Friday possibly lower

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

• Friday lower - low confidence.
• ES pivot 1392.00.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains short at 1386.75.

Recap

Well so much for opting for historical precedent instead of paying attention to what the charts were saying.  Turns out the charts were right in suggesting more upside and I was wrong.  The Dow did finally manage to string together more than two winning days in a row, this time with a convincing 114 point pop that smashed the 13K resistance level and the 13,115 level.  Now we need to wonder, can there be yet another day of upside in store or was this the blow-off top?  Let's round up the usual suspects and search for clues.

The technicals

The Dow: The Dow's three day run has a look and feel of going exponential.  This sort of accelerating run-up always makes me nervous.  And although we broke through the 13,115 resistance, there's another line at 13,260 and then the upper BB at 13,307.  RSI has also turned lower now.  However, there's no reversal warning on the stochastic yet.  This chart looks like it still has a bit of moxie to make one more push higher, but not by much.

The VIX:  The VIX fell another 3.45% today to close at 16.24, just above the top of last month's consolidation range.  While there's no sign of a reversal yet here, the VIX has been acting pretty jumpy lately, so it's not out of the question.  RSI did go oversold today and momentum turned positive.  The futures are also near support and their lower BB.

Market index futures: Today's ES gain wasn't quite as pronounced as the Dow's and featured a 10 point sell-off after the close.  This gives the overnight candle the look of a dark cloud cover.  With all three futures down at 1:22 AM EDT and ES lower by a not insignificant 0.41%, this chart seems to be ready to move lower.  A look at the hourly ES chart supports this idea, where the late afternoon dump broke the rising RTC for a bearish trigger.

ES daily pivot: Tonight the pivot climbs again from 1381.50 to 1392.00.  That now places us below the pivot and ES is continuing lower - a negative sign for Friday.

Dollar index: Yesterday I spoke of the dollar's support at its 200 day MA.  Today that support was tested and it held, with the dollar forming a bullish hammer.  Its indicators have now bottomed at oversold so I'm thinking we're likely to see the dollar move higher on Friday - bad for stocks.

Transportation: Uh oh - after moving up in sync with the Dow for two days, today the $TRAN was decidedly down, losing 1.06% on a bearish engulfing pattern.  Add in that four of my Fave Five indicators went lower today and it sure looks like this index is going lower Friday, and that's bad for stocks.


History: According to The Stock Traders Almanac, Friday is historically actually fairly bullish.

Accuracy:

 

Month right  wrong  no call

April   7      7      2
     And the winner is...

Hmmm - I'm not really seeing all that much negativity on the charts except for ES, which is looking like it wants to go lower.  And with $TRAN and the dollar guiding lower and the euro moving higher, I'd have to say there's a good chance that Friday will close lower.  It's been a difficult month to call for sure.  Perhaps my call for a lower Thursday was just a day too early - I've done that more than a few times in the past.

ES Fantasy Trader

Portfolio stats:  the account remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are remaining short at 1386.75.

Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.  But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post.  Also keep in mind that these trades run with no stops and no preset targets.

Thursday maybe lower

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

• Thursday lower - low confidence.
• ES pivot 1381.50.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes short at 1386.75.

Recap

With the kind of yo-yo market motion we've been seeing lately, it was kind of a leap of faith to call the market higher today, but that paid off in the form of an 89 point gain for the Dow.  The $64 million dollar question now is, with the Dow having been unable to string together more than two advancing days in a row since March 29th, can we go for three on Thursday?  Let us tilt the Market Ouija board and see where the pointer stops.

The technicals

The Dow: The Night Owl hates ambiguity  And yet the Dow persists in handing us just that.  Two nice up days in a row look quite positive.  And yet today's close at 13,091 left us just shy of resistance at 13,115.  But it also broke clear in a big way of the descending RTC, and that is a bullish setup.  And the stochastic today made a bullish crossover but it did it from a high level.    See the winner below for my conclusion.

