Wednesday, December 17, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1985.92.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Holy moly - I think "uncertain" was absolutely the right call for Tuesday after a triple digit roller coast ride both up and down.  But in the end, the selling just continued.  Will Santa Claus come to the rescue?  It's getting to be about time to ask that.  Maybe the charts have the answer (or maybe not).

The technicals

The Dow:  The Dow just continued its sell-off Tuesday down another 112 points, this time on a big inverted hammer.  But reversal candles are meaningless lately so what else have we got?  Well there's RSI which at 6.21 is now extremely oversold.  And the stochastic's %K line is 2.54 - doesn't get much lower than that.  But also the 200 day MA is now moving into view at 16,861.  This whole pattern is now looking a lot like early October and that didn't end til we'd broken under the 200 MA with a couple of big dojis.  So for now we continue riding the lower BB down locked in a steep descending RTC.  No bullish signs here.

The VIX:  The VIX is looking even more like October than the Dow with a big 15% gap up long-legged doji star on Tuesday.  Back in October (10/15 to be exact) that marked the beginning of the end.  The next day saw a big blow-off top and then down we went.  And interestingly, oil had begun a steep leg lower at exactly the same time, just like now.  We actually have a completed bearish stochastic crossover in the VIX and VVIX already peaked two days ago..  I know this market has really gone off the rails but I still have to think that the VIX is going lower on Wednesday.

Market index futures: Tonight, all three futures are higher at 12:43 AM EST with ES up  0.28%.  ES had yet another lousy day Tuesday, ho hum, and seems to be trying to rally in the overnight, just like last night and we all know how that ended.  I can't rely on overnight moves anymore  the way I used to.  But RSI appears to have bottomed at extreme oversold and OBV took a turn higher   So there might be good news here but with the VIX pushing 24 we need some real confirmation before calling a rally.

ES daily pivot: Tonight the ES daily pivot falls again from 1996.92 to 1985.92.  And we once again remain below the new pivot so this indicator remains bearish.

Dollar index:  Interestingly, the dollar took a big gap down, off 0.43% on Tuesday breaking support at 59.86. to hit oversold and just north of its next support at 59.40.  Does this mean a move higher?  Not in this Kafkaesque market.  Who knows.

Euro:  The euro meanwhile continued its recent rally to end at 1.2495 on an inverted hammer that just touched its upper BB and hit overbought.   It still might be able to push higher from here, but the euro is looking a bit tired to me right now.

Transportation:  The trans just laughed at Monday's doji and resumed their march lower, down 1.32% in a move I just do not understand.  You'd think lower oil prices would help this sector.  But anyway down we go with no end in sight despite way oversold indicators.

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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       2      4           1       0.667   -192


     And the winner is...

Well once again we're seeing a lot of good reversal signs, especially from the VIX.  I'll note too that the Morningstar Market Fair Value index has now gone below 1 - to 0.99.  And the SPC Hi-Lo indicator has now gone to a very low reading - 15.22.  The last time we were around these levels was in mid-October and that marked the end of the early October slide.  And we also had falling oil back then too.  And a VIX above 25.

So what I'm thinking is that Wednesday will be a blow-off top in the VIX and then he market will begin to move higher, perhaps on a hammer.  That would time nicely for Santa Claus and his rally - assuming he bothers to show up this year.  But then we've still got that pesky oil problem so once again I'm calling Wednesday uncertain until things calm down a bit.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Tuesday, December 16, 2014

Tuesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday uncertain.
  • ES pivot 1996.92.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Ugh - I picked another bad day to be wrong - a really bad day.  It is now apparent, even to me that this market is entirely oil-driven.  The technicals did appear to be going my way out the gate but then some noise about Libyan oil tankers or something appeared and it was back to the same old same old.  We'll take a quick look at the charts but mostly for entertainment value - it's not clear that you can do much predicting in the current bizarro market environment.

The technicals

The Dow: The aforementioned Dow looked like it was headed higher on Monday but then everything went off the rails quickly enough for yet another loss.  This is now looking just like the middle of October, minus the 200 day MA breakdown.  That one ended with a star, a hammer, and then another still lower star.  We've yet to see anything comparable, so with my hands dripping with blood from catching the falling knife, I now claim there's no end in sight to the slaughter.  Perhaps the 200 day MA at 16,858 can save us.

