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- Friday uncertain.
- ES pivot 1310.83. Holding below is bearish..
- Next week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader remains long at 1365.00.
Ugh. Not only did we not go higher today as I thought the charts might be suggesting, we had one of the biggest losses in the current downtrend. The Dow is now down five straight and 11 of the last 12. Its indicators have been oversold for nine days straight now. And still no end in sight...
The technicals
The Dow: Last night I suggested that it would take a 90+ point loss to keep us inside the descending RTC. Well we got that and more, blowing off another 156 points today. And with today's close at 12,442, the 200 day MA now comes into view on my chart, at 12,196. That's now just 240 points away. With what's been going on lately, we could easily be there in a day or two. And there is only one minor line of support above that, at 12,200. So tonight we remain solidly inside the descending RTC on a solid red candle. And despite impossibly oversold indicators, there is still no turnaround in sight.
The VIX: After three days of small gains where it looked like the VIX was getting ready to move lower, today it instead shot up10%, way above its upper BB. This is now looking just like last August when the VIX broke through its upper BB and refused to come down. The only hope here is the looming 200 day MA at 25.86 which will serve as resistance. But even that has only worked 50% of the time in the past few years. Still, the RTC is finally looking like it's making a bearish crossover. And the VIX has now been overbought for 10 straight sessions. I went all the way back to 2007 and was unable to find any other time that was even close to this, even through the Great Recession. I want to say the VIX has to come down soon, but everything seems to be going crazy here and not working the way one would expect.
Market index futures: Tonight the futures are gloomier than they've been this entire downturn. At 1:346 AM, all three are significantly in the red with ES down another 0.58% and moving lower as I write. And the 200 day MA is coming into play on this chart too, at 1268.09. That's just 26 points away now. And like the Dow, we can be there in a day or two if the current sell-off continues. Today's loss and the continuing overnight decline have actually taken us way off the left edge of the declining RTC - very unusual. Supposedly, this can signal the end of a decline but that remains to be seen.
ES daily pivot: Tonight the pivot drops again from 1327.67 to 1310.83. But with ES in freefall, we're just as far below it now as earlier today. Very negative.
Dollar index: The dollar rose again today. Technically, it's nearing a big resistance level and it is now unbelievably overbought - RSI has been stuck on 100 for 8 straight days now. Now what goes up really must come down. It's just that in the current environment, there's no way to tell when that will be. The dollar remains firmly stuck in its rising RTC and that's about the only remaining working indicator we have.
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| $TRAN daily |
History: According to The Stock Traders Almanac, Friday is historically bearish.
Accuracy:
Month right wrong no call conditional
April 7 9 2May 6 5 1 1
And the winner is...
Impossible to tell. There is absolutely nothing in the charts tonight to suggest that this downtrend is even close to coming to an end. But Friday is a triple witching day and on top of that we've got Facebook going IPO. And we are now so overextended to the downside, the market just has to have an up day soon. If you go back to my last post on market streaks here, you will see that until now the longest losing streak in the Dow was of length 10. On the other hand, we are now completing only our third straight losing week, and we've seen much longer weekly losing streaks than this. The record there is seven.
But in any case, given that the charts are not working the way I expect and the fact that we are at so many extremes in so many places, there's no way I can make a meaningful prediction here. So I'm now officially taking a break and moving to the sidelines until some sanity returns to the markets. No call tonight.
ES Fantasy Trader
Portfolio stats: the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1 Tonight we're once again still holding on to this long at 1365.00. At this point we're in too deep to get out now. But perhaps that's the problem. Maybe I should just throw this trade into the volcano to appease the angry market gods.
Posts
Michele-
ReplyDeleteThree unrelated comments.
First, I know from your blogger profile that Pi is your favorite movie. The profile mentions Favorite Movies (note plural) and your list is a very short list; in fact it consists of just two letters. P--I--...
And of course your site bookmark icon is the mathematical symbol for PI.
Therefore it might interest you to know that a fellow financial blogger, “chessNwine”, from that IBankCoin consortium, offered a testimony of his appreciation of it, and a strong recommendation for it, as his Saturday posting. I dropped off a strong thumbs up in the comments section there, it’s definitely a movie that leaves a deep impression and is worth viewing by any thoughtful person, and not just investors.
