Tuesday, December 11, 2012

Tuesday higher if pivot holds

[I accidentally deleted this post earlier today.  Fortunately, I did finally manage to finad a copy in my browser's cache.  So here it is again.]
The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher if ES stays above pivot, else lower, low confidence.
  • ES pivot 1417.33Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.

Well after submerging in the pre-dawn hours (but that doesn't count) ES broke above its pivot in convincing fashion exactly at the open Monday morning and that was that.  Despite sagging somewhat later in the day, we still managed to pull out a win, meager as it was, with the Dow gaining 15 points.  Forget pyramid power folks, pivot power is where it's at.  So one day down in Interesting Week and four to go.  Now let's put all the charts on the 5:12 to Glendale and see where they get off.

The technicals (daily)

The Dow: The Dow's slim gain today kept it inside the rising RTC but with a spinning top.  The indicators are beginning to look weak here.  RSI has peaked at overbought, money flow is highly overbought at 79.08, and the stochastic is leveling out to form a bearish crossover.  So although I can't immediately call this chart lower, I'd guess we'll see a drop in a couple of days at the most.  Right now the upper BB at 13,253 is looking out of reach.

The VIX:  Another funny day here - the VIX gained 0.94% but did it on a long red closing marubozu.  So despite the numeric gain, the pattern doesn't look particularly bullish.  In fact we remain inside a surprisingly good descending RTC (Pearson's = 0.941) and the indicators are nowhere near oversold.  So I'd not be surprised at all to see the VIX move lower again on Tuesday.

Market index futures: Tonight all three futures are down at 1:20 AM EST with ES lower by 0.19%.  Today's continued gains were the payoff for yesterday's three white soldiers pattern I mentioned.  They kept us inside the rising RTC.  But - with the RTC rising so steeply, it didn't take much to fall off the right side and that's what's happening now.  We're really just clinging to the edge here.  And the indicators are ambivalent too, with RSI. money flow, and OBV heading lower, but momentum and the stochastic moving higher.  This sort of indecision is typical of a pre-Fed day.

ES daily pivot: Tonight the pivot rises from 1415.58 to 1417.33.  The drop in ES after the close plus the rise in the pivot lands us smack on top of the new number.  Right now as I write, ES is teetering on the edge trying to decide which side to come down on, with an ever so slight edge to the bulls.

Dollar index: The bearish evening star I spoke of last night completed today with a 0.09% gap down for the dollar.  Although the indicators are still not quite overbought, I'd not be wanting to place any long bets on the dollar in the face of a chart like this right now, especially considering the state of the euro (see next).

Euro: Looks like the euro decided to completely ignore what's 'is name's resignation in Italy as it posted strong gains today with continued upside i the overnight, now at 1.2958 following a big pop at 11:20 PM caused by, um, well nothing really jumps out at me on the news wires right now.  That's why I like technical analysis - I don't have to spend a lot of time reading news articles all day long.  The important point is that this move took the euro out of its latest descending RTC for a bullish setup.  Unless the euro closes below 1.2859 on Wednesday (which seems unlikely), further upside will no doubt follow and that should be good for the markets.

Transportation: And on a very positive note, the trans on Monday took a 1.08% pop to bust through resistance at 5150 and come close to their upper BB at 5212.  We now have a clearly defined rising RTC, support at the 200 day MA and 5150, a completed bullish stochastic crossover, and rising indicators that are not yet overbought.  No bearish signs here, folks.

 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 (it's getting pretty long):

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  11/14
 15  4/9        25         46        -     1398  12/15
 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17
 18  4/30       44         32        +     1403  14/18
 19  5/7        23         50        -     1350  15/19
 20  5/14       32         44        -     1353  16/20
 21  5/21       30         52        -     1295  16/21
 22  5/29       35         42        -     1318  16/22
 23  6/4        32         48        -     1278  16/23
 24  6/11       28         40        -     1326  16/24
 25  6/18       39         26        -     1343  16/25
 26  6/25       38         46        -     1335  16/26
 27  7/2        41         40        -     1362  16/27
 28  7/9        42         38        -     1355  16/28
 29  7/16       44         32        -     1357  16/29
 30  7/23       33         42        -     1363  16/30
 31  7/30       43         22        +     1386  17/31
 32  8/6        52         28        +     1391  18/32
 33  8/13       43         21        +     1406  19/33
 34  8/20       46         31        +     1418  20/34
 35  8/27       39         29        +     1411  21/35
 36  9/4        31         38        +     1407  22/36
 37  9/10       54         29        +     1438  23/37
 38  9/17       63         22        +     1466  23/38
 39  9/24       52         30        +     1460  23/39
 40  10/1       39         39        -     1441  24/40
 41  10/8       52         34        +     1461  24/41
 42  10/15      41         32        -     1429  25/42
 43  10/22      38         41        -     1433  26/43
 44  10/29      36         43        -     1412  27/44
 45  11/5       44         33        -     1414  27/45
 46  11/12      38         46        -     1380  27/46
 47  11/19      52         34        +     1360
 48  11/26      48         26        +     1409
 49  12/3       57         21        N     1416 
 50  12/10      46         29        N     1418   

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 bearish call on 11/12 was wrong, the S&P now being  higher than then. I'm using the column "Accuracy" to track my calls.  So now with just two weeks to go in 2012, I'm 27 for 46 or 59%.

