Friday higher

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

• Friday higher, low confidence.
• ES pivot 1410.08.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside..

Recap

Finally today we got the breakout everyone's been waiting for for over a week now.  To my considerable surprise though, it was not to the downside, as the Dow gained a solid 85 points that finally took us out of five days of sideways action.I'm going to have to study this one more closely to see if there were any clues I missed.  In the meantime, at last we now have something to work with, as we see what Friday may have in store.

The technicals (daily)

The Dow: After a seemingly endless string of dojis, the Dow finally broke out to the upside today.  I'm not really sure what's with the overbought  indicators but you can't argue with a big green candle that effectively cleared our resistance at 13,200.  We are now very close to the 2012 highs from back in March and April.  The big difference here is in OBV.  It was running close to 3.8B back then but has come all the way down to 2.1B now.  Now that the Dow has decided to move higher, this should provide some gas for the tank.

The VIX:  This one caught me by surprise too.  After expecting the VIX to move higher, it went lower, dropping 2.32% today on a bearish engulfing pattern.  While the indicators are still oversold, they haven't been too reliably lately so I'm more inclined to go with the candlesticks and guess that the VIX might go lower Friday.  Today's drop in the futures after yesterday's doji supports this idea.

Market index futures: After today's breakout, tonight the futures are mixed at 1:44 AM EDT with ES lower by 0.05%, YM down just two ticks, but NQ up 0.05%.  Last night I wrote that the new daily candle "will become a bearish setup unless ES can hang onto the1406.25 level on Thursday.".  Well ES clearly not only hung on but blasted up to 1413, keeping us inside the rising RTC and canceling the bearish setup.  We're also getting one of these odd bullish stochastic crossovers from a high level.  Usually this sort of action happens at deeply oversold levels.  It's unusual to see this crossover with the %K and %D lines above 75.  So although ES isn't adding anything on in the overnight, there isn't really a reversal warning here anymore.

ES daily pivot: Tonight the pivot jumps from 1402.08 to 1410.08.  We were comfortably above the old number but with ES essentially flat in the overnight so far, we're now a lot closer.  It's still bullish but bears watching.

Dollar index: After an indeterminate chart last night, today the dollar dropped 0.36% and made a bearish stochastic crossover.  I'm thinking we have more downside left here on Friday.

Euro: Meanwhile, the euro moved pretty much in mirror image to the dollar, with a bullish engulfing green candle and a bullish stochastic crossover  However, we're not seeing any follow-through in the overnight and we're now at the top of a six day consolidation range that makes me cautious about the euro's ability to rise further on Friday.  I need confirmation on this one.

Transportation: At  least I was right about this one when I wrote "we could still get some more upside here on Thursday." as the trans gained  half a percent today.  The bullish stochastic crossover from a high level is complete and we're now in a new rising RTC.  We're also close to the upper BB but there's nothing on this chart suggesting lower on Friday.


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  4      3      4           1        .625      60
     And the winner is...

Tomorrow is options expiration which is always tricky, but of note is that this particular one is historically quite bullish.  I'll note too that copper turned up today, the trans turned up, and the TLT dropped for the fifth day in a row following a fake out breakout on August 9th.  We're even now getting a bullish crossover on the monthly SPX stochastic.  Although I'd prefer to see the futures moving higher at this point in the night, I'm also no longer seeing any downward warnings so I'm going to go out on a limb and call Friday higher.

ES Fantasy Trader

Today I saw the handwriting on the wall and gave up on last week's short, taking a  16.5 point loss in the process.  I guessed we'd see the recent stalemate resolve lower and I guessed wrong.

Portfolio stats: the account now falls to $166,625 after 57 trades (43 wins, 14 losses) starting from $100,000 on 1/1/12.   Tonight I'm standing aside, mostly while I regroup and re-evaluate.

BOT    10    ES    false    SEP12 Futures     1411.50    USD    GLOBEX    AUG 16 12:24:22   


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 uncertain

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

• Thursday uncertain..
• ES pivot 1402.08.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00.

Recap

Last night's headline was "Wednesday uncertain but bias lower".  That pretty much summed it up as the Dow lost all of seven points today.  With the SPX higher just a bit, it was another mixed day and we remain mired in Nowheresville.  You can get an idea of how slow things are in the Accuracy section below.  August is half over now and I've only collected 60 Dow points.  It's too bad the Olympics wasn't this week instead of the last two.  It's looking like a great time to go on vacation.  Shoot - I could pretty much just copy last night's post here and hit Publish for all the change we saw today but we'll run down the charts anyway to see when and if we might finally see some action. 

