Friday, August 1, 2014

Friday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher, low confidence..
  • ES pivot 1937.92.  Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Yowsa!  I'm really glad I called Thursday lower because I sure wasn't expecting a 317 point collapse in the Dow, the worst day for the market since February 3rd.  I'm still not sure I entirely understand this - disappointing earnings, interest rates, Argentinian bonds, whatever, it seems like an awful lot of wealth destruction for no really good reason.  But coming at the end of the month, we have an interesting situation, so let's see how Friday might play out as we sift through the rubble of Thursday's charts.

The technicals

The Dow: Holy inverted exponential - Thursday's 1.88% collapse in the Dow just fell off a cliff, blasting through the lower BB like it wasn't there and driving the indicators to extreme oversold levels as the 200 day MA hove into view.  This is just nuts.. It's worth nothing though that when we had out last triple digit loss back in February, the next day was higher/  However, that one came after two weeks of relentless daily falls.  This time, we're only down for about a week.  On the other hand, in February, the reversal came right as we touched the lower edge of a long-running rising RTC, back to December 2012.  Thursday's close of 16,563 is just short of that line.  So while there's nothing technically indicating a reversal here, I'd have to think  that a DCB could be in the offing if nothing else.

VIX daily
The VIX: OK, this one is definitely worth a chart.  Remember how the VIX spiked on the 17th, right through its 200 day MA, prompting my "holy moly" comment?  Well on Thursday the VIX exploded, gaining 27.16% with a green marubozu spaceship that gapped up right through the 200 day MA and left the upper BB in the dust.  Check it out.  This is the highest VIX close since April, but the rate of increase hasn't been seen since January back when, oh you remember, the big news was ... yeah right - I don't remember either.  Three months from now, we won't remember what this one was about.

But back then, the VIX retraced a bit the next day but then went on to make further highs peaking at 21.48 as Mr. Market flushed all his meds down the toilet.  But with the VIX now nearly two points above its upper BB, I have to think it's going  to retrench a bit on Friday.  The ascendance into insanity may not be over, but two in a row like this would be highly unusual.

Market index futures: Tonight all three futures are higher at 12:27 AM EDT with ES up 0.29%.  On Thursday like the Dow ES had their biggest drop since February 3rd, also blasting through their lower BB.  But this one was more riveting, coming as it did after a week of tiny moves lower.  In any case, it moved all the indicators swiftly oversold and spun the stochastic around into position for a bullish crossover Real Soon Now.  The overnight action leads me to believe that Wednesday's move was overdone and we could see some retracing on Friday.

And I'll note that the last two times ES broke under its lower BB, it bounced right off the next day.  So far, the new overnight seems to be supporting that.

ES daily pivot: Tonight the ES daily pivot swoons from 1965.25  to 1937.92.  And even after that plunge, we're still below the new pivot by a good eight points so this indicator continues bearish.

Dollar index:  The dollar managed to avoid the carnage on Thursday, up just 0.01%on a funny red spinning top.  We're still in a rising RTC and still clambering up the upper BB but this is the first credible reversal sign I've seen here in two weeks.  With RSI still pegged at 100 for now four days in a row, I can't help but think that what goes up must come down sooner or later - and it's getting pretty late.

Euro: Considering the havoc in all the other charts, the euro had a fairly tepid asymmetric spinning top doji on Thursday for just a small loss.  But the descending RTC remains intact and the indicators remain flat on the floor.  So until we see a real reversal sign, this one's going lower.  Note too that the 200 week MA at 1.3418 did not hold - a bad sign.

Transportation: Huh - well so much for my spinning top reversal at the end of a waterfall theory.  The trans on Friday  were trashed along with everything else in sight, closing just above their lower BB. We crashed right though support at 8200, stopping at the next support of 8144.  There's just nothing bullish about this chart other than the chance of a DCB on extremely oversold indicators and the lower BB touch.

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

     And the winner is...

