Friday lower

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

• Friday lower, low confidence..
• ES pivot 1399.33.  Holding below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader going short at 1395.00..

Recap

The Dog Days of Summer

I wasn't real confident about it, but I did think the Dow would close higher today.  It turned out to be just another sleepy low-volume nothing mid-summer day with the Dow losing 10 points and the SPX up by just over half of one point.  Clearly, this market is stuck in the doldrums.  We now scan the horizon for any signs of wind, whether from the north or the south.

The technicals (daily)

The Dow: Another day, another doji.  This one though nudged the indicators back up almost to overbought again.  And it also gave us one more failure to cross resistance at 13,175.  It's frustrating, but we know this kind of drifting (I hesitate to even call it consolidation) can go on for days, like back in February when we got 10 sideways days in a row before a big break.  Doing some curve-fitting to the daily chart, it does appear that we may be getting ready for a move soon, and it may be to the downside.

The VIX:  Today the VIX moved lower again, but this time only by 0.26% on an inverted hammer.  That's a reversal warning, but one that requires confirmation.  I continue to think we're due for a higher VIX soon but this isn't really quite the setup yet.

Market index futures: Tonight all three futures are lower with ES down 0.37% at 1:22 AM EDT.  After two days of kitty corner dojis we may be about to see a break.  ES at 1395 is sitting right on the edge of the rising RTC for the first time in five days.  Also, the indicators have now turned downward off overbought levels, though the stochastic remains threaded.  But this chart now seems to have a different flavor than the last few days and to me it tastes a lot like ... bear.  Yum!

ES daily pivot: Tonight the pivot rises from 1396.33 to 1399.33.  But with ES trending lower since 7 PM, we broke decisively under the old number at 11 PM and are now even further under - a bearish sign.

Dollar index: Here we got a second gap up spinning top in a row, this one green as the dollar gained 0.33% on the $USDUPX.  This also served as the bullish RTC trigger.  And the stochastic bullish crossover is now complete, so everything seems to be lining up for continued higher on Friday, which would be bad for stocks.

Euro: Meanwhile in euro-land, the currency continues a two day slide and confirms yesterday's bearish stochastic crossover.  We also now have a bearish RTC trigger here too.  This meshes nicely with the rising dollar and is also bad news for stocks.

Transportation: Perhaps the most telling chart tonight is the trans.  After attacking the 200 day MA for three straight days, the trans appear to have simply given up, putting in what is now two straight red candles in a row, with today's down 0.54%.  Today's also completed the bearish stochastic crossover.  With these sorts of declines, I'd expect the Dow to take notice and start following suit any day now.


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  3      2      1           1        .667      64
     And the winner is...

Zzzz... zzz...zzzzz...huh?  Oh 'scuse me, I must have dozed off there.  This less-than-thrilling action of the past few days is just putting me to sleep.  But help may be on the way!  It sure looks like my bearometer is starting to indicate some gathering storm clouds on the horizon, particularly in the futures and the $TRAN.  And also Dr. Copper has been making smaller and smaller gains for three days now and finally hit a resistance line today.  And I note that the SPX hi-low index ratio hit 100 today, a level that usually precedes a fall.  Finally I'll add that the TLT put in a big hammer today after five days of losses and is also just about to make a bullish stochastic crossover.  To me that spells money about to head for bonds and away from stocks.  Therefore all things considered (and I always do), I am calling Friday lower.

ES Fantasy Trader

Portfolio stats: the account still remains at $174,875 after 56 trades (43 wins, 13 losses) starting from $100,000 on 1/1/12. Tonight we're going short at 1395.00.  I missed the ideal entry point earlier this evening first due to dinner and then the Olympics, but I think there's still more money to be made on this trade on Friday.  I believe the risk/reward profile now favors the downside.

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.  Act accordingly.
 

Thursday maybe higher

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

• Thursday higher, low confidence..
• ES pivot 1396.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader stranding aside.

Recap

Last night I was figuring that we'd go higher if ES could break above its pivot in the morning.  It took a bit longer than I expected but after several failed attempts, it did break through at 11:10 AM and the Dow closed higher - by a whopping 7 points in a snoozer of a session.  Today's Olympic volleyball games were much more exciting than the market.  Heck, the Olympic thumb-wrestling loser's match was more exciting than this action was.  But it may just be setting us up for some interesting times.  Let's see if the charts agree..