The technicals (daily)

The Dow: Absolutely nothing new here.  Another day, and one more doji, making eight reversal candles in a row now.  Aside from the indicators ticking down just a bit, tonight's chart looks just like last night's and the night before, etc.  Still no indication of when this will end.

The VIX:  On the other hand, the VIX traded entirely outside its descending RTC today and even though it lost 1.48%, this was a bullish trigger.  The futures put in a doji but that does not negate the idea that the VIX still has higher to go on Thursday.

Market index futures: Tonight all three futures are up at 1:04 AM EDT with ES higher by 0.16%.  Not much has changed on this chart from last night.  We're now at the top of the recent range but that's still not a breakout.  And four days of sideways action have finally brought us outside the rising RTC.  This will become a bearish setup unless ES can hang onto the1406.25 level on Thursday.

ES daily pivot: Tonight the pivot ticks down from 1402.75 to 1402.08.  With ES gradually drifting higher in the overnight we're now back above the pivot, a bullish sign.

Dollar index: The dollar gapped up 0.22% but did it on a red candle today and that drove it to overbought levels.  Hanging in space as it is now, I have to wonder if it's going to be able to continue higher tomorrow but overall, this chart is too vague to draw any firm conclusions from.

Euro: The euro moved lower Wednesday and seems to be continuing downward in the overnight after a short blip upward t 8 PM.  It is now nearing its recent support at 1.2265 but I don't see anything on this chart suggesting a move higher on Thursday.

Transportation: While there's a lot of waffling going on elsewhere, there's nothing of the kind here.  The trans today gained  a solid 1.19% on a move that finally punched convincingly through the 200 day MA and established a new rising RTC.  With the upper BB still at 5184, I'd say we could still get some more upside here on Thursday.

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  16/29

 30  7/23       33         42        -     1363

 31  7/30       43         22        +     1386 

 32  8/6        52         28        +     1391  

 33  8/13       43         21        +     1406

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 7/23 was wrong, the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 29 .  After an impressive start this year, my monthly calls have now been wrong for 10 weeks running.   For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.


This week both bullish and bearish sentiment declined, indicating more poll participants heading for the sidelines, not quite sure what to make of this confusing market.  The bias remains net long though.


 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  4      3      3           1        .625      60
     And the winner is...

So the sideways action rolls on with still no resolution in sight.  The charts if anything are more mixed tonight than last night.  The trans, the TLT, the futures and the euro are suggesting more upside, the VIX, copper, and the NH/NL index are looking bearish for stocks while the Dow and SPX charts are simply moving sideways.  SPX is having trouble with resistance from the April highs while the Dow is stalled out even lower.  So once again, I'm afraid I have no alternative but to call Thursday uncertain with yet another doji day possible.

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 remain short at 1395.00.  One might be tempted to bail at this point, but with the momentum completely sideways right now, there's no compelling reason to give up just yet.  Patience may prevail in the end.  However, if we get a definitive move to the upside, I will have to consider taking the loss.

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 uncertain but bias lower

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

• Wednesday uncertain..
• ES pivot 1402.75.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00.

Recap

How about that?  Last night I wrote " it's not out of the question that we get yet another small-range doji day of indecision" and that's exactly what we got, with the Dow finishing up just over 2 and a half points and the SPX down just 0.18.  So we remain in the dog days, waiting in Casablanca, or for Godot - heck, I'm running out of metaphors here.  This is getting monotonous.  Let's scan the charts for any sign of a shake-up on the way.

The technicals (daily)

Dow daily

The Dow: Lately, the Dow has been giving a clinic on reversal candlesticks.  Just look at the last seven candles here: shooting star, inverted hammer, green spinning top, red spinning top, green hanging man, red hanging man, and today a perfect doji.  Every one a bearish warning, every one rejected.  And so we remain stuck in a narrow range.  The only difference today is that RSI has now finally started to come down from overbought and the stochastic looks like it may be unthreading itself as a bearish crossover.  But once again, we're going to need confirmation before calling an end to the congestion.

The VIX:  After hitting a five year low yesterday as I noted, the VIX today staged a big comeback with an 8.39% bounce that took it right out of its descending RTC for a bullish setup.  It also sent the RSI and stochastic turning back up from oversold.  This all seems to suggest more upside to follow which would be bad for stocks.