Ack!  A Baby Ruth!
The first day of most months is historically positive, but not August.  However, we took such a big hit on Thursday that convention would dictate at least a DCB on Friday - particularly since my feeling is that Thursday's action was overdone, sort of like the swimming pool scene in Caddyshack.  So I'm going to go out on a limb, claim that it's not so bad, and call Friday higher.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Thursday, July 31, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence..
  • ES pivot 1965.25.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Well that was interesting.  A lot of people were selling the rumor that Auntie Janet was going to sound more hawkish than she actually did Wednesday afternoon.  That cheered up Mr. Market, but just a bit as the Dow finished lower anyway, thought both the SPX and Nasdaq managed to end in the green.  So that takes care of one bit of news, but wait there's more.  We'll now check on how the charts sort out tonight heading into Thursday.

The technicals

The Dow:  The indecision in the Dow on Wednesday as reflected in a textbook spinning top.  However, it's sitting just off the lower BB, the indicators have now gone oversold, and the stochastic is flattening out in preparation for a bullish crossover.  So right now I'm leaning towards this candle as a valid reversal sign.

The VIX:  After a bullish engulfing candle on Tuesday, the VIX did indeed move higher on Wednesday - by all of 0.38% as it tested both its 200 day MA and upper BB and was rejected on both counts.  As the indicators continue higher, this is forming a roof on the VIX making any further headway problematic.  Nonetheless, I expect the VIX to take another stab at the MA (now at 13.57) on Thursday.

Market index futures: Tonight all three futures are lower at 12:18 AM EDT with ES down  a non-trivial 0.15%.  On Wednesday, ES put in a long-legged doji near the bottom of Tuesday's big drop.  That also drove the indicators to nearly oversold and traded just outside a steep descending RTC for a bullish setup.  That said, ES seems to be non-confirming the doji in the overnight and continues to sag lower, so I can't really call a reversal here just yet.

ES daily pivot: Tonight the ES daily pivot drops from 1968.17 to 1965.25.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  The dollar has been on fire-o all month long and continued its escalator ride up the upper BB on Wednesday with another 0.25% gain that kept it in a tight rising RTC.  RSI remains pegged at 100 for the third day in a row, but there's really no sign that the dollar is ready to roll over just yet.

Euro:  And so of course the euro continued it ride down to the bargain basement on Wednesday, dribbling down its lower BB in a tight descending RTC.  This action was significant because on Wednesday the euro broke under its 200 week MA and now has no support until 1.3359.  There's just no sign of a reversal here either.

Transportation: Much has been made in the press lately about the trans' swan dive this past week.  But no one seems to have noticed the reverse exponential shape of the curve.  These moves always end by reversing  Always.  And Wednesday may have been the start of that with a 0.72% gain on an inside harami.  The indicators are now oversold and the stochastic is maybe a day or two from a bullish crossover.  I have to think the selling is about done here for now.

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       5       4      4           3       0.667    322

     And the winner is...

I hate to say it because I want the market to go higher, but although I'm starting to see some signs of the selling abating, I'm not seeing enough good reversal signs to be able to call Thursday higher.  Accordingly, I guess the only other direction we can go is Thursday lower.  I'll be happy to be proven wrong.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Wednesday, July 30, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1968.17.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Tuesday was a good example of the kinds of weirdness I was expecting this week.  I called the close higher and we started off smartly with a nice advance that retook the 17K level for the Dow.  Things were looking good until exactly 2:20 PM when it began a big slide that ended with the Dow down 70 points, handily snatching defeat from the jaws of victory.  Only reason I could find for that had something to do with new sanctions against Russia.  When in doubt, blame the Rooskies, I always say.

So with Wednesday being a Fed day, we cut right to the chase - which is that I never make a call on these days - there's just too much headline risk.  So we're also skipping the chart run-down tonight - not much point to it, considering.  I'm sure Wednesday will provide plenty of entertainment.  Pass the popcorn!

