Monday looking lower

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The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Friday lower, low confidence.
• ES pivot 1376.00.  Holding under is bearish.
• Next week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going short at 1372.25.

Recap

Oh man, wrong again  My call for a higher close today was looking good - until 10:40 AM.  Then it was all downhill from there to end with a disappointing 69 point loss for the Dow.  At least I did say it was a low-confidence call.  Let's see tonight if I can't do better than flipping a coin.

The technicals

The Dow: Today's red candle took us just outside the right edge of the rising RTC from 4/11.  That's the bearish setup.  The stochastic looks to be gearing up for a bearish crossover though its not quite there yet.  In any case, this chart tonight looks more likely to go lower than higher on Friday.

The VIX:  Compounding the confusion was a VIX that dropped along with everything else today.  The long-legged doji shows this indecision nicely.  A slightly bigger picture seems to show a developing symmetrical triangle, not perfect, but the general idea is there.  And since those resolve in the direction of entry about 75% of the time, that favors another leg higher for the VIX.  The futures seem to support this idea and that would be bad for stocks.

Market index futures: The futures seem to have their own symmetrical triangle going here.  All three are up just a tad tonight with ES gaining a single tick at 1:12 AM EDT.  Since the entry of this ES triangle was from above, the expected resolution is down.  And this triangle is would up about as far as it can go so I'll expect a resolution Real Soon Now, like either Friday or Monday at the latest.  A freshly completed bearish stochastic crossover supports this view.

ES daily pivot: Tonight the pivot drops again, from 1380.92 to 1376.00.  And just like last night, ES has been mostly directionless in the overnight, leaving us still under the new number, though not by quite as much.  Still, it's bearish unless ES can break above the pivot.  There's no sign of that right now.

Dollar index: The dollar, along with everything else is totally confused right now.  We've now got two almost identical side-by-side red candles with today's finishing up just 0.04%.  The only clue here is that the stochastic is just about to execute a bullish crossover suggesting a move higher and that would be bad for stocks.

Transportation: Last night this chart was too tough to call.  Well the market spoke and it was down big, by 1.41%.  This provided the bearish confirmation to yesterday's doji.  With the stochastic just forming a bearish crossover, it looks like the $TRAN is ready to move lower again on Friday, which is bad for the market as a whole.


History: According to The Stock Traders Almanac, Thursday is historically fairly bullish, with the Dow up 12 of the last 15.

Accuracy: 

Month right  wrong  no call

April   5      5      1

     And the winner is...

I',m thinking tonight has a bit more clarity than last night.  I'm seeing some definite bearish signs in the charts and not really anything bullish so I'm going to call for a lower close Friday.  Keep in mind that Friday is options expiration, so that could generate some unexpected gyrations, but right now things are looking down.

ES Fantasy Trader

Despite the Dow ending down, today we took some profits while the taking was good to lock in a 2.75 point gain before the sell-off got into gear.

Portfolio stats: the account rises to $131,500, after 31 trades (24 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1372.75.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

SLD    10    ES    false    JUN12 Futures     1384.00    USD    GLOBEX    11:19:05    

BOT    10    ES    false    JUN12 Futures     1381.25    USD    GLOBEX    01:08:45

Tough call - Thursday maybe higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Thursday higher, low confidence.
• ES pivot 1380.92.  Breaking above is bullish..
• Friday bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going long at 1381.25.

Recap

Oh well - another wrong call.  At least I did mention that I had little confidence in this and that I wasn't going to take a long position in ES on that basis.  Good thing too, since the Dow dropped 83 points as we continue this crazy game of retracing the retracements.  For over a week now it has literally been a case of two steps forward, one step back.  The Dow has been up, up, down, then up, up, down.  Does this mean Thursday will be up again?  Let me see if I can figure it out.