Market index futures: Tonight all three futures are down at 1:12 AM EDT with ES lower by 0.27%.  Today gave us a classic doji, making five straight reversal candles here too.  So far, the new candle developing seems to suggest a move lower, but we've seen this movie before.  At 1398 right now, we're still inside the recent congestion range.  I do note though that RSI has come off its recent 100 readings.  And perhaps of greater importance, we are now trading entirely outside the latest rising RTC and that's a bearish setup.  This is the best case I can make for lower prices Wednesday.  Unless ES can trade back up over 1403 on Wednesday, the bear case will become much stronger.

ES daily pivot: Tonight the pivot bumps up from 1400.25 to 1402.75.  We moved back under the old level after today's close and are now even more below the new number, a bearish sign.  Note also how the pivot is now the same value is the right edge of the RTC.  It's mostly coincidence, but it reinforces the importance of that level.

Dollar index: Today the dollar gained 0.05% but that was enough to create a classic morning star pattern, which is a pretty good bullish reversal sign.  The indicators are also now rising off oversold.  I'd say further gains for the dollar are possible on Wednesday.

Euro: While the dollar gained a bit today, the euro gave us a perfect doji warning that yesterday's bullish RTC setup might not carry through.  And in the evening session so far, it is trading lower which, along with declining indicators suggest that there may be more downside on Wednesday.

Transportation: Last night I mentioned the possibility of a bullish RTC setup here and today the trans obliged with just that, gaining 0.39%.  If we go higher on Wednesday, that would be a bullish trigger, but the indicators seem to suggest downward pressure.  Note too that they tried, but failed to break over the 200 day MA at 5102 today.  I'm not convinced they're going to be able to move higher again on Wednesday.


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  4      3      2           1        .625      60
     And the winner is...

Looking over the charts, three things stand out: the big move up in the VIX, indicators starting to come off extreme overbought levels in the Dow and ES, and candles riding the edge of RTC's suggesting the rising trend may be over.  I've been saying for days now that I think the next move (when the market finally does decide to move) will be lower.  However, the hourly ES chart is still not showing the break, so given the current environment, I'm just going to have to call Wednesday uncertain.

If I absolutely had to guess, I'd say we're going lower, but in this environment confirmation is required.  In the meantime, I continue to hold my position in SDS, which amazingly enough closed today at the exact same level where I bought it last week.

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 remain short at 1395.00.  I'm still expecting a move lower before we go higher.

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 uncertain

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

• Tuesday uncertain..
• ES pivot 1400.25.  Holding above is bullish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00.

Recap

Waiting for an exit visa....

Well, it looks like not much has changed since last week.  I'm starting to feel like the opening scene in Casablanca where the narrator talks about the refugees who come to Casablanca where they wait... and wait... and wait.  Although my call for Monday was correct as the Dow did in fact finish lower, it has more the feel of flipping coins than anything else.  Obviously this can't go on forever, but is tomorrow the day?  Read on...

The technicals (daily)

The Dow: Make it six straight reversal candle sin a row now for the Dow with another hanging man.  Nothing has changed here, except that RSI got even more overbought today.  The analysis remains the same: looking toppy but requiring confirmation.

The VIX:  Well there was one development today - the VIX blew right through its support at 14.5 to close at 13.70, a level we have not seen since - get ready for it - June of 2007.  I had to back out to the monthly chart to find that one.  And while we're there, I note that the monthly stochastic has just executed a bearish crossover from a low level.  Short term though, we have a gap-down inverted hammer that could signal a reversal with highly oversold indicators.  But - (insert broken record here) after being fooled so many times already, we require confirmation.

Market index futures: Tonight all three futures are up at 1:23 AM EDT with ES higher by 0.11%, most of that coming on a pop at 9 PM on (I think) a news item about increased electricity demand in China.  Meanwhile we now have four straight hanging men in a row here and tonight's candle is developing as a doji too.  The only difference is that RSI has now hit 100 for the first time since February 9th.  While it's tempting to start ignoring this parade of reversal candles that don't, I'll note that an RSI at 100 is generally a pretty good indication that the top is coming.  Also, this parade of dojis are moving us closer to the right hand edge of the rising RTC.  When we get there, that will be a bearish setup.  The RTC is one of the best indications of trend changes there is.

ES daily pivot: Tonight the pivot notches up again from 1399.08 to 1400.25.  We broke above the old level this afternoon and remain just a few points above the new line.  That's bullish on the face of it but bears close watching.

Dollar index: As expected, the dollar moved lower on Monday, dropping 0.18% on a gap-down spinning top.  More indecision!

Euro: The euro gained ground for the second day in a row and in so doing traded entirely outside its descending RTC for a bullish trigger.  With confirmation from a stochastic just executing a bullish crossover, I'd say look for a higher euro on Tuesday.