The VIX:  King VIX took a big 7% gap down today to form an inverted hammer and bring its RSI into oversold territory.  But that still leaves us only halfway between BB's, right in the Twilight Zone.  The last time we had a big gap down after a big down day was in early March.  And then we got three more gap down days taking us right to the lower BB.  In any case, it's impossible to call a reversal here without confirmation, but we do have a reversal warning.

Market index futures: Tonight all three futures are trading just barely in the red, with ES lower by just 0.04%.  The pattern here lately has been that after two big days of gains, we get at least one day of retreat.  With RSI, momentum, and OBV all hooking lower tonight, that's not looking out of the question for Thursday.

ES daily pivot: Tonight the pivot jumps from 1367.42 to 1381.50.  This still leaves us above the pivot, but by a lot less than today.  And with ES drifting lower since around 11:30 PM, it looks like we may encounter the pivot before the open.  Bouncing off, bullish - breaking under, bearish.

Dollar index: The dollar put in its eighth consecutive red candle today, dropping another 0.27% on an inverted hammer like the VIX.  At this level the indicators are just beginning to show oversold.  And the dollar is nearing its lower BB and its 200 day MA, both around 54.70 (on the $USDPX).  That should provide some support.  Still I think the dollar is being driven more by Europe lately than by technicals.

Transportation: The transports had a good day along with the rest of the market, putting in a second green candle with a bullish stochastic crossover like the Dow.  But like the Dow, they're also near some resistance at 13,115.  This is a chart that looks like it's still got some room to run, but only a little.


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

Accuracy:

 

Month right  wrong  no call

April   7      6      2
     And the winner is...

Although the candlesticks seem to suggest further upside, and at the least don't have any reversal indicators, I think tonight I'm going to go with the "two steps forward, one step back" that we've been seeing lately.  That one is three for three since the early March rising RTC was broken.  Even without that, it's common for a big up day to be followed by some consolidation anyway.  So on that basis, I'm calling for a lower close Thursday but I'm not particularly confident about it.  One possibility that would not surprise me is that we rise in the morning until the various resistance levels on these dcharts are hit, and then move lower from there.

ES Fantasy Trader

Even though we missed a good part of the move last night, we were correct to go long, resulting in a nice 6.25 point profit today.  Portfolio stats:  the account now becomes $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are going short at 1386.75.

Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.  But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post.  Also keep in mind that these trades run with no stops and no preset targets.

SLD    10    ES    false    JUN12 Futures     1382.25    USD    GLOBEX    10:59:26   

BOT    10    ES    false    JUN12 Futures     1376.00    USD    GLOBEX    01:08:47   

Wednesday higher

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

• Wednesday higher - low confidence.
• ES pivot 1367.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes long at 1376.00.

Recap

Last night wasn't at all clear to me.  I thought we might form some kind of star today but as it turns out the Dow simply gave us a nice 74 point gain.  I hoped to get some greater clarity in the markets and I think today provided some.  Read on...

The technicals

The Dow: Today's gain retraced most of yesterday's loss.  It also turned both money flow and momentum positive.  And the stochastic is now giving a hint at forming a bullish crossover, though not there just yet.  That said we remain inside a five day declining RTC.  Still, there's a few positive signs on this chart.

The VIX:  Today the VIX lost 4.59% on a bearish two crows pattern.  Indicators continue to decline supporting this idea.  And of course that would be good for stocks.

Market index futures: Tonight all three futures are in the green with ES leading the way higher at :32 AM EDT, up 0.4% which is pretty good for this time of night.  In fact the developing green candle is almost as big as today's completed one.  On the indicator side, money flow continues to rise for the fifth straight day, OBV is now rising from a low level, and the stochastic just barely squeaked out a bullish crossover.  While a continued advance Wednesday is not guaranteed, I'd say from this chart it's more likely than a decline.

