Tuesday, December 4, 2012

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence.
  • ES pivot 1411.83Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader remaining short at 1396.00.
Recap

My call last night was "Monday lower if we break below the ES pivot at 1414.58 by mid-morning."  And that's exactly what happened.  ES gave up the pivot at 10:50 AM and that was that.  Don't be fooled by the vain fake-out break-out attempt at 11:50 AM.  The volume put the tell on that and by 12:40 PM it was all over with the Dow finishing the day down 60 points.  Now let's look at the charts to see if we've got any pin action for Tuesday.

The technicals (daily)

The Dow: Last night I commented that the Dow seemed to be running out of gas.  Today the tank ran dry and we lost 0.46% as resistance around the 13,050 level proved too tough to crack.  And for collateral damage, we fell out of the rising RTC for a bearish setup, dropped the 13K psychological support level and crashed right through the 200 day MA at 12,996 for the second time in six days.  That's three strikes, yer out.  And the indicators are still all overbought, though they now appear to have topped (which in itself is bearish).  This chart's not looking good.

The VIX:  Last night I called for "higher again on Monday" so now I'm two for two as we gained 4.85% here today.  Today's tall green marubozu suggests nothing but higher still and there's no resistance til the 200 day MA at 17.55.  Also, the indicators are rising but not yet overbought so I'm going to go for the hat trick and call for higher again on Tuesday.

Market index futures: Tonight all three futures are down at 1: 04 AM EST with ES lower by 0.23%.  Like the Dow, ES was unable to break a three day resistance line, here at 1420.  The bulls appear to be exhausted form the effort and we're finally seeing the pullback I've been expecting for a couple of days now.  The overnight declines are just enough to bring us to the edge of the rising RTC for a bearish setup but I'll note that this one has a fairly low Pearson's coefficient of just 0.889, so we might already have exited the trend.  With declining indicators it sure looks like we're headed lower on Tuesday here.

ES daily pivot: Tonight the pivot drops from 1414.58 to 1411.83.  With ES wandering lower in the overnight we remain a good eight points under the new pivot so that's a bearish sign.

Dollar index: On Monday the dollar gapped down 0.36% and landed on its lower BB with a bullish morning star.  With oversold indicators I now believe that we have a chance for a dollar rebound on Tuesday but this sort of move requires confirmation.

Euro: In some impressive divergence, the euro on Monday posted a big gain closing at 1.3059 while our major averages all moved lower.The E is taking a breather in the overnight with the new candle forming as a spinning top suggesting we could see a move lower on Tuesday.  That would mesh with my ideas for the dollar.

Transportation: And I got this one right too last night when I said "I'm looking for lower trans again on Monday" as the trans posted their biggest loss since November 14th falling 1.13%.  And like the Dow, this was enough to drop us out of a rising RTC for a bearish setup and right through the 200 day MA.  The bearish stochastic crossover is confirmed, the indicators remain overbought but have peaked, so all i all this chart's looking lower again..

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 
 47  11/19      52         34        +     1360
 48  11/26      48         26        +     1409
 49  12/3       57         21        N     1416 

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 11/5 was just barely wrong, the S&P now being two points higher than then. I'm using the column "Accuracy" to track my calls.  So now with just three weeks to go in 2012, I'm 27 for 45 or 60%.

The interesting thing this week is that we set a YTD record for bullish sentiment: 57%, while bearish sentiment tied the record low at 21%.  Perhaps people are getting caught up in the Santa Claus ho-ho-ho seasonality.  I sure can't understand it.  Personally I voted Neutral, for the first time ever, mainly because 30 days from now will be the first day in 2013 and to my mind, whether we';re up or down depends entirely on whether or not we see a fiscal cliff resolution by then.  And right now that's pretty much up in the air.  With no way to predict that, I can't really vote either plus or minus.


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   1      0      0           0       1.000      60

     And the winner is...

Last night I was seeing a few storm clouds on the horizon.  Tonight they appear to be gathering as most of the charts ar elooking bearish.  And I'll note that the wonderful Rob Hanna is suggesting an edge to the downside now.  So I'd say we could get some further declines tomorrow and I'm calling Tuesday lower.

ES Fantasy Trader

Portfolio stats:  the account remains, for the time being, at $198,000 after 72 trades (57 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we remain short at 1396.00.  This trade is running a bit longer than most but I believe that patience will eventually prevail.

6 comments:

  1. Michele-

    A quick question. Above, you wrote “Tuesday lower, low confidence.” My question is why you added the cavaet of “low confidence”. Reading through the analysis, item by item, it seemed that if anything there was an unusual preponderance of conclusions supporting a thesis that today’s strong reversal has a high likelihood of continuing to the downside. (Including a YTD high in bullish sentiment in a poll.)

    ..As opposed to times when some of the factors you consider are strongly one way, but others are very much the other way...

    By the end it seemed your tone was, “--and here’s annudder one, and here’s annudder one...” And I went back to the top of the posting and checked the Trend box, and it’s neutral-- so the prediction isn't even going counter to that directional measure.

    Is there some other factor which is giving you pause, but is too inchoate, or too complex, to go into in such a short and concise format?

    Otherwise, I too have been reading the nearly universal sentiment that the market HAS to go up for at least another week because “it’s December”. To me this makes it even more vulnerable to any technical weakness, since the initial investor reaction by many will be denial. (This is Santa time, the market now goes up, yes? NO!! Panic.)

    ReplyDelete
  2. Good eye, Daniel. Basically my confidence is going to be low on any moves until we see a fiscal cliff resolution. Until then, the market's going to respond to every talking head that shows up on TV with comments of "progress" or "lack of progress".

    ReplyDelete
    Replies
    1. Michele-

      Was I hallucinating worse than usual? I thought the Trend symbol in the top right corner of your site was the neutral X, as I posted, but I see now that it's pointing down... did it change since I posted my comment, or did I just mis-read it, maybe remembering a prior day..?

      Also, what happened to your PI? They've taken it away and left you with a minus sign. Did Blogspot non-renew your license and sell it to the highest bidder, the bastards!?

      Took me a moment to notice it was gone...

      Delete
    2. Ha, yeah well let me tell you what happened. I got this new Android phone and I was setting up my Google stuff on it. During that process, up pops some screen about Picassa and all the albums I have there. So I'm like, I don't use Picassa and I don't need any of that junk so I just deleted everything.

      Well come to find out that while *I* may not use Picassa, that's where Blogspot caches every single image you insert into a blog. So without realizing it, I deleted all of my trend arrows, my user icon, and even my NightOwl title image. Not cool!

      Fortunately, I had backups of everything but it still took me a while to a. realize what had happened and b. fix it.

      Then I decided that while I was at it I might as well turn the trend arrow from X to down since it's looking like we're now officially in a new downtrend. Live & learn.

      Delete
  3. Not really sure what sparked this late-night rally but now it looks like we will at least reach ES print of 1424 and possibly go higher before turning down.

    Very keen to your take on the market. Doesn't bode well for the short position. Reverse and go long here or not is the big question!

    Thanks.

    ReplyDelete
    Replies
    1. I'm looking at that right now. About all I've been able to find is some noise about "technical rebound in the Chinese markets" or something to that effect. I'll have to see what all the charts can tell me. It's an interesting move, I'll grant you that.

      Delete

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.