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- Thursday slightly lower, low confidence.
- ES pivot 1316.00. Holding above is bullish..
- Rest of week bias lower technically.
- Monthly outlook: bias up.
- ES Fantasy Trader remains short.
Well for once it wasn't Europe that tanked our markets. On Friday the enemy was us, in the form of some truly ugly jobs numbers that were bad enough to send the markets down big time. The Dow's awful 2.22% loss was enough to drive it negative for the year so far and handed me my worst day of the year too - and that's despite being (partially) hedged. Anyway, today's action caused some dramatic changes on the charts that are well worth aq look-see. In fact, these charts are so unusual, I just couldn't wait til Sunday night to trot them out, so here's an early preview of the Night Owl. Be sure to check back again Sunday night for our usual late-nite market forecast.
And speaking of the weird, here's a very strange story from Friday about how the obsolete Greek drachma has somehow mysteriously reappeared on Bloomberg terminals, here. According to Bloomberg, it's an "internal test". I guess just in case it might happen to be needed again at some point. In the future. Hypothetically, of course. Nudge nudge, wink wink, know what I mean? Can you say "Grexit"?
Unfortunately, the collapse of the megaphone isn't necessarily an all-clear, because it also blasted right through the dreaded 200 day MA, and that's never a good thing. The only positive signs are that we never tested support at 12K, we hit the lower BB, and the indicators reached oversold levels. But those are pretty weak reversal signs.
Market index futures: The futures are of course closed over the weekend, so check back Sunday night for this critical section.
ES daily pivot: ES ended the week with a pivot at 1308.50. Check back Sunday night for my usual pivot analysis.
I note also a corresponding bullish pattern to the euro, which after dipping into the 1.22's on Friday, finally caught a bounce rallying hard to 1.2413.
Transportation: The major charts were ugly enough on Friday, but they looked positively like Miss America compared to the trans which dropped an impressive 3.21% on a long solid red candle. And the indicators still aren't close to being oversold. This chart is just ugh and uglier. If you believe the trans are a market predictor, we're in for some more bad times this coming week.
|To the moon, Alice!|
And what always happens when a chart goes exponential? That's right, class, it comes right back down. If you're looking for a sign of an end to the current market downtrend, I can't find a better one than this. Maybe not Monday, but Real Soon Now.
Hi-Lo: The $RHSPX, the SPX Hi-Lo Ratio index, hit 8.57 on Friday, a level not seen since last November. Recall that last November was as ugly as the May we just ended. And it was followed by a big move up in December. When the Hi-Lo gets this overextended, it's usually a good reversal indicator. (It's not quite as good when it hits high levels, as it can remain pegged at 100 for a while before an uptrend ends).
History: According to The Stock Traders Almanac, Monday is historically fairly bullish.
Accuracy (daily calls):
Month right wrong no call conditional batting average
April 7 9 2 .438
May 10 7 3 2 .632
June 1 0 0 0 1.000
And the winner is...
There's no call until Sunday night when I can see what the futures are doing. From what I can see at this point on Saturday evening though, I'd say Emperor Nerobama and his PPT had better pull a whole bunch of rabbits out of their hats between now and Monday morning to put an end to this ongoing destruction of wealth. And there do seem to be signals in the charts that this is exactly what the markets are expecting. Failing that though, look out below.
Be sure to check back Sunday night for the exciting conclusion to Market Mania 2012!
ES Fantasy Trader
On Friday we took a nice 14.75 point profit on Thursday night's short. I'll admit the exit was a bit premature, but I wasn't really expecting such a vicious downturn. In any case, no one ever lost money by leaving money on the table.
Portfolio stats: the account now rises to $134,000 after 40 trades (31 wins, 9 losses) starting from $100,000 on 1/1.
Reminder - you can follow the entries and exits for these trades live on Twitter @NightOwlTrader.
BOT 10 ES false JUN12 Futures 1288.00 USD GLOBEX 09:27:23
SLD 10 ES false JUN12 Futures 1302.75 USD GLOBEX 00:54:34
CUA (Commonly Used Acronyms)
BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date