The technicals (daily)

The Dow: OK, the Dow, somewhat surprisingly, continued grinding slowly higher today to gain 0.05% on a small spinning top.  That's the third bearish daily reversal candle in a row.  And the past two were rejected like a bad volleyball hit.  Not only that, but the indicators have now all come down off overbought even as we continue to move higher.  The Dow has now broken past resistance at 12,500, 13K, and 13,150.  There is now no more resistance until 13,260 which is coincidentally also the upper BB.  With the Dow drifting higher like a knuckleball float serve (OK, I've been watching too much volleyball), I am hesitant to call a top until I see the market actually go lower.  And right now I'm not seeing any evidence of that on this chart.

The VIX:  While the Dow and SPX barely budged today, the VIX dropped 4.19% on a tall red candle that's forming a bullish megaphone pattern.  With its indicators now quite oversold, I'd be inclined to expect this pattern to break out to the upside in a day or two.  I note too that the VIX at 15.32 is now getting close to a multi-year support line at 14.50.

Market index futures: While the other charts are looking fairly gloomy, all three futures are in the green at 1:20 AM EDT with ES up a respectable 0.36%.  Like the Dow, ES has been giving off hints of going lower for days now, but then it just goes higher.  And ES just broke through some resistance at 1394 yesterday too.  I'm not playing this game anymore.  I'm afraid I now need to see ES actually go lower before calling an end to this uptrend.

ES daily pivot: Tonight the pivot ticks up from 1395.92 to 1396.33.  With ES taking off earlier this evening, we're now much further above the pivot than before, a positive sign.

Dollar index: Today the dollar gained 0.23% on a small red gap-up spinning top.  But more importantly, it broke out of its descending RTC for a bullish setup and its stochastic is about to form a bullish crossover.  I'd not be surprised to see the dollar move higher Thursday, implying stocks lower.

Euro: Meanwhile the euro lost ground today on a red candle that confirmed Tuesday's bearish spinning top.  However, it's getting a boost in the overnight continuing a rally that began at 2 PM Wednesday.  This is making it difficult to say anything meaningful about where the euro might go Thursday.

Transportation: Today, the trans failed on the 200 day MA for the fourth straight session and in fact moved lower by 0.33%.  This is about the most bearish indicator we've got going at the moment.


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  3      1      1           1        .800      74

     And the winner is...

I'm not sure why the market continues to insist on going up lately, but like the Fed, the tape is another one of many things you should not fight in this arena.  So as long as we remain inside the rising RTC and continue to put in higher highs and lower lows, I really have no choice but to call Thursday higher.  And I say this not so much because the market has a lot of reasons to go higher, but more because I don't yet see many reasons to go lower (the trans being the one exception right now).  This is the kind of call that will be wrong eventually, but for the time being, I guess you just have to go with the flow.  That's all she wrote.

ES Fantasy Trader

Portfolio stats: the account remains at $174,875 after 56 trades (43 wins, 13 losses) starting from $100,000 on 1/1/12. Tonight I'm going to stand aside once again because although the market continues to grind higher, I think the risk/reward point has now moved against us.  Anyway, there's not much money to be made on these small range days.  The Night Owl does not play penny ante.

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.  Act accordingly.
 

Wednesday lower unless pivot crossed

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

• Wednesday lower unless ES breaks above pivot, low confidence..
• ES pivot 1395.92.  Holding under is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader stranding aside.

Recap

Wow - the Night Owl went for the gold last night but came away with the lead medal instead.  Virtually every technical idea I had about the market today was wrong.  We did not go down today, instead the Dow gained 51 points in another funny low-volume dome shaped session influenced by - who knows, Angela Merkel, some Fed member, whatever.  Clearly, something has changed over the last two days and I'm going to try and get to the bottom of it.

The technicals (daily)

The Dow: Yesterday's bearish shooting star was not confirmed today.  Oddly, we got something of an echo of that in a similar looking candle with an upper wick just touching the upper BB but a longer real body.  The indicators remain confused and with the rejection of yesterday's star, I'm not seeing the bearish case here anymore.

The VIX:  Support at 15.50 held today and the VIX gained 0.25%.  The stochastic is now quite oversold and looking ready to form a bullish crossover in the next few days.  So this is one point I did get right today and I'm expecting the VIX to move higher again on Wednesday.

Market index futures:Like everything else tonight, the futures are giving mixed messages.  NQ is up but ES and YM are down, with ES lower by 0.14% at 1:33 AM EDT.  I do see a developing pattern here though.  It's starting to resemble 6/29-7/5 where a big gain was not immediately followed by a leg down but rather a few more days of small momentum induced gains before falling.

