Tuesday, April 24, 2012

No call for Tuesday - star possible.

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday too tough to call - star possible.
  • ES pivot 1363.83Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader standing aside.

Well at least we got this one right, after three goofs in a row.  Today the market fell as expected, with the Dow shedding 102 points in a broad market decline.  It was even worse early on, with much of the session spent retracing part of the opening minutes' losses.  So will tomorrow continue this recovery or is there more downside to come?  Let's figure it all out.

The technicals

The Dow: Today's dump and recover act formed a hammer on the daily chart, but without a clear downtrend established and with indicators all solidly moving lower now, it's too soon to say that this might be a reversal.  It definitely requires confirmation on Tuesday.

The VIX:  The VIX put in a tall red candle today but nevertheless managed to gain 8.77% because of a big gap up that took it right to its recent resistance of 20.25 before backing off.  Because of the recent herky-jerky action in the VIX, the indicators are somewhat confused.  Even the rising RTC is too wide to be useful, with a poor Pearson's coefficient of just 0.789.  Not even much guidance from the futures today, so we'll just have to move on.

Market index futures: Remember last night when I posted the daily chart with the symmetrical triangle here that ended with the question "Exit lower?"  Well today that question was answered as the triangle resolved with an almost one percent drop.  The symmetrical triangle is one of my favorite patterns, even though it's not a candlestick pattern.  It generally works really well, as we saw today.

Anyway, tonight we find all three futures in the green, with ES up 0.18% at 1:27 AM EDT.  After rising all evening, this is actually something of a retreat, giving the developing candle the look of something of a dead cat bounce following today's long red candle.  I'm not convinced yet that this is the start of a rally, not even a short one.

ES daily pivot: Tonight the pivot takes a big drop from 1376.58 to 1363.83.  That was enough to put ES above the pivot for the first time in a while, so that's positive on the face of it.

Dollar index: The dollar gapped up for a 0.28% gain today but did it on a red candle.  In fact, only once in the last eight days has the dollar closed higher than its open.  With today's gap up pretty much retracing yesterday's gap down, this chart is once again too hard to call.  As expected though, the euro did move lower today.  I think the euro/dollar is going to be more news-driven than technically influence for the next few days, so we'll just leave it at that.

Transportation: Today the $TRAN took a nearly one percent drop that exactly touched its lower BB intraday, forming a nice hammer.  This sort of pattern often moves higher the next day, meaning a hammer to the lower BB combination.

History: According to The Stock Traders Almanac, Tuesday is historically quite bearish, and the worst day of the week.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1
  2  1/9        56         37        +     1278   2/2
  3  1/17       41         33        +     1289   3/3
  4  1/23       46         32        +     1315   4/4
  5  1/30       48         31        +     1316   5/5
  6  2/6        56         30        +     1345   6/6
  7  2/13       48         31        +     1343   7/7
  8  2/21       44         32        +     1361   8/8
  9  2/27       48         24        +     1366   9/9
 10  3/5        43         26        +     1370  10/10
 11  3/12       46         32        +     1371  11/11
 12  3/19       46         29        +     1404  11/12
 13  3/26       39         29        +     1397  11/13
 14  4/2        42         21        +     1408
 15  4/9        25         46        -     1398
 16  4/16       26         48        -     1370
 17  4/23       30         48        -     1379  

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that my bullish call on 3/26 was, for the second time this year, wrong, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 13.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  Despite being wrong twice in  a row, 11 for 13 still isn't bad.

This week we see that not much has really changed form last week.  Bullish sentiment advanced slightly, but at the expense of the fence-sitters.  Bearish sentiment remained unchanged.  So once again, there are no contrarian messages in this poll and once again the Night Owl voted bearish


Month right  wrong  no call
April   6      6      1

    And the winner is...

I'm afraid that tonight the crystal ball is fogged over.  The charts aren't really talking to me and I'm just not feeling the love.  ES is up from the close but that boat has already sailed.  I don't see a lot of upward momentum or downward pressure.  My best guess is that we may see a small range spinning top on Tuesday but whether it's red or green is just too tough to tell.  So no call for Tuesday.  I do think though that by tomorrow's close we'll have more clarity for the rest of the week.

ES Fantasy Trader

Well we took some heat on this trade from last Thursday.  I don't like holding these over the weekend and I really don't like holding them when they're underwater, but in this case, once again patience paid off rewarding us today with a handy 14.25 point profit.

Portfolio stats: the account now climbs to $138,625, after 32 trades (25 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside, believing that ES may have already seen whatever run-up it's going to get into Tuesday..  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.

BOT    10    ES    false    JUN12 Futures     1358.50    USD    GLOBEX    11:45:27   
SLD    10    ES    false    JUN12 Futures     1372.75    USD    GLOBEX    APR 20 01:11:05

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