The VIX:   This is weird.  It felt really bad on Monday and yet the VIX was actually down 3.13%, on a giant spinning top, and green of all things.  But finally, after two big reversal warnings, we have a bearish stochastic crossover.  So I will once again (sight) claim that the VIX is ready to move lower.

Market index futures: Tonight, all three futures are higher at 12:38 AM EST with ES up  0.20%. ES put in a good spinning top reversal candle on Monday but we've now seen three god such candles in the past week and each one was followed by another nasty leg down.  So I'm done playing that game regardless of the advance in the overnighit.

ES daily pivot: Tonight the ES daily pivot ticks up from 2008.67 to 1996.92.   That still leaves ES just barely below the new pivot, though it just made a failed attempt to break above just after midnight.  Until we see a definite move on this, this indicator remains bearish.

Dollar index: On Monday the mighty dollar gained another 0.1% to arrest what looked like a swan dive off the first of the month.  Never mind that the dollar used to be worth 360 yen when I was little (and I'm not that old).  The dollar's recent uptrend remains intact.  The buck is also quite oversold and on the verge of a bullish crossover so I'd say it's looking higher on Tuesday.

Euro:  Meanwhile the euro put in a classic dark cloud cover on Monday and traded outside the rising RTC for a bearish trigger.  The stochastic is quite close to a bearish crossover the indicators remains quite overbought, and so this chart looks lower on Tuesday.

Transportation:  Well here's an interesting bit of bullish divergence.  With the Dow down 100 points, on Monday the trans gained a non-trivial 0.23% on a really big doji star.  And more importantly, it traded outside the descending RTC for a bullish setup.  This is my best clue that a reversal is at hand.  Oh, and with a highly oversold stochastic just about to form a bullish crossover.

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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       3      3           1       0.571   -292


     And the winner is...

I think I'm pretty much done for the year.  I'm ready to take my 9.59% YTD profit, declare victory, and go home.  While there are technical reversal signs on the charts, I don't think they're going to matter as much as what oil does on Tuesday.  And that chart has been putting in a series of waterfall lows for days now.  Until we see a reversal in oil, this market will just keep going lower.  And yet I'm concerned about getting whipsawed now so I'm just going to call Tuesday uncertain

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Monday, December 15, 2014

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence.
  • ES pivot 2008.67.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Several times a year the stock market holds a sale.  After a 316 point cliff dive in the Dow on Friday, this is one of those times.  Of course the question now is how long the sale will go on?  Are these the best prices of the year or will there be even better bargains in the week ahead?  Let's go right to the charts for some answers.

This is a good time to note that we're looking at another big holiday week next week and accordingly the Night Owl will be taking the entire week off.

The technicals

The Dow:  Is the selling over?  Well one glance at the Dow's chart clearly shows a negative exponential curve and that's always a good sign that we're nearing the end.  Whenever something goes exponential, it's about done.  The indicators are now a quite oversold levels and we're way below the lower BB.  All we're missing now is a reversal candle.  That could come Monday.

The VIX:  Well hey now - speaking of reversal signs, on a day the Dow absolutely cratered, the VIX was up just 5% with a tall spinning top in perfect evening star position.  Indicators are now crazy overbought and the stochastic has flattened out in preparation for a bearish crossover.  This is a good sign we're getting ready to move lower.  If not Monday, then Tuesday.

Market index futures: Tonight, all three futures are higher at 12:31 AM EST with ES up  0.43%. ES had another ugly day last Friday, closing well under its lower BB and driving the indicators quite oversold.  Tonight we note the stochastic is getting very close to a bullish crossover and we're seeing a bounce in the overnight trade.  It's not clear if it's a bottom, a DCB, or just an echo of the trade we saw last Thursday after Wednesday's big decline.  But in any case, it looks like the selling's about done, at least for now.

ES daily pivot: Tonight the ES daily pivot dives from 2037.08 to 2008.67.   Amazingly, even after that massive drop and a substantial overnight gain in ES, we're still below the new pivot, though not by much.  So this indicator remains bearish but the possibility exists for an assault on the pivot.  A break above would turn things bullish.

Dollar index:  On Friday the dollar put in an odd little green spinning top that was nonetheless a 0.38% decline.  But with RSI looking to have bottomed and the stochastic real close to a bullish crossover, I'd say the buck is telegraphing a move higher on Monday here.

Euro:  And of course the euro did the opposite on Friday, stymied now for three days at 1.2450 resistance.  The overnight is gapping up but fading as we leave the rising RTC for a bearish crossover.  Can the euro make another move higher Monday?  I'm not at all sure about that.