ES daily pivot: Tonight the pivot rises again from 1391.00  to 1395.92.  The pivot action is really similar to last night, with the pivot rising just up over the current ES level for a bearish indication.  But that didn't work out too well today.

Dollar index: The dollar fell today by 0.07% but did it on a green candle.  Nevertheless, the current downtrend remains intact.  The indicators are confused on this chart and frankly, so am I.

Euro: After two days of doji's the euro in the overnight is forming, yes, yet another doji.  It just seems to be hanging on top of last Friday's big gain.  Just looking at this I want to say what goes up must come down.  Whether that will be on Wednesday isn't clear.

Transportation: The trans gained 0.20% today on a second shooting star on increased volume that once again failed to break above the 200 day MA.  This is still looking bearish to me.

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  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

 30  7/23       33         42        -     1363

 31  7/30       43         22        +     1386 

 32  8/6        52         28        +     1391 

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 7/9 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 27 .  After an impressive start this year, my monthly calls have now been wrong for 9 weeks running.   For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.


Interestingly, bullish sentiment has now risen to the second highest level of the year.  Only the week of February 6 was greater.  Contrarian bearish?  After February 6th, the SPX went on to rise for six more weeks.



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  3      1      1           0        .750      74
     And the winner is...

Well you know, the charts tonight are looking an awful lot like last night.  My call then was for lower and I got fooled badly.  But now I'm thinking I might have been really more just a day early than flat-out wrong.  Still, this market doesn't seem to be committed to turning over just yet.  So what I'm going to do is make a conditional call.

If ES stays below its pivot by the open Wednesday morning, then we're closing lower.  But if ES breaks above the pivot and holds there, we'll close higher.  This tactic would have worked nicely today and I think it's safer than just calling Wednesday lower, given the fact that with similar charts, that did not work today.

And do note that the recent pattern of cycles of five or six days up followed by five or six days down going back to June 13th now seems to be breaking down.  All the more reason to be cautious right now.

ES Fantasy Trader

Well they can't all be winners.  I bailed on this trade for an 11 point loss.  In retrospect, I exited too early rather than exercising the patience that generally serves me well.

Portfolio stats: the account falls to $174,875 after 56 trades (43 wins, 13 losses) starting from $100,000 on 1/1/12. Tonight, with the market looking just like it did last night and still smarting from today's loss, we're going to stand aside.  Fool me once, etc.

BOT    10    ES    false    SEP12 Futures     1401.50    USD    GLOBEX    11:44:41    

SLD    10    ES    false    SEP12 Futures     1390.50    USD    GLOBEX    00:51:32    

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.  Act accordingly.
 

Tuesday lower

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

• Tuesday lower, low confidence..
• ES pivot 1391.00.  Holding under is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader going short at 1390.50.

Recap

Last night I called Monday's close as "uncertain".  But there are two different types of uncertainty - one in which you expect the market to move but are not sure which way, and the other, where I wrote "I expect little change [on Monday]".  In the latter case, there's not really much point in calling a close "higher" or "lower" when there isn't going to be much price movement.  And I think today fit the bill, with the Dow finishing up just 21 points (and my calls are always for the Dow).  Accordingly, I think I'm going to add this one to the "right" column in my daily accuracy section but I won't accumulate the Dow points since I didn't call a direction.  Anyway, let's see now where Tuesday may go.

The technicals (daily)

The Dow: Today's small gain was in the form of a long shooting star - a bearish reversal pattern, coming as it did at the top of a big up-day and just touching the upper BB.  And RSI actually peaked on Friday and has begun moving lower, still overbought.  Plus the stochastic's attempted bullish crossover was canceled and the stochastic is now all threaded out.  So overall, this chart looks ready to roll over.

The VIX:  Of the VIX, last night I wrote "I'm not seeing much more downside left".  Turns out there wasn't any downside left and the VIX gained 1.98% on a little inverted hammer.  But that was enough to hook RSI upward from oversold and drive the stochastic into a position from which to form a bullish crossover Real Soon Now.  And the futures's stochastic did just form a bullish stochastic crossover on a double hammer pattern today.  Verdict: more upside to follow.

Market index futures: Tonight all three futures are actually up, but by the slimmest of margins, with ES up just a single tick at 1:33 AM EDT.  Today's candle was a classic doji with ES closing just one tick below where it opened.  Coming as it did at the top of Friday's tall green candle, there is, like the Dow chart, the suggestion of lower to come.  RSI and OBV have both already started down from overbought levels.

ES daily pivot: Tonight the pivot jumps from 1379.83 to 1391.00 even.  Because of this we just broke below the new number.  Unless ES can break back above by morning, this is a negative sign for the market.

