Friday higher

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

• Friday higher, low confidence.
• ES pivot 1329.50.  Holding below is bearish..
• Next week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going long at 1333.00.

Recap

Six straight losing days in a row now.  If there's any good signs here it's that the pace of the decline slowed a bit today with the Dow ending down just 31 points.  Is the turnaround at hand?  Let's check the charts.

The technicals

The Dow: The Dow gave us a second hammer today, and a more classic looking one at that.  Two hammers in a row are generally stronger than one.  The stochastic is also very close to making a bullish crossover now and we have now exited the descending RTC, also signaling that the downtrend may be over.

The VIX:  Meanwhile the VIX gained 2.12% today but did it on a small gap-up spinning top.  It is also very close to overbought now and may be signaling a decline on Friday.  And the futures are forming a symmetrical triangle.  Since this was entered from above, the expectation would be a  break under.  Lower futures -> lower VIX -> higher stocks.

Market index futures: Tonight all three futures are finally in the green by non-trivial amounts with ES up 0.21% at 2:17 AM EDT.  It was up higher, but took a dive right at 2 AM, I guess as all the Europeans woke up and started trading.  Today's candle was a fat hammer, RSI is very oversold at just 8.13 and the stochastic is now clearly about to make a bullish crossover.  I'd say that after a protracted decline, we're about due for a bounce here.

ES daily pivot: Tonight the pivot drops again from 1335.50 to 1329.50.  Combined with a rising ES, this finally puts us above the new number and that's a positive sign.

Dollar index: The dollar tacked on some more gains today as it continued to climb the upper BB.  But today it gave us a stubby spinning top and the first red candle in six sessions.  Its indicators remain quite oversold.  And the euro finally just traded outside its latest descending RTC suggesting it may be finding some footing here.

Transportation: Finally an encouraging sign here.  Today the trans gave us a decent hammer that just tested, but rejected the 200 day MA.  The stochastic is now in a good position from which to form a bullish crossover and the RSI is quite oversold.  This chart is now looking ready to move higher.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632 
June    8      6      6           1        .600     632   +$330
July    5      0      3           0       1.000     299
     And the winner is...

It's something of a risk and I may be a day early on this one, but I'm going to go out on a limb (which seems to be a common location for a Night Owl) and call Friday higher.  I'm just seeing too many reversal signs starting to pop up to ignore them.

ES Fantasy Trader

Portfolio stats: the account remains at $153,375 after 50 trades (39 wins, 11 losses) starting from $100,000 on 1/1/12. Tonight we go long at 1333.00.  This trade may be a bit early but I think it will be profitable in a day or two.  Follow these trades live on Twitter @nightowltrader.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

 

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1335.50.  Holding below is bearish..
• Friday bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Well it was more of a hammer than a doji as I was expecting, but it was still a fairly benign day with just a 49 point loss for the Dow following the big non-sequitur of the Fed minutes.  Still, this moved the market in some interesting ways, as the following charts show.

The technicals

The Dow: Today's close at 12,605 left us just on the right-hand edge of the descending RTC - good enough for a bullish setup in my book. It also drove the indicators to oversold levels, finally.  RSI in particular hit17.2 today.  The stochastic meanwhile began flattening out and is now in the position where I'd expect a bullish crossover in the next day or two.  In general this chart is looking like there may finally be a chance of an up day after five straight losing sessions.

The VIX:  Tellingly, while the Dow was down 0.38% today, the VIX  also fell, by 4.11%.  Yesterday's bullish engulfing pattern did not pan out and  the indicators rose almost to overbought, even with this loss.  The gravestone doji we got is not the mark of a chart that wants to move higher, and that would be good for stocks.  But it still requires confirmation on Thursday, so we don't want to read too much into this.

Market index futures: Tonight once again the futures have resumed their downward march, with ES losing another 0.3% at 1:43 AM EDT.    ES gave us a spindly spinning top today that traded outside the descending RTC for a bullish trigger.  However, the overnight action isn't exactly following through.  Nevertheless, ES is now at oversold levels and the stochastic is now positioned to start a bullish crossover as early as Thursday.  And yet, from the current candlestick pattern, this isn't a reversal.  Until I see some upward motion, I'm reluctant to call a bottom.