The technicals

The Dow: It may not feel like it, but even after today's loss, the Dow remains in a rising RTC, and one with a fairly robust Pearson's coefficient of 0.959 going back to the 11th.  And the indicators continue to rise, so there's no reversal warning there either.  I'm feeling pessimistic right now, but there's nothing on this chart to support that viewpoint.

The VIX:  Today the VIX gave us another hammer pattern to gain just under 1%.  And in so doing, it appears to be forming a symmetrical triangle.  These resolve about three quarters of the time in the same direction as the entry.  In this case, that would be higher, which would be bad for stocks.  But who knows - the VIX has been characterized by some crazy choppy action for two months now making it difficult to tell which way it may be going next on a daily basis.

Market index futures: At 1:08 AM all three futures are up by some decent numbers, with ES rising 0.22%.  After a small range day today, it looks like ES is forming an ascending triangle.  Coming at the end of a downtrend, this is a bullish reversal pattern.

ES daily pivot: Tonight the pivot rises from 1377.17 to 1380.92.  With ES meandering about aimlessly in the overnight, so far we're now just below that number and it looks like ES is getting ready to launch an attack on it.  It will be interesting to see how this plays out.

Dollar index: In another weird chart, the dollar gained 0.06% today but did it on a  red candle in a dark cloud cover position relative to yesterday.  It looks like the dollar wants to go lower and just need a bit of encouragement here.  In any case, this is not a really bearish looking chart for stocks.

Transportation: Interestingly, the $TRAN has a much smaller drop than the major averages today - just 0.12%.  But it put in a doji doing it, warning that the last two days of gains may not continue.  Still, in an environment like this, one requires confirmation of these things first, so all we can say is that we need to wait and see what happens on Thursday here.


History: According to The Stock Traders Almanac, Thursday is historically essentially neutral.

Accuracy:

 

Month right  wrong  no call

April   5      4      1
     And the winner is...

Now I'm not so sure I was wrong about today or just a day early as I seem to be on occasion.  But with a number of dojis and triangles appearing on the charts, it looks like the market is winding up for a move pretty soon.  Up or down remains to be seen.  I'm going to go out on a limb tonight and claim that it's going to be up, for a higher close Thursday.  I'm not really seeing any convincing signs of a move either way just yet though.  This is yet another difficult one to call.

ES Fantasy Trader

Portfolio stats: the account remains at $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside again.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

Wednesday possibly higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday higher, low confidence.
• ES pivot 1377.17.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Last night I was as confused about where today might go as I've ever been.  Turns out the bulls romped to a 194 point gain in the Dow.  Who knew?  And the SPX and Nasdaq gained even more, percentage-wise.  Is there more to come?  Let's take a look at the technicals.

The technicals

The Dow: After three days of trying, the Dow finally reclaimed the 13K line to close at 13,115 on a very tall green candle.  With no resistance until 13,250 and rising indicators, a further move up is not out of the question. 

The VIX:  Today the VIX fell 5.58% on a hammer-type candle.  This move was predicted by the futures, as I suggested lat night.  Today the futures moved lower again, so we could be in line for further declines in the VIX on Wednesday, an encouraging sign for the market.


Market index futures: All three futures are in the green at 1:52 AM EDT with ES up 0.14%.  This is encouraging after today's tall green candle.  Nevertheless, ES did not have the sort of breakout move over resistance that the Dow had today.  Instead it closed right at the top of its recent trading range.  But with rising indicators and a lack of selling pressure, it's possible that the way is cleared for further gains - if we can break above 1386.

ES daily pivot: Tonight the pivot rises from 1366.58 to 1377.17.  We were above the old number by so much that even with ES just wandering around we're still over the new pivot, and that's a good sign.

Dollar index: At least this chart worked.  Yesterday's dark cloud cover did result in a dollar that retreated 0.13% today..  But it left us with a spinning top in the Twilight Zone, that gray area half way between the upper and lower BB's.  This one could go either way Wednesday.