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       5       4      3           3       0.667    322

     And the winner is...

Flip a coin.  I really think anything could happen on Wednesday.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Tuesday, July 29, 2014

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence.
  • ES pivot 1969.92.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

I called Monday lower and while the Dow did once again fall right out the gate, Mr. Market changed his mind right at the 10 o'clock reversal hour, regained the pivot, and then bobbed along there for the rest of the day and a modest gain despite some arguably worse than expected home sales numbers.  Go figure.  Let's continue our navigation of this tricky week as we study the charts for clues to Tuesday.  Reminder - I'm already calling Wednesday as "uncertain" due to the impending Fed announcement.  That's always a market mover and the battery in my bug in the Fed's conference room is still dead.

The technicals

The Dow: The Dow ended the day with just a 22 point gain, but also a classical hammer whose tail nearly touched the lower BB.  The indicators are all over the place - RSI and momentum are moving higher, money flow and the stochastic are moving lower and OBV is sideways.  All that really leaves us with is the candlestick.  Hammers that touch the lower BB  after a big decline are usually pretty good, but the conservative in me says wait for confirmation.

The VIX: OTOH, the VIX chart is quite the sight.  A tall inverted hammer here exactly touched both the upper BB and 200 day MA, which coincidentally just happen to be in the same spot - RE-jected!  The trading was outside the descending RTC so that's nominally a bullish trigger, but I'm not too sure about that.  The descending trend wasn't all that well-behaved. and with a similar inverted hammer in VVIX, I'm going to claim the VIX goes lower from here.

Market index futures: Tonight all three futures are lower at 12:23 AM EDT with ES down  0.05%.  On Monday, ES gave us an even bigger hammer than the Dow.  Indicators remain overbought but one cannot discount this sort of candle.  The indicators are just now exiting overbought and the overnight is trading outside a short, narrow descending RTC for a bullish setup.  So there's at least a suggestion here that the selling may be over, but one that requires confirmation.

ES daily pivot: Tonight the ES daily pivot drops from 1973.42 to 1969.92.  That's enough to put ES back above the new pivot for the first time in several days, so this indicator turns bullish.

Dollar index:  Last night I wrote "there's a bigger chance of a move lower from here than higher" but it was a push, with the dollar finishing Monday exactly unchanged.  But with the bounce off the upper BB confirmed and with RSI now at 100 (doesn't go any higher) I still think the next move is lower.

Euro: Last night I wrote "there's no sign of a move higher here" and indeed there wasn't as the euro finished Monday unchanged just like the dollar.  But with a doji star and oversold indicators, the next move now seems likely higher, an idea that's being confirmed in the new overnight.

Transportation: In a bit of understatement, last night I wrote "this chart looks bearish for Monday".  And wow - the bears roared on Monday as the trans dove 1.13% on a long red marubozu that capped three days of accelerating losses to form a classic inverted exponential waterfall.  The indicators are all now moving lower though still not yet oversold.  But this kind of chart looks to me like a reversal is pretty close.  What goes down, must come up.

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       5       3      3           3       0.727    394

     And the winner is...

With the VIX seemingly out of gas and bullish candles in both the Dow and ES, I think I'm seeing just barely enough signs to call Tuesday higher.  But with more economic news coming out and a Fed announcement due Wednesday, I'm not expecting any big moves in either direction.  I think we're going to be in wait&see mode.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Monday, July 28, 2014

Monday

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1973.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Finally.  After four days of reversal warnings and no reversal, the break came on Friday and it was lower.  Friday's big move should at last give us something we can sink our talons into so let's get right to the charts and figure out Monday's direction as we begin a week that's jam-packed with economic news that will certainly generate lots of action.  Oh, and let me note right now that with a Fed announcement on Wednesday, my Tuesday night call will be "uncertain" as per my long-standing policy.