Transportation: On Friday the trans retracted all of Thursday's gains and then some to continue dribbling down the lower BB and remain in a descending RTC.  But despite oversold indicators, I still don't see any reversal signs 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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       2      3           1       0.667   -192


     And the winner is...

The Friday charts all look pretty ugly but the extent of the sell-off, the reversal hint in the VIX, and the overnight futures all seem to be suggesting a move higher Monday.  And I'll take that suggestion and call for a close Monday higher.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Friday, December 12, 2014

Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain.
  • ES pivot 2037.08.  Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

On Thursday we got a big rally early on that faded as the day progressed and made for some interesting candles so let's take a look as we wind up the second week of December.

The technicals

The Dow:  Thursday's action gave the Dow a big inverted hammer that is generally quite bullish.  Of course Tuesday's hammer was also supposed to be bullish but that flopped big time on Wednesday.  But now we're actually finally oversold and have now touched the lower BB two days running.  So this chart is at least hinting at more upside.

The VIX:  The VIX gained another 8.36% on Thursday as it continued climbing its upper BB in a move reminiscent of two months ago.  VVIX spiked even more, right up to its resistance at 134 and is now highly overbought.  I'd say the VIX is due to come back down soon but can't say if it will be on Friday.

Market index futures: Tonight, all three futures are lower at 12:18 AM EST with ES down 0.17%. 
lower   We got a giant bullish inverted hammer on Thursday off the lower BB along with indicators now quite oversold, so there's at least a suggestion of a move higher here on Friday.

ES daily pivot: Tonight the ES daily pivot ticks up from 2036.58 to 2037.08.   But we remain below the new pivot so this indicator remains bearish.

Dollar index: A nice 0.45% gain in the dollar Thursday  along with a stochastic gearing up for a bullish crossover points to higher here on Friday.

Euro:  The euro fell on Thursday on a dark cloud cover.  With a stochastic close to forming a bearish crossover, a bearish RTC setup, and a drift lower in the overnight, this one looks lower on Friday.

Transportation:  The trans have now put in three days of higher lows and their stochastic is getting ready for a bullish crossover.  But they're not yet out of their descending RTC so there's still something of a falling knife 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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       2      2           1       0.667   -192


     And the winner is...

Tonight we're getting a number of bullish reversal candles in the charts but unfortunately they really require confirmation.  I ignored that Tuesday night and paid for it big time on Wednesday.  So we're not making that mistake again.  I get the impression that the market is being more highly news-driven than usual lately, with the price of oil being the obvious culprit.  So much as I'd like to call it, I'm afraid I have to take a pass again tonight and just call Friday uncertain.  We just don't quite have enough factors lined up to make the bullish call, though I do think that's where the bias seems to be tonight.

That's all she wrote.  See you again Sunday night.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Thursday, December 11, 2014

Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 2036.58.  Holding below is bearish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

My my, how quickly one can go from hero to zero.  The technicals didn't really look at all bearish last night so I said we'd go higher and yet here we are with the Dow tanking 268 points on Wednesday to finish near session lower.  All we can do is say ouch, take the heat, and move on.  One bad day does not a career make.  So with this interesting development, let's see how the picture changes for Thursday.

The technicals

The Dow:  Huh - well so much for the impressive hammer candle on Tuesday.  Wednesday's big red marubozu made it look like an extra from the Wizard of Oz.  This big dump wiped out a month of gains in one day and closed under the lower BB but even at that did not drive the indicators oversold.  So in the absence of any reversal signs at all, I can only call this one lower again.

The VIX:  On Wednesday the VIX failed to complete an incipient evening star in a big way with a massive 24.45% explosion for its biggest gain since early October back when, yeah I can't remember what earth-shaking news caused that spike either.  Anyway we traded entirely above the upper BB which is quite unusual and the indicators are now back to overbought.  But as in early October when that condition went on for three more days, there's no guarantee of coming back to earth on Thursday.

Market index futures: Tonight, all three futures are higher at 12:33 AM EST with ES up  0.17%. On Wednesday ES took a big dump that stopped right on its lower BB, (finally) drove the indicators oversold (remember when I was complaining recently about how long we'd been overbought?), and started the stochastic curving around for a bullish crossover.  So is the selling done?  Well unlike last night, we're seeing some positive pin action in the overnight and we've also finally hit oversold.  Also the stochastic is flattening out so that's all a lot better than last night.