ES daily pivot: Tonight the pivots drops from 1340.83 to 1335.50.  Since ES has been falling since 8 PM, even with this fall we remain below the new pivot - a bearish sign.

Dollar index: Last night I wrote " there's still a bit more room to run higher" and that' just what the dollar did today, tacking on an additional 0.2%  However, the dollar has now been playing tag with the upper BB for three days now, the RSI is very overbought, and the stochastic is just a hair away from a bearish crossover.  I'd say this chart is now finally ready to roll over, if not tomorrow, then on Friday.

Transportation: The trans dropped another 0.22% today but that was enough to drive them to oversold levels on a spinning top.  With RSI at 22 now, we've got at least a glimmer of a bullish turn-around coming soon.  We'll now watch the stochastic for a bullish crossover, possibly by Friday.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632 
June    8      6      6           1        .600     632   +$330
July    5      0      1           0       1.000     299

     And the winner is...

Here we've got another tough night going on.  I believe we are now at least near the end of the current sell-off and starting to be due for a rally.  But it's hard to say if it will happen on Thursday.  I'm seeing some positive signs, like toppiness in the TLT, the euro seeming to find some stability after a long decline, and copper nearing a bullish crossover, but it hasn't happened yet.  If I had to guess, and this is only a guess, I'd say that tomorrow might be a turn-around day.  If we do close lower Thursday, then I'm more encouraged about Friday going higher.  So I'm going to look for something of a spinning top sort of day, and I can't really call that one way or the other in any meaningful way.  And that all simply makes Thursday uncertain.

ES Fantasy Trader

I think we were correct to stand aside last night as there was very little action ahead of the Fed minutes today and no way to predict the reaction once they came out.  Nothing ventured, nothing lost, as I say.

Portfolio stats: the account remains at $153,375 after 50 trades (39 wins, 11 losses) starting from $100,000 on 1/1/12. Tonight we stand aside once again in view of the possibility that we may be close to a short term bottom.  We don't want to risk getting on the bus just as it's changing direction.   Follow these trades live on Twitter @nightowltrader.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

 

Wednesday uncertain

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

• Wednesday uncertain.
• ES pivot 1340.83.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

That big pop right out the gate this morning kind of took me by surprise, party because it was the exact opposite of what we've been seeing lately, a big drop at the open.  But the gains were all over in 120 seconds (don't blink!) and it was all downhill from there to finish the day with an 83 point loss.

The technicals

The Dow:Tuesday's 0.65% loss kept the Dow squarely inside its descending RTC and left the indicators still falling but even now still just short of halfway from overbought to oversold.  With increased volume and a long red candle, there's sure no reversal signs on this chart.  The only positive sign, if you can call it that, is that the 12,650 support level I talked about last night was tested today and it held.

The VIX:  Last night I said "the VIX may go higher again on Tuesday" and it did, gaining another 4.12% on a tall green candle.  With a close at 18.72, the VIX has now retraced exactly 50% of the big gap down from June 29th.  We're now in a gradual rising trend and the indicators are just coming out of oversold territory.  With the futures still rising and still more oversold than the VIX, it's looking like we could be in for further upside here on Wednesday.

Market index futures: The only bright spot (if you can call it that) in the charts tonight is here, with all three futures running higher for a change in the overnight at 1:25 AM EDT with ES actually up an admittedly modest 0.07%.  Of interest here is that after four days of fairly substantial declines, we're now approaching oversold territory.  RSI, at 25.13 is already oversold.  We're now waiting for the stochastic to start flattening to form a bullish crossover.  My best guess is that we've got two more days to wait.  The next support for ES is at 1327, but the drift higher right now makes me a bit cautious about whether we're going to test that level on Wednesday.

ES daily pivot: Tonight the pivot takes a big drop from 1346.83 to 1340.83  After spending most of the morning above the pivot for the first time in a while, we dipped back below at 10:35 AM.  It was all downhill from there into the close, but then a gradual upward drift began.  This, combined with the drop in the pivot, puts it within striking distance.  We'll want to watch closely Wednesday morning to see if ES mounts an attack on this level.