The technicals

The Dow:  On Friday the Dow took a big dump right out the gate and never really recovered..  We gave up the 17K level again and finished just above support at 16,947.  This move also finally gave some real direction to the indicators and they're now all traveling lower and getting close to oversold.  So while that all looks bearish, there's still the chance of a DCB on Monday following such a big drop - that happened four out of the last four times we had a similar triple digit one day loss.  So we can't just call this one lower.

The VIX:  Interestingly, on Friday the VIX broke out of a descending RTC with a 7.18% green marubozu for a bullish RTC setup.. The stochastic has also curved around nicely and is on the cusp of a bullish crossover.  Also, RSI and momentum appear to have bottomed and are moving higher.  There's a similar pattern in VVIX which has now broken above its 200 day MA.  So net net, this chart looks bullish.

Market index futures: Tonight all three futures are lower at 12:27 AM EDT with ES down  0.15%.  On Friday, ES exited its rising RTC for a bearish setup.  That move also sent all the indicators lower and formed a bearish stochastic crossover.  That all spells bearish in my book, and the overnight pin action so far seems to be confirming that.

ES daily pivot: Tonight the ES daily pivot drops from 1981.08 to 1973.42.  We remain below the new pivot so this indicator remains bearish

Dollar index:  After three days of crawling up its upper BB, the dollar on Friday decided to skip walking and instead just leap 0.20% with a gap-up spinning top that busted resistance at 55 (on $USDUPX) like it wasn't there.  Indicators remain extremely overbought and now that we have a reversal candle sitting on the upper BB making 2/3 of an evening star, I'd say there's a bigger chance of a move lower from here than higher.

Euro: The euro's two-week downtrend continued unabated on Friday with another stairstep leg lower that  was stopped at 1.3430 only by the 200 week MA.  If we break this, there's no more support til 1.3380 and with two black crows on the weekly chart, there's no sign of a move higher here.

Transportation: On Friday the trans conclusively exited their rising RTC for a bearish setup.  The uptrend back to July 8th is now over, Jack  In fact after last Wednesday's record peak, we now have  anew descending RTC going.  With indicators continuing to come off overbought, this chart looks bearish for Monday.

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       5       2      3           3       0.800    416

     And the winner is...

With futures guiding lower and the VIX looking higher, the charts overall have a rather bearish cast to them.  Accordingly, I will simply call Monday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Friday, July 25, 2014

Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower, low confidence.
  • ES pivot 1979.00.  Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Hmm - last night's conditional call worked - if you're going by the SPX.  ES broke above the pivot at 4 AM Thursday and the SPX finished up 0.05%.  Unfortunately, my benchmark is the Dow and a random dip in the closing minutes caused a three point loss on the day there.  Oh well - it's still not a bad theory.  So now we move on the Friday as we approach the end of July.

The technicals

The Dow:  The Dow remains in its summer doldrums, putting in a small spinning top on Thursday that means very little.  If you squint real hard, you can sort of see a rising triangle going on.  But honestly, yet again, there's not much meat to chew on here.

The VIX:  And there's also little clarity in the VIX which gained 2.78% on Thursday, rejecting Wednesday's doji.  At least here we do have something of a downtrend going and we remain inside this RTC.  Remember the other day how I noted an 8-day pattern between bottoms here lately?  Thursday was day 6.  So in the absence of anything better, I think the VIX could still go lower for a day or two.

Market index futures: Tonight all three futures are lower at 12:24 AM EDT with ES down  0.08%.  On Thursday ES gave us a perfect doji star that just touched its upper BB before backing off.  The new overnight so far seems to be confirming that and the indicators seem to be waking up a bit, all having turned downwards simultaneously just shot of reaching overbought.  We're also right on the edge of the rising RTC for a bearish setup, and the overall tenor of this chart is now leaning bearish.

ES daily pivot: Tonight the ES daily pivot ticks up from 1979.00 to 1981.08.  We've now dipped back below that so this indicator now turns bearish.

