mr. Market is now completely off his meds, with the VIX adding another 13% on Friday to close at 21.24, its highest weekly close since December 2012.  It also blasted through its 200 week MA in a way we haven't seen since August 2011, back when we had that huge crisis around, uh, yeah well I can't remember either.  The bad thing is that one took months to sort out and this is starting to look a lot like then.  Not so good.

Market index futures: Tonight all three futures are lower at 1:01 AM EDT with ES down  0.51%.  ES also just broke through its 200 day MA in the Sunday overnight and is also not yet oversold.  Not looking good here.

ES daily pivot: Tonight the ES daily pivot dives from 1936.25 to 1906.25.  We remain well below the new pivot so this indicator remains firmly bearish.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
    64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132

July       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376
October    2       3      2           1       0.500    -33

    And the winner is...

There's no question tonight - the only call I can make is Monday lower.  And with the VIX above 20, I'm now curtailing my trading activities.  I'm starting to really not like the looks of things here.

ES Fantasy Trader


Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside - this roller coaster is still a bit too wild for me.