ES daily pivot: Tonight the pivot rises from 1363.83 to 1367.42.  With ES pretty much flat in the overnight so far, we were above the pivot before and we're still above by a comfortable margin, all in all a positive sign.

Dollar index: Today the dollar continued its wayward ways giving up all of yesterday's gains gapping down to form a hammer virtually identical to the one we saw Friday.  The indicators are similarly confused.  If I had to guess, I'd say the dollar's going higher tomorrow just because it's now at the lower end of its recent trading range, but that's a pretty weak argument.  There's not really much to tell from this chart once again.

Transportation: Today the $TRAN delivered a decent 1.17% gain that confirmed yesterday's hammer, with a bonus bullish engulfing pattern.  This caused the indicators to hook back up - it's all looking pretty favorable right now.


History: According to The Stock Traders Almanac, Wednesday historically has no particular edge..

Accuracy: 

Month right  wrong  no call

April   6      6      2
     And the winner is...

It's still far from a slam-dunk, but I'm a bit more comfortable tonight calling for a higher close Wednesday.  There's an interesting pattern in the Dow lately of two up days following each big down day.  If that continues, we should see another up day on Wednesday.

ES Fantasy Trader

Portfolio stats: because we did not trade last night  the account remains at  $138,625, after 32 trades (25 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are going long at 1376.0..  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.

No call for Tuesday - star possible.

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

• Tuesday too tough to call - star possible.
• ES pivot 1363.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Well at least we got this one right, after three goofs in a row.  Today the market fell as expected, with the Dow shedding 102 points in a broad market decline.  It was even worse early on, with much of the session spent retracing part of the opening minutes' losses.  So will tomorrow continue this recovery or is there more downside to come?  Let's figure it all out.

The technicals

The Dow: Today's dump and recover act formed a hammer on the daily chart, but without a clear downtrend established and with indicators all solidly moving lower now, it's too soon to say that this might be a reversal.  It definitely requires confirmation on Tuesday.

The VIX:  The VIX put in a tall red candle today but nevertheless managed to gain 8.77% because of a big gap up that took it right to its recent resistance of 20.25 before backing off.  Because of the recent herky-jerky action in the VIX, the indicators are somewhat confused.  Even the rising RTC is too wide to be useful, with a poor Pearson's coefficient of just 0.789.  Not even much guidance from the futures today, so we'll just have to move on.

Market index futures: Remember last night when I posted the daily chart with the symmetrical triangle here that ended with the question "Exit lower?"  Well today that question was answered as the triangle resolved with an almost one percent drop.  The symmetrical triangle is one of my favorite patterns, even though it's not a candlestick pattern.  It generally works really well, as we saw today.

Anyway, tonight we find all three futures in the green, with ES up 0.18% at 1:27 AM EDT.  After rising all evening, this is actually something of a retreat, giving the developing candle the look of something of a dead cat bounce following today's long red candle.  I'm not convinced yet that this is the start of a rally, not even a short one.

ES daily pivot: Tonight the pivot takes a big drop from 1376.58 to 1363.83.  That was enough to put ES above the pivot for the first time in a while, so that's positive on the face of it.

Dollar index: The dollar gapped up for a 0.28% gain today but did it on a red candle.  In fact, only once in the last eight days has the dollar closed higher than its open.  With today's gap up pretty much retracing yesterday's gap down, this chart is once again too hard to call.  As expected though, the euro did move lower today.  I think the euro/dollar is going to be more news-driven than technically influence for the next few days, so we'll just leave it at that.

Transportation: Today the $TRAN took a nearly one percent drop that exactly touched its lower BB intraday, forming a nice hammer.  This sort of pattern often moves higher the next day, meaning a hammer to the lower BB combination.


History: According to The Stock Traders Almanac, Tuesday is historically quite bearish, and the worst day of the week.

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  11/13

 14  4/2        42         21        +     1408

 15  4/9        25         46        -     1398

 16  4/16       26         48        -     1370
 17  4/23       30         48        -     1379  

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 3/26 was, for the second 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 13.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  Despite being wrong twice in  a row, 11 for 13 still isn't bad.