Second, despite how “one-way” the market has been this month, I'm not sure the market action can actually be described as crazy.
For many moons we’ve heard the comment that the longer-term investor, as opposed to the momentum trader, has not really returned to the market. This is offered as an explanation for the persistently low volume on rallies.
If the fundamental, buy and hold investor is still not robustly IN, then the market is left dominated by humans who think like computers and computers that are trained to think in regression channels and trendlines and 200 day moving averages and such.
In a ‘technical’ market like that, it kind of makes sense that the instant one key major widely-watched level breaks, these technical traders, or Hedge-bots, or sell programs, all immediately assume the next level will be reached-- and begin to calculate what they will do THERE. So why should the datapoint dawdle? It just marches ‘unidirectionally’ there, without much waste of time.
And that’s what we’ve seen alot of-- one way marches to a technical level, and then one-way marches back, or onward. It goes with a “risk on/risk off” investment universe and overall structure. On the contrary, when myriad smaller investors are individually weighing the dividend-ratio and p/e of their particular pet company, the action tends to be less dramatically one-way.
Third, it is indeed difficult but very lucrative to catch a goodly majority of the reversionary moves. In many cases these are the opportunities the momentum traders must leave behind. This is where superb analytical hocus pocus such as you perform daily is not only invaluable, but really the only way of attempting an intelligent educated guess at a potential inflection and reversion point. I can scarecely imagine facing a market day without your consistent and well-structured reports, so clearly do they lay out the daily patterns and issues.
But that said, I must also note that the few times the Market has moved persistently against your calls, that very bold, clear colored Arrow in the upper right of your blog page, with the word TREND beneath it, is almost invariably pointed in the other direction from said calls. I see the Night Owl hooting, and I see that trend arrow over your shoulder... and I scratch my head.
Michele-
ReplyDeleteThree unrelated comments.
First, I know from your blogger profile that Pi is your favorite movie. The profile mentions Favorite Movies (note plural) and your list is a very short list; in fact it consists of just two letters. P--I--...
And of course your site bookmark icon is the mathematical symbol for PI.
Therefore it might interest you to know that a fellow financial blogger, “chessNwine”, from that IBankCoin consortium, offered a testimony of his appreciation of it, and a strong recommendation for it, as his Saturday posting. I dropped off a strong thumbs up in the comments section there, it’s definitely a movie that leaves a deep impression and is worth viewing by any thoughtful person, and not just investors.
Second, despite how “one-way” the market has been this month, I'm not sure the market action can actually be described as crazy.
For many moons we’ve heard the comment that the longer-term investor, as opposed to the momentum trader, has not really returned to the market. This is offered as an explanation for the persistently low volume on rallies.
If the fundamental, buy and hold investor is still not robustly IN, then the market is left dominated by humans who think like computers and computers that are trained to think in regression channels and trendlines and 200 day moving averages and such.
In a ‘technical’ market like that, it kind of makes sense that the instant one key major widely-watched level breaks, these technical traders, or Hedge-bots, or sell programs, all immediately assume the next level will be reached-- and begin to calculate what they will do THERE. So why should the datapoint dawdle? It just marches ‘unidirectionally’ there, without much waste of time.
And that’s what we’ve seen alot of-- one way marches to a technical level, and then one-way marches back, or onward. It goes with a “risk on/risk off” investment universe and overall structure. On the contrary, when myriad smaller investors are individually weighing the dividend-ratio and p/e of their particular pet company, the action tends to be less dramatically one-way.
Third, it is indeed difficult but very lucrative to catch a goodly majority of the reversionary moves. In many cases these are the opportunities the momentum traders must leave behind. This is where superb analytical hocus pocus such as you perform daily is not only invaluable, but really the only way of attempting an intelligent educated guess at a potential inflection and reversion point. I can scarecely imagine facing a market day without your consistent and well-structured reports, so clearly do they lay out the daily patterns and issues.