Dollar index: After gapping up big time last Thursday, one would have imagined that the gap would be filled pretty soon.  But instead we just got up, up, and away.  After a small decline on Monday, the dollar today resumed its upward march playing tag with the upper BB to gain 0.25%.  And there's still a bit more room to run higher before the resistance set on June 1, the high of the year so far.  And the indicators are still not particularly overbought here.  I see no imminent turn-around on this chart.

Transportation: This , unfortunately, is perhaps the weakest of the charts tonight.   The trans accelerated their losses on Tuesday ending down 1.29%, double the loss of the Dow.  And also we dropped through first support at 5143.  Next support is at 5067.  And the indicators are all only now exiting overbought territory.  There's nothing on this chart to suggest a move higher on Wednesday.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632 
June    8      6      6           1        .600     632   +$330
July    5      0      1           0       1.000     299

     And the winner is...

Hmmm, this is actually a tough one.  Although the charts are generally still looking fairly negative, a lot of steam has already come out of the market the past few days.  While I don't think we're quite done with the current sell-off, I'm not sure we're going to see a lot more immediate downside on Wednesday.  My best guess is that we may see a doji day.  And given that I'm not expecting a big move, I can only call Wednesday uncertain.

ES Fantasy Trader

Last night's short worked out well with a 7.5 point gain that didn't leave too much on the table.

Portfolio stats: the account remains at $153,375 after 50 trades (39 wins, 11 losses) starting from $100,000 on 1/1/12. Tonight we stand aside given what I perceive to be a lack of an edge for Wednesday.  There's no real need to put on a trade every night anyway.  Follow these trades live on Twitter @nightowltrader.

BOT    10    ES    false    SEP12 Futures     1336.00    USD    GLOBEX    14:29:26   

SLD    10    ES    false    SEP12 Futures     1343.50    USD    GLOBEX    01:14:19   


CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

 

Tuesday lower

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

• Tuesday lower, low confidence.
• ES pivot 1346.83.  Holding below is bearish..
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going short at 1343.50.

Recap

Today gave us a pretty blah low-volume day in which the Dow followed its recent pattern of putting in U-shaped sessions.  After taking a dump out the gate, we proceeded to sawtooth our way back up to end with just a 36 point loss.

The technicals

The Dow: Monday's candle was a hammer, but it will definitely require confirmation given that the indicators are all less than halfway down from overbought, implying that we've still got a ways to go before a turn-around.  So there might still be more downside here.  Also note that the Dow didn't come close to testing its support at 12,650 today.

The VIX:  Ah, you can always count on the VIX to surprise you.  Last night I was figuring we'd see a gap-down open followed by retracement.  Instead the VIX gapped up on the open and then spent the rest of the day oscillating but never retracing the gap, to finish up by 5.15%.  This leaves us with a bearish looking red candle sitting at the top of Friday's tall red candle- most unusual.  And that's at odds with the indicators that are still oversold, though have now clearly bottomed.  I'm going to go with the indicators here and guess that the VIX may go higher again on Tuesday, and that's bad for stocks.  The oversold futures and star there too support this idea.

Market index futures: Tonight once again all three futures are lower with ES down a non-trivial 0.41%% at 1:18 AM EDT.  Today's decline gave us a dragonfly doji, but this is a reversal sign that requires confirmation and it looks like we're just not getting it in the overnight so far as ES just continues lower.  The indicators are all now firmly in declining mode and there's only a modicum of support at 1338.

ES daily pivot: And tonight the pivot falls again from 1352.67 to 1346.83.  And just like last night, ES has fallen away from the pivot so we remain under the new number, a bearish sign.

Dollar index: The dollar put in a small star today after Friday's huge run up that took us clear through the upper BB.  This is perhaps to be expected.  While the indicators are still not overbought, the star is at least a blinking yellow caution light.  This chart could go either way on Tuesday.  There's not much guidance from the euro, which is wandering aimlessly in the overnight after rising much of Monday afternoon.  It does appear to have a bias lower though.

Transportation: Last night I said of this chart "more downside to come."  And that's what happened today with a 0.31% loss.  The important thing here is that this small red candle provided a bearish trigger after trading entirely outside the last rising RTC.  And the indicators support this, remaining overbought despite having peaked two days ago.  So look for more downside again here on Tuesday.