ES daily pivot: Tonight the ES daily pivot dives from 2051.00 to 2036.58.   But even after that fall, and even with a rise in ES overnight we're still below the new pivot so this indicator continues to be bearish.

Dollar index:  Ho hum - the dollar, like everything else did not respect Tuesday's reversal signs instead falling 0.46% to finally come off overbought.  With the hammer failure, there are no bullish signs here.

Euro:  At least I got something right when last night I wrote "there's more upside potential than downside risk here on Wednesday" as the euro continued what is now a three day uptrend to close at 1.2443.  With indicators still a ways from overbought, there's nothing to suggest anything but higher again here on Thursday.

Transportation: As with the Dow, on Wednesday the trans ignored Tuesday's hammer and tanked another 1.35% to close below their own lower BB.  With a new steep and sharp descending RTC now in place  and indicators yet to reach oversold, there are no bullish signs here tonight.

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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       2      1           1       0.667   -192


     And the winner is...

Wednesday's further losses helped clear the air some and actually strengthened the case for a reversal but I'm done trying to catch this particular falling knife.  I made the risky call last night and got my head handed to me.  Tonight we play it safe and simply call Thursday uncertain.  I am expecting a rally any day now - I just don't know for sure if Thursday is it.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Wednesday, December 10, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence..
  • ES pivot 2051.00.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

The sell-off continued Tuesday with the Dow down big time again right out the gate until Mr. Market figured out that maybe the world wasn't coming to an end after all.   We then spent the rest of the day slowly slogging uphill to finish still down but only by 51 points.  The chart implications are interesting so let's get right to them.

The technicals

The Dow:  On Tuesday the Dow drew a textbook perfect classic hammer candle iif ever I saw one.  Thing is though, it was also a bearish RTC trigger along with a completed bearish stochastic crossover and indicators only just now off overbought.  So who ya gonna believe/  Hmmm...  Moving on...

The VIX:  THis is perhaps the best chart of the day.  ON Tuesday the VIX began with a huge gap up, only to spend the rest of the day sagging lower.  The end result was still a 4.79% gain but on a tall red marubozu, evening star-style.  This trade was entirely above the upper BB and as I always say, the VIX never likes to spend much time at those altitudes.  So my best guess is we're looking for lower here on Wednesday.  That's supported by VVIX which is quite overbought and put in a big gap-up doji on Tuesday for 2/3 of an evening star.

Market index futures: Tonight, all three futures are lower at 12:15 AM EST with ES down 0.09%. On Tuesday ES, like everything else, put in a very tall hammer that came close to its lower BB and caused RSI to bottom before hitting oversold.  This is an excellent reversal sign.  I'd be happier though if we were seeing some positive pin action in the overnight.

ES daily pivot: Tonight the ES daily pivot drops from 2063.58 to 2051.00.   That was more than enough to put us back above the new pivot despite a sag in the overnight so this indicator turns bullish.

Dollar index:  Last night I wrote "this one looks lower on Tuesday."  And indeed it was as the bearish engulfing pattern asserted itself.   Another gap-down hammer here makes a good case that we could see a move higher on Wednesday.

Euro:  And of course as the dollar weakened the euro gained on Tuesday, though not with an inverted hammer.  But it did just barely managed to squeak out a bullish RTC setup and with a rising stochastic and indicators just off oversold I'd say there's more upside potential than downside risk here on Wednesday.

Transportation: And finally on Tuesday the trans put in an even bigger hammer than the Dow did.  A gap-down hammer like this that punches through the lower BB is quite unusual and an excellent reversal sign.  Enough that I'm calling this one higher on Wednesday even though we've yet to hit oversold.

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    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       1      1           1       0.800     76


     And the winner is...

Whew - we've got a boiler factory-worth of hammers on the charts tonight!  More than I think I've ever seen.  That's quite a powerful reversal sign.  In addition, the SPX Hi-Lo index is now down to 66 - not screamingly low but still lower than the last reversal we saw on December 1st.  And the NYSE A/D line has stopped putting in lower lows and lower highs, so that's always a good sign.  The only real problems I've got tonight are that 1, I'd prefer seeing ES moving higher rather than even a bit lower and 2. while we have a lot of reversal candles, they're not supported by the indicators which have yet to hit oversold.

I guess I'm just going to have to close my eyes, shinny waaay out on the limb and nervously call Wednesday higher.  I could be wrong.  Lord knows I am often enough.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.