Transportation: With today's decent 1.44% gain, the $TRAN is now established in a rising RTC.  That said, it stopped just short of resistance at 5315.  However, its indicators are still rising, though giving signs of slowing down.  At this point, it looks like there's at least still a bit more room to run, though tomorrow will be critical.  We need to see a close above 5315 in order to continue higher.


History: According to The Stock Traders Almanac, Wednesday is historically not quite as good as today but bullish nonetheless.

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:

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

 14  4/2        42         21        +     1408

 15  4/9        25         46        -     1398

 16  4/16       26         48        -     1370

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 bullish call on 3/19 was, for the first time this year, wrong, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 12.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  This also means that the Ticker Sense bloggers' winning streak is now broken at 11.  Still, 11 for 12 isn't bad.


This week we see that both bullish and bearish sentiment increased just a bit, as more fence-sitters came off the sidelines.  So the ratio remains essentially unchanged.  While 48% bearish sounds pretty bad, it's still not really at the sort of extreme level that would qualify as a contrarian bullish indicator.  For the time being anyway, the bearish monthly thesis remains intact.  And for what it's worth, I voted bearish again this week.  I'm still seeing the monthly SPX chart as having more downside than up.


Accuracy: 

Today I have to add a third column to this section to handle those instances where I'm unable to make a call for the next day.  Since that means I'm neither right nor wrong, we now have a column labelled "No Call".
 

Month right  wrong  no call

April   5      3      1

     And the winner is...

I'm just vaguely feeling that we could move higher again on Wednesday, but I'm not confident enough to stake an ES trade on it right now.  Nevertheless, I'll call for a higher close Wednesday.  I'm just seeing more positives than negatives here tonight.

ES Fantasy Trader

Portfolio stats: the account remains at $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside again.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

Tuesday too tough to tell

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Tuesday uncertain.
• ES pivot 1366.58.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

 Recap

Well today sure was a real puzzler.  Last night I was reasonably sure we were going lower today.  From what I read and heard today, so were a lot of other people.  Now the S&P did close down just a bit and the Nasdaq was off by 0.76% but what was up with the Dow?  Or what held up the Dow?  Up 83 points in the opening minute of trading, then up over 100 a few minutes later.  And despite giving some of that back, we still closed up 0.56%.  I don't know about you, but I find this sort of strange action for no good reason to be vaguely disconcerting.  Just op-ex week jitters?  Who knows.  Maybe the charts will have more clarity tonight.

The technicals

The Dow: So of course right after I claimed that we wouldn't retrace yesterday's big drop, we did exactly that today, although the Dow then closed at exactly halfway down what's now a three day see-saw.  This is the sort of herky-jerky schizophrenic action we saw last summer that I hate so much.  Technically I have no clue what to make of this chart.  The candles are all over the place.  The only guidance I can see comes from the indicators, which are now rising from oversold levels, suggesting more upside.  But who knows.  This is weird.

The VIX:  The daily VIX is also pretty muddy.  We did spike up to the upper BB intraday before retreating to finish exactly unchanged.  The only clue I can find here comes from the futures which have been putting in lower highs for four days now and have indicators that sort of suggest a move lower.  So that would be good for stocks, but it's a long way from certain.

Market index futures: Tonight all three futures are down by just a hair, with ES losing just 0.07% at 1:55 AM EDT.  The stochastic completed a bearish crossover today, but did it from a very oversold level, which is odd.  I don't really know what's going on here either.

ES daily pivot: Tonight the pivot drops from 1372.42 to 1366.58.  But since ES seems to be showing no enthusiasm for moving higher in the overnight so far, that still leaves us under the pivot, just a bit less so.  Until and unless we can cross that line, it's not looking good for Tuesday.

Dollar index: This is really the only chart tonight that has a recognizable pattern on it - a big dark cloud cover.  Coupled to declining indicators, this would suggest a  move lower on Tuesday which would be good for stocks.

Transportation: Another chart here that looks like it's trying and failing to move higher.  There's no obvious pattern here.


