Friday, December 28, 2012

Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain, bias lower.
  • ES pivot 1408.42  Holding above is bullish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader closed.

Thursday was a perfect example of what I mean by "uncertain" as the market got jerked around by more FC rumors and blathering from Professional Politicians.  The day started off level, then the Dow tanked 120 only to recover almost all its losses later in the afternoon.  And by the time all the shouting was over, it was down just 18 points.  Just a perfect example of a market where the technicals count for nothing.

So in view of this, I am again going to skip the usual daily chart review.  There's really no point to it since the market is now completely driven by the fiscal cliff.  With the year about to end, it looks like we'll continue in the  holding pattern I described last night - a slow drift lower until some sort of deal is announced, and then a pop higher.  And if no deal is announced, we're going down.  So basically once again it's simply Friday uncertain but the bias is lower.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

April      7      9      2                    .438
May       10      7      3           2        .632
June       8      6      6           1        .600     632
July      11      2      6           1        .857     917
August     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19 

October    8      5      8           0        .615     208
November   7      5      5           0        .583     135
December   6      3      3           5        .786     496

ES Fantasy Trader

Portfolio stats:  the account remains at $193,500  after 74 trades (58 wins, 16 losses) starting from $100,000 on 1/1/12.  I'm now declaring the ESFT closed for 2012, so these are our final numbers.  We'll start over again with $100,000 on the first of the new year.



  1. "Just a perfect example of a market where the technicals count for nothing."

    Perfectly said. TA is an attempt to discern gradually evolving patterns as early as possible-- it is not a method of handicapping a singular announcement or event.

    --And as if these Washington dramatics were not enough to disrupt rational analysis, another source of clues to directions, cross-market correlations, has been generally messed up for weeks, and we now have another voice added to the Velikovsky Thesis of the disruptive wandering Planet Yen, the eminent cross-correlations scholar and chartmaster, John Murphy.

    “One of the most consistent intermarket principles is that gold (and most commodities) usually trend in the opposite direction of the U.S. Dollar. That inverse relationship has broken down of late......The Euro and gold usually trend in the same direction. That was the case until mid-November, when a rising Euro coincided with falling gold, and the 20-day Coefficient has turned negative, which is unusual. So the answer to the recent change in the gold/currency relationship doesn't come from the Euro, it may be coming from the yen.”

    I recently heard an interview on Bloomberg radio, a veteran currency expert, who said that with the new Japanese Government in place he “no longer regarded the Yen as a safe-haven currency”. Holy cow, that’s a rather radical statement, and if there’s truth to it a whole new structure of “safe-haven-ness” may be evolving...

    Michele, well-deserved congrats on a superb year of wit and warmth and great analysis and a superb risk-adjusted performance! Readers, a toast to the wise Owl of the wee hours!

    Now, time to move up our seats to a good spot and watch all the lemmings go off a non-existent cliff.


    1. Very well put, Daniel. I've been wondering about the breakdown of our usual correlations for a while. There is definitely something interesting going on in Japan these days and it's not all just about the yen. I note the resurgence of the gaisensha, the black vans that trundle around Tokyo decked out in Imperial flags and blaring martial music from big loudspeakers.

      I'll just be glad when this fiscal cliff nonsense is over with and we can get back to technical swing trading.

      Anyway, thanks so much for reading and for your great commentaries. I've learned a lot from reading your observations. I raise my champagne glass to you and wish you a happy New Year.

  2. Thank you night owl for your analysis throughout the year. I really appreciate the daily updates.

    Thank you

    1. Thanks for the kind words. It's always nice to know you're appreciated. Here's to an even better 2013.


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