But that said, I must also note that the few times the Market has moved persistently against your calls, that very bold, clear colored Arrow in the upper right of your blog page, with the word TREND beneath it, is almost invariably pointed in the other direction from said calls. I see the Night Owl hooting, and I see that trend arrow over your shoulder... and I scratch my head.
(I received the following comment in my email, with Blogspot indicating that it had been published. However, when I open my blog in my browser, there's nothing there. So I'll enter it myself and reply below. This isn't the first time that's happened. I think Blogspot is having some programming issues).
ReplyDeleteHere is the comment:
Daniel has left a new comment on your post "Friday uncertain":
Michele-
Three unrelated comments.
First, I know from your blogger profile that Pi is your favorite movie. The profile mentions Favorite Movies (note plural) and your list is a very short list; in fact it consists of just two letters. P--I--...
And of course your site bookmark icon is the mathematical symbol for PI.
Therefore it might interest you to know that a fellow financial blogger, “chessNwine”, from that IBankCoin consortium, offered a testimony of his appreciation of it, and a strong recommendation for it, as his Saturday posting. I dropped off a strong thumbs up in the comments section there, it’s definitely a movie that leaves a deep impression and is worth viewing by any thoughtful person, and not just investors.
Second, despite how “one-way” the market has been this month, I'm not sure the market action can actually be described as crazy.
For many moons we’ve heard the comment that the longer-term investor, as opposed to the momentum trader, has not really returned to the market. This is offered as an explanation for the persistently low volume on rallies.
If the fundamental, buy and hold investor is still not robustly IN, then the market is left dominated by humans who think like computers and computers that are trained to think in regression channels and trendlines and 200 day moving averages and such.
In a ‘technical’ market like that, it kind of makes sense that the instant one key major widely-watched level breaks, these technical traders, or Hedge-bots, or sell programs, all immediately assume the next level will be reached-- and begin to calculate what they will do THERE. So why should the datapoint dawdle? It just marches ‘unidirectionally’ there, without much waste of time.
And that’s what we’ve seen alot of-- one way marches to a technical level, and then one-way marches back, or onward. It goes with a “risk on/risk off” investment universe and overall structure. On the contrary, when myriad smaller investors are individually weighing the dividend-ratio and p/e of their particular pet company, the action tends to be less dramatically one-way.
Third, it is indeed difficult but very lucrative to catch a goodly majority of the reversionary moves. In many cases these are the opportunities the momentum traders must leave behind. This is where superb analytical hocus pocus such as you perform daily is not only invaluable, but really the only way of attempting an intelligent educated guess at a potential inflection and reversion point. I can scarecely imagine facing a market day without your consistent and well-structured reports, so clearly do they lay out the daily patterns and issues.
But that said, I must also note that the few times the Market has moved persistently against your calls, that very bold, clear colored Arrow in the upper right of your blog page, with the word TREND beneath it, is almost invariably pointed in the other direction from said calls. I see the Night Owl hooting, and I see that trend arrow over your shoulder... and I scratch my head.
Great to hear from you, Daniel. To reply,
ReplyDelete1. Pi is an awesome movie on many different levels. I know of no other movie that manages to combine trading the stock market, computer programming, hardware hacking, Jewish mysticism, organized crime, and acute schizophrenia. It is simply brilliant.
2. Yes, "crazy" is perhaps an over-reaction to the current state of affairs. With the VIX still only in the mid-20's, I think that "mildly neurotic" is probably more like it. Actual craziness doesn't begin until 30. Followed by severe psychosis in the 40's and then full-on lunacy above 50.
In any event, I should probably pay more attention to the extent that the quants manipulate the market. The number I keep hearing is that 70% of all trades are now executed by machine. It seems to me that there should be some way to expolit this.
3. The "swing trade arrow" indicates the direction of the current regression trend channel. It is not a forecast. As such, it is possible for the arrow to point down for several days after the market turns upward. It is not until the market exits the RTC that I change to a "Trend End" X symbol. And I need three consecutive days of directional movement to show a trend. So it's entirely possible for the arrow to point in the opposite direction of today's movement or my call for tomorrow.