It's interesting to see how in the space of one week, the spread in sentiment narrowed considerably.  Personally I'm sitting on the sidelines again for the second week in a row and it looks like I've got company.  Still waiting for the fiscal cliff to resolve.

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   3      1      1           1        .800     130

     And the winner is...

SPX daily
It's looking to me like the market is already pricing in some good news ahead of the Fed on Wednesday, so I think Tuesday's pretty much going to be a wait & see day.  Technically, the charts are still in pretty good shape, so I'm going to make another conditional call.  If ES stays above its pivot by mid-morning Tuesday, we close higher, else lower.  Either way though I'm not expecting any big moves on Tuesday.

Oh yes, and let me add that while the SPX failed to take out 1420 again on Monday, it does have a bullish stochastic crossover going for it and remains in a rising RTC, so all hope is not lost.  And while we're on the subject - am I the only one seeing a developing cup & handle in the daily SPX chart?  That's one of the best bullish patterns out there.  Take a look here and see if you don't agree.

ES Fantasy Trader

Portfolio stats:  the account remains at $188,750  after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside in the face of continuing uncertainty and the expectation of minimal rewards.


Thanks for the kind words, Michele, in your prior comment reply. You create a safe and serious space for posting such speculations. Nobody jumps down anyone’s throat, very rarely does anyone get razzed or ‘held accountable’ for daring to guess the nearterm direction of the stock market and maybe guessing wrong. But you also inject humor and lightness into all your writings and that encourages comments to do likewise.

I understand what you mean by the ancient board game of GO being the closest analogue to short term market ‘swing trading’ and/or ‘intraday scalping’. I never learned to play it but a very close friend was a GO master and he and his wife dedicated a small alcove room right off the living room, in their oddly shaped house (partly built into a hill), to be a beautiful GO room, with a japanese silk screen on the wall and soft lighting, with a board and bags of stones always ready on a low table, and two zafu seats for the players and a love seat for any spectators--often their children.

When my friend explained the basics of the game to me, many years ago, it immediately brought to mind analogies to classic Japanese candle analysis, with their common use of Set Theory and territoriality.

I too learned an entire School of cross-market analysis from Dr. Brett Steenbarger and I was glad that you pointed out to a commentor some nights ago how worthwhile the ‘timeless’ articles on his archival site still are, and that it is by no means a defunct site. I loved his core message (as befitted a shrink, as he is and was), that rather than try to “beat” the market we should rather carefully LISTEN to it... but not like some thunderous voice as would come out of a God of Thunder like Thor... but like as a patient on a couch, with lots of conflicted notions and anxieties...

He used (and taught others how to use) psychoanalysis metaphors and techniques to get at symbolic feelings of what the underlying sentiment or ‘skew’ or expectational set of the majority of market participants might be... and then use that to create distance from the perceived consensus and be appropriately guided whether to fade moves, or pyramid positions into them.

Dr. Brett is and was a unique teacher, who gave much wonderful guidance for years and asked little in return and STILL got heckled by yokels if occasionally he guessed the market direction wrong. (But he was also a zen stoic, and practiced samurai discipline, so such gross embarrassments to planet Earth and humanity as a species just made him chuckle. I know I was far more irked by their unappreciative rudeness than he was.)

Keep your eye on the yen. It continues to be the wild card in the pie, to mix metaphors. In the hieroglyphic language of currencies, the Yen usually is the fixed principle of maximum safety. But a 3-year low in manufacturing output or somesuch has sent the Japanese government and central bankers on a crusade to weaken the currency and help exports. So capital is flooding from the Yen crosses and after the dollar the next hiding place is the Euro, making it seem stronger than it probably really is.

The normally stable yen has broken free and is rolling through the currency solar system like a planet X from the cosmo-mythology of the writer Velikovsky. Correlations are getting wiggly and electromagnetic and not normal, and finally WHAT has gotten into the DAX? What could possibly be so wonderful about the German situation that their stock market has needed to go up 15 days in a row? Much is NOT making sense right now, in terms of correlation analysis.
  1. Hmm, you noticed that too, eh? Maybe it's because the world is ending in a couple of weeks, according to the Mayans. But we've had several odd things lately, like the market, VIX , and dollar all moving together rather than opposite. I'll have to go mull over the DAX and yen, two charts I don't normally look at.

    I especially liked reading Dr. Brett's posts because my dad was a psychiatrist and a very savvy investor. I used to ask him how he decided when to buy or sell and all he would tell me was that he would psychoanalyze the market. TraderFeed echos a lot of those themes.

    Of course I was still young and foolish at the time and more interested in other, more trivial pursuits. Now that I'm old and foolish I'm sorry I didn't pay more attention, and of course now it's too late. Perhaps I should add a few books on psychoanalysis to my reading list.

No comments:

Post a Comment

Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.