History: According to The Stock Traders Almanac, Thursday is historically even slightly more bullish than Monday.

Accuracy:

Month right  wrong

April   5      4

     And the winner is...

Very very strange.  It's not often that I'm left completely at a loss, but tonight is just one of those times.  So there is no call and no trade.  The best I can suggest is to watch the ES pivot to see if we can move above it Tuesday morning.  That would be bullish, otherwise another move lower is possible.

ES Fantasy Trader

I guess like the Germans in WWII in Foy when Lt. Speirs ran right through their lines, I couldn't believe what I was seeing today, but I finally pulled the plug on this trade while it was still positive, just barely, for a quarter point gain.  Nevertheless, a win is a win.  But with no readily observable edge, tonight we're going to stand aside.

Portfolio stats: the account is now $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1363.75 at 2:13 AM EDT.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

BOT    10    ES    false    JUN12 Futures     1363.50    USD    GLOBEX    11:55:58
SLD    10    ES    false    JUN12 Futures     1363.75    USD    GLOBEX    02:12:51

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday lower, medium confidence.
• ES pivot 1372.42.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes short at 1363.75.

Recap

Last week ended lower as I expected, though by more than I expected.  Friday's 137 point dump put the kabosh on what was starting to look like a new uptrend after two solid green candles.  With another options expiration week coming up, things should be interesting.  Never a dull moment on the Street of Dreams, eh?

The technicals

The Dow: With the Dow up big and then down big and a full week behind us, I like to back out to the weekly chart.  And I have to say, it's looking more like a weakly chart, with two consecutive solid red candles.  Even worse, the candle from two weeks ago took us right to the lower edge of a weekly rising RTC all the way back to last December 5th.  That's a bearish setup.  And then last week's candle traded entirely outside the RTC.  That's the bearish trigger.  And the indicators continue their march downward from overbought levels.  Nothing but ugly here, folks.

The VIX:  Let's keep the weekly theme going here since the daily VIX chart is also somewhat confusing right now.  The weekly VIX closed with a big gap-up spinning top just short of 20.  But it's too soon to view this as a reversal warning.  Note that preceding candle looked almost identical and we moved up a lot from there.  And the weekly indicators continue to rise from oversold levels.  All of this suggests more upside to come from the VIX and that would be bad for stocks.

Market index futures: All three futures are trading lower tonight at 2:14 AM EDT, though not hugely with ES down 0.11%.  Friday's big red candle that essentially completely retraced Thursday's gains short-circuited the indicators, pulling the rug out from what was starting to look like an advance.  Although this kind of yo-yo motion might make you think that we could go right back up again on Monday, the fact that the VIX remains sub-20 tends to put a damper on that idea.  Overall, this chart's not looking so hot.

ES daily pivot: Tonight, the pivot fell from 1378.50 to 1372.42.  With ES pretty much wandering around little changed this evening, we were below before and are still below.  Not very encouraging.

Dollar index: The weekly dollar chart is less clear than the others, probably because of the recent renewed attention to Europe.  The greenback now finds itself near the upper end of a two month trading range with a hanging man and overbought indicators that would suggest the next move would be lower, contrary to what many of the other charts are telling us.  By itself, this would be good for stocks.

Transportation: And finally, the weekly $TRAN looks bad too.  Here we have two rising spinning tops followed by a hanging man.  The indicators are starting to top off at overbought levels, with the stochastic trying to form a  bearish crossover and OBV turning lower from a very high level.  Not good at all.

History: According to The Stock Traders Almanac, Monday is historically quite bullish.

Accuracy:

Month right  wrong

April   5      3

     And the winner is...

Tonight I'm just not feeling the love.  The charts are mostly in agreement about some more downside from here, so I'm going to call for a lower close Monday.

ES Fantasy Trader

Portfolio stats: With no trade over the weekend, the account remains at  $130,000, after 29 trades (22 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1363.75 at 2:13 AM EDT.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.