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  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  

 26  6/25       38         46        -     1335

 27  7/2        41         40        -     1362

 28  7/9        42         38        -     1355

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 6/11 was wrong (again), the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 24 .  And of course that means that since I voted with the majority back then, the poll as a whole was also wrong that week.  So going into the second half of the year the poll's accuracy drops to 67% YTD.

This week we see very little change from last week.  The bull-bear spread widened from one point to four points and the poll is now just slightly bullish, though for the record I voted bearish once again.  The SPX had a pretty impressive run in June, but I'm afraid right now it's looking like it's over.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632 
June    8      6      6           1        .600     632   +$330
July    4      0      1           0       1.000     216
     And the winner is...

With more disappointing news from China tonight, this time on imports, and charts that now seem to be established in a downtrend with no reversal signs in sight, a rising TLT and Dr. Copper just completing a bearish crossover, I'm going to have to hand it to the bears again and call for a lower close Tuesday.

ES Fantasy Trader

Portfolio stats: the account remains at $149,625 after 49 trades (38 wins, 11 losses) starting from $100,000 on 1/1/12. Tonight we go short at 1343.50.  Follow these trades live on Twitter @nightowltrader.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

 

Monday lower

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

• Monday lower, low confidence.
• ES pivot 1352.67.  Holding below is bearish..
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

The only surprise on Friday was the extent of the decline with the Dow dropping 124 points to finish at 12772.  Although we put in a higher high last week, can the rally that began in early June be saved?  Silence!  The charts will now speak...

The technicals

The Dow: And what the Dow chart has to say isn't pretty.  Friday's loss gave us a bearish trigger after Thursday fell out of the rising RTC.  In addition, the stochastic bearish crossover is nowe complete.  And to top it all off, both RSI and money flow have peaked at overbought and are now headed back down - all bearish signs.  And the Dow has no technical support until 12,650.

The VIX:  Thursday's breaish warning gap up star in the VIX was confirmed on Friday with a big bearish engulfing pattern that resulted in a 2.29% drop.  In addition, we got a dark cloud cover in the futures.  This all points to a lower VIX on Monday which would be good for stocks.  This is somewhat at odds to the picture being painted on the other charts and makes me think of the cases where the VIX has a gap down open but then spends the rest of the day rising to end up on the day.  I guess we'll see.

Market index futures: The wishy-washy moves of last week seem to be gone with all three futures in the red tonight and ES down by % at 1:  AM EDT.

ES daily pivot: Tonight the pivot drops from 1364.50 to 1352.67.  Holding under is bearish.

Dollar index: The dollar strengthening considerably on Friday, moving up 0.75% in the $USDUPX and just passing its upper BB at 57.61.    However, the indicators are still not yet overbought.  All that can stop this chart now is resistance at 57.78 and we are nowhere nearly as overbought now as the last time we approached that level back in May.  WIth no indication of a reversal in Friday's solid green candle, there's no reason to believe the dollar's coming down on Monday, ergo bad for stocks.

Transportation: The trans chart looks a lot like the Dow: RTC exit (though only a bearish setup, not the trigger yet), stochastic bearish crossover, and an RSI that peaked at highly overbought levels and is now descending.  All in all, this one looks like more downside to come.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632 
June    8      6      6           1        .600     632   +$330
July    3      0      1           0       1.000     180
 
     And the winner is...

xxx

ES Fantasy Trader

Last Wednesday night's short turned out quite nicely, as I resisted the temptation to take a small profit or loss on Thursday, betting instead on more downside on Friday.  And ka-ching, ES paid off nicely for a handy 18.5 point profit that didn't even leave much on the table  Follow me on Twitter @nightowltrader for my next live ES trade (but be prepared to stay up really really late :-)

Portfolio stats: the account now rises to $149.625 after 49 trades (38 wins, 11 losses) starting from $100,000 on 1/1/12. 

BOT    10    ES    false    SEP12 Futures     1345.00    USD    GLOBEX    JUL 6 11:35:32   

SLD    10    ES    false    SEP12 Futures     1363.50    USD    GLOBEX    JUL 5 01:06:09   

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.