Dollar index:  Last night I wrote "you just can't call this one lower yet" and it's a good thing too because eon Thursday the dollar continued to crawl up its upper BB, gaining  0.06% in the process.  With three white soldiers and indicators broken at overbought, there's still nothing bearish about this chart.

Euro: The euro remains similarly undecided, putting in a nice star on Thursday centered about Wednesday' action.  The lower trend remains lower but for the past two days we're just looking for a direction.  The fact that we've finally peeled off the lower BB could be interpreted as bullish but that remains to be seen.

Transportation: And finally on Thursday the trans were similarly afflicted with nothing-itis, dropping a mere 0.02% on a small lopsided spinning top.  We remain inside a decent rising RTC, indicators are just barely coming off overbought, so the net takeaway is only mildly bearish 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       4       2      3           3       0.778    293

     And the winner is...

The market is still not really giving many good directional signals, but tonight I'm seeing just enough of a bearish edge, particularly in the VIX and the futures, to cautiously call Friday lower.  That's all she wrote.  See you again next Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Thursday, July 24, 2014

Thursday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher if ES remains above pivot, else lower.
  • ES pivot 1979.00.  Holding above is bullish.
  • Friday bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Well I still think my VIX idea for calling Wednesday higher was a good one, and the SPX did in fact gain 0.18%.  Unfortunately, I base my calls on the Dow and that closed down 0.16%, so that counts as a miss, though only by 27 points.  So we just move on to the closing week of July and see what Thursday may bring.

The technicals

The Dow: On Wednesday the Dow took a dump out the gate and never recovered, though the damage was limited.  The resulting fat hanging man reinforces the week-long resistance just above 17K.    And that's about all the guidance we get since the indicators remain completely opaque.  If anything, there's now a slight bias lower, but that remains to be seen.

The VIX:  My whole thesis last night was posited on the assumption that the VIX would go lower on Wednesday and surprise - it did!  Down almost 6% on a spindly gap-down star.  That's a reversal candle right there but with the odd randomness of the charts lately, it's hard to tell.  Still, I think there's a chance of a move higher on Thursday.

Market index futures: Tonight ES and YM are lower at 1:11 AM EDT with ES down  0.06%.  ES had a decent day on Wednesday, just touching its upper BB before falling back a bit.  But that may have been the third rail and the overnight is making no further headway.  Indicators continue indecisive.  The new candle is forming as a bearish inverted hammer, but again, it's only half-baked.  So all in all, another ambiguous night.

ES daily pivot: Tonight the ES daily pivot rises from 1973.58 to 1979.00.  After bumping along just below the new pivot, ES seems to be making an attempt as I write to break above.  That would be bullish.

Dollar index:  Darn - I was sure the dollar was going higher on Wednesday but it had other ideas - down 0.096%on a stubby little candle that crawled up the upper BB.  Indicators remain extremely overbought but without a reversal candle or RTC exit, you just can't call this one lower yet.

Euro: At least I got this one right last night, and I did say I had more confidence in this than my dollar forecast.  The euro continued lower from Tuesday's dump, closing below its lower BB at 1.3459 as the indicators reach extreme oversold.  So the selling appears to be getting played out and the overnight seems to support that idea.  I'd look for a move higher pretty soon.

Transportation: Well here's some bullish divergence, Dow theory-size - maybe.  The trans gained 0.16% on a day the Dow was down by the same amount.  But the candle was a fat hanging man high above Tuesday's close.  With indicators now overbought, this doesn't inspire a lot of confidence for Thursday.

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       4       1      3           3       0.875    296

     And the winner is...

Mr. Market seems to be suffering a sort of existential malaise at the moment.  The charts are in the doldrums and there' still not much to go on.  With ES hugging the new pivot though, that give me the opportunity to make one of my famous patented conditional calls: if ES stays above the pivot by mid-morning Thursday, we close higher.  Otherwise, we close lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.