This week we see that not much has really changed form last week.  Bullish sentiment advanced slightly, but at the expense of the fence-sitters.  Bearish sentiment remained unchanged.  So once again, there are no contrarian messages in this poll and once again the Night Owl voted bearish

Accuracy: 

Month right  wrong  no call

April   6      6      1

    And the winner is...

I'm afraid that tonight the crystal ball is fogged over.  The charts aren't really talking to me and I'm just not feeling the love.  ES is up from the close but that boat has already sailed.  I don't see a lot of upward momentum or downward pressure.  My best guess is that we may see a small range spinning top on Tuesday but whether it's red or green is just too tough to tell.  So no call for Tuesday.  I do think though that by tomorrow's close we'll have more clarity for the rest of the week.

ES Fantasy Trader

Well we took some heat on this trade from last Thursday.  I don't like holding these over the weekend and I really don't like holding them when they're underwater, but in this case, once again patience paid off rewarding us today with a handy 14.25 point profit.

Portfolio stats: the account now climbs to $138,625, after 32 trades (25 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside, believing that ES may have already seen whatever run-up it's going to get into Tuesday..  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.

BOT    10    ES    false    JUN12 Futures     1358.50    USD    GLOBEX    11:45:27   

SLD    10    ES    false    JUN12 Futures     1372.75    USD    GLOBEX    APR 20 01:11:05

Monday lower

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

• Monday lower, medium confidence.
• ES pivot 1376.58.  Holding under is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains short at 1372.25.

Recap

Arrrgh!  Thursday I though the market would go higher and it went lower.  Friday I thought the market would go lower so naturally it went higher.  The Night Owl is now 0 for 3 and getting kind of depressed.  But this is pretty much a reflection of the market itself - unable to find a direction.  And I did mention a week ago that options expiration weeks tend to be squirrelly.  Well now that we've got that out of the way, maybe we can do better for Monday.

The technicals

The Dow: After closing outside its rising RTC on Thursday for a bearish setup, the Dow on Friday closed right back inside with its 65 point gain thus canceling the bearish signal.  However, the stochastic completed it bearish crossover.  The stochastic has called every top correctly so far this year.

The VIX:  The VIX chart is too tough to call on both the daily and weekly time frames.  However, the futures are giving at least a hint that the VIX may be going higher, in the form of oversold indicators.  And that would be bad for stocks.

ES daily

Market index futures: Tonight, once again, all three futures are trading lower with ES down 0.16% at 1:29 AM EDT.  The indicators also continue to move lower.  But more importantly, I think is the developing symmetrical triangle as you can see in this daily chart.  Notice how we've been putting in lower highs and higher lows for ten straight days now.  This has gone on about as long as it can.  It should be ready to break any day now and since it was entered from above, the break is most likely to be to the downside.

ES daily pivot: Tonight the pivot remains virtually unchanged,  nudging up from 1376.00 to 1376.58.  As we continue to hold below this and ES shows no signs of making any attempt on the pivot, that's a negative sign.

Dollar index: Meanwhile the dollar on Friday took a big gap down for a nearly half percent loss.  This took the indicators much closer to oversold than overbought and with some unsettled news from Europe over the weekend, I wouldn't be surprised to see the euro move lower on Monday.  That would drive the dollar higher and be bad for stocks.

Transportation: Friday the $TRAN put in a small spinning top at the bottom of Thursday's big drop.  That's only a potential reversal indicator and requires confirmation on Monday.  But with the stochastic just finishing a bearish crossover, I'm expecting more downside here too.


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

Accuracy: 

Month right  wrong  no call

April   5      6      1

     And the winner is...

Once again, I think I was a day early on my bearish call, so I'll just say it again.  Given the mostly negative look on the charts I follow, I think we're going lower Monday.

ES Fantasy Trader

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