Transportation: And finally, more indecision from the trans with a dragonfly doji today.    The most telling feature here is that this was good enough to move us right to the edge of the descending RTC which could give us a bullish setup on Tuesday if we get any advance at all.


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  4      3      1           1        .625      60
     And the winner is...

With such a gaggle of dojis on the charts tonight, it's difficult to make a reasoned call in either direction.  The Dow and ES are both giving warnings of a decline but the euro and the trans suggest a move higher.  The VIX and the dollar are simply unclear.  And TLT, after looking like it would go higher today, did not.  But Dr. Copper does look to have peaked and is moving lower.  What to make of all this?  Darned if I know.  If I had to make a wild guess, I'd say it's not out of the question that we get yet another small-range doji day of indecision.  I already got fooled once into expecting a decline that didn't happen.  Now I'm just going to wait until I see it.  Therefore I am simply calling Tuesday uncertain.  I always hate to punt, but that's really all I'm seeing tonight.

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 remain short at 1395.00.Although this trade is moving against us, I believe that when the break comes (and it will come eventually) it will be to the downside.  I realize this puts me in a minority opinion since I'm reading a lot of chatter that the break will be higher, but sometimes that's not a bad place to be.  In the meantime, we continue to take some heat.

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 lower

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

• Monday lower, low confidence.
• ES pivot 1399.08.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00..

Recap

Tonight, the Night Owl is bumming, because the Olympics just ended.  For the past two weeks I have been gorging on the spectacle day and night.  And now, suddenly, it's all over.  I'm going into withdrawal.  It's all so sad.  Thankfully, the stock market is the show that never ends.  That's one of the reasons I like it.  Whether you're going for the gold or merely sitting in the stands, there's always something for everyone.  And last Friday we got pretty much what we got all week long - more sideways action as the Dog Days bark on.  Will we get a break this week?  Let's take a look.

The technicals (daily)

The Dow: Friday's 43 point gain was in the form of a hanging man, the fifth consecutive reversal candle in a row - and still no reversal.  I really was expecting a break lower.  So we're pretty much in the same waiting-for-Godot mode we've been in for a few days now.  Overbought indicators, sideways action, and daily reversal warnings that require confirmation.

The VIX:  Last week I was talking about support at 14.5 for the VIX and on Friday we got pretty close with a red candle that brought us to 14.74.  Meanwhile, the indicators remain massively oversold and the stochastic is just lying on the floor (%K and %D lines both under 7).  So I have to think the VIX is due for a reversal Any Day Now, but just which day that is, I can't say.

Market index futures: All three futures are running lower at :27 AM EDT with ES down 0.32%.  With three consecutive daily reversal candles that came to naught, this is the first sign we might actually be going lower.  It also brings us to the very edge of the rising RTC that last week's melt-up established.  Any further downside action will give us a bearish setup.  And the indicators just keep getting more overbought.  RSI is now 90.6.  The last time it was this high was right before the big May meltdown.

ES daily pivot: Tonight the pivot ticks down from 1399.33 to 1399.08.  This leaves us right below the new line but so far ES does not seem interested in taking a crack at it.  Unless that happens, this looks bearish.

Dollar index: After two consecutive rising dojis, the dollar lost .1% on Friday with a bearish engulfing pattern.  This would suggest a  move lower on Monday even though the indicators are not particularly overbought.

Euro: On Friday, the euro put in a hammer after two big down days.  After falling further early Sunday evening, it suddenly reversed course right after 9 PM, possibly on some Chinese housing news,and is now right back where it closed on Friday.  The pattern indicates the possibility of a move higher on Monday, but it definitely requires confirmation.

Transportation: After two days of declines, the prospects for the trans brightened somewhat on Friday as they gained 0.3% on a little hammer.  Of course, this too requires confirmation and the indicators remain highly overbought.  It's hard to say where this chart may be going on Monday.


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      3      1           1        .571      21
     And the winner is...

I hate to keep saying this, but nothing's really changed since last week.  We're still overbought and still getting reversal warning candles.  And still not getting a reversal  But it seems more logical to call for the reversal than to expect a break higher under these conditions.  And as I mentioned, back in February, we had a run of 10 straight days of doji-laden sideways motion before getting the break.  So although I was wrong about Friday, I'm going to do it again and call Monday lower.  With TLT gaining half a percent on Friday and clearly looking to have bottomed (about the clearest direction change of any of the charts I follow), the downside is just looking the more sensible option here.

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 remain short at 1395.00.

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.