Dollar index: The dollar put in a small hammer on Monday entirely below Friday's big drop, at least suggesting the possibility of a reversal on Tuesday.

Euro: Meanwhile the euro put in a totally classic bearish long-legged starthat closed right on the upper BB.  The follow-through in the overnight so far seems to be guiding lower and the euro just broke under its own pivot.  This chart suggests lower to come.

Transportation: Always worth watching, the trans today dropped 0.08%, seemingly stymied in their attempt to cross the 200 day MA on a long shooting star, just like the Dow's.  The indicators are kind of in disagreement, no doubt as aftermath to Friday's big run-up, but I'm not liking the combination of 200 MA failure and the shooting star.

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  3      0      1           0       1.000     125


     And the winner is...

I dunno - tonight I'm just not feeling the love, baby.  I'm seeing a bunch of doji's out there and indicators at extremes that suggest to me that the market's going to be wanting to retrace some of last Friday's big gains.  Accordingly, I'm calling Tuesday lower.  I also took out some SDS again today at 14.76 to hedge my longs.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $180,375 after 55 trades (43 wins, 12 losses) starting from $100,000 on 1/1/12. Tonight, with the market looking tired, we go short at 1390.50.

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.  Act accordingly.
 

Monday uncertain

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

• Monday uncertain.
• ES pivot 1379.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

It really wasn't very clear to me last Thursday night which way the market might go Friday as there were signs pointing both up and down.  Turns out Mr. Market chose to go up - big time with a 217 point pop in the Dow that completely canceled all the negative indications we were seeing.  So just like the last time we had a big up day like this the question is, was this a one-off or is there more in store?  Read on...

The technicals (daily)

The Dow: Friday's jolly green candle simply smashed through the descending RTC for a bullish setup and as a bonus, reclaimed the 13K level.  It also left us about to form a bullish stochastic crossover from a high level.  I've mentioned that this unusual pattern can be a good trend change indicator.  There is now resistance at 13,100 and the upper BB at 13,151.

The VIX:  Corresponding to the market's gains, the VIX on Friday took a big gap down with a small red candle that left it just above support at 15.5.  This move just brought the indicators to oversold, though there's surely some distortion here.  In short, I'm not seeing much more downside left after Friday's big move.

Market index futures: All three futures are running higher at 1:37 AM EDT with ES up just a bit at +0.04%.  However, after Friday's big move, there's no real follow-through forming and ES is just meandering right now.  We're also now back to the upper BB, which has been well-respected all year so far.  Further upside would seem to be limited here.

ES daily pivot: Tonight the pivot rises from 1364.75 to 1379.83.  With ES little changed in the overnight, we're still comfortably above the new number, so that's bullish.

Dollar index: The dollar's megaphone pattern broke to the downside on a long red candle, contrary to what I was expecting.  This move was enough to bring us to the lower BB.  While the stochastic looks to be forming a bearish crossover, this may be an artifact and I would not be surprised to see the dollar retrace some of Friday's loss in the next few days.

Euro: Like the Dow, the euro had a big day on Friday and closed outside its descending RTC on high volume for a bullish setup.And it is indeed drifting slowly higher in the overnight.  My only concern here is that the euro has moved all the way up to its upper BB now and if you look at the chart, it has really respected this line all year long so far.  I'd say a lower euro is in the works, maybe not Monday, but at some point this coming week.

Transportation: Last week I mentioned how the trans didn't spend more than two days below the 200 day MA lately and that's just what happened again.  Big down day Wednesday, doji Thursday, and then boom, Friday popped right back through the 200 MA before closing just a hair below it.  Stochastic is setting up for a bullish crossover - nothing really negative here.


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  2      0      1           0       1.000     125


     And the winner is...

The pattern all year so far has been for big up moves to be followed by small doji days and that's what I'm expecting for Monday.  With no economic news on the table, it's hard to see where the short-term push for higher prices will come from.  We're also now technically right up against a number of BB's from which reversals usually come.  So I'm going to call Monday uncertain, not because I have no idea where we're going, but because I expect little change.  It would really be splitting hairs to try to call this one higher or lower.  I don't really like doing this two days in a row, but I have to call 'em like I sees 'em.  If I really had to guess, I'd say we might close a bit lower, but that's just a guess.

ES Fantasy Trader

Portfolio stats: the account the account now rises to $180,375 after 55 trades (43 wins, 12 losses) starting from $100,000 on 1/1/12. With no real evidence for a tradeable move on Monday, I'm just going to stand aside again tonight.

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.  Act accordingly.