Friday, September 14, 2012

Friday uncertain - look for doji

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain - doji expected.
  • ES pivot 1452.17.  Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Quote of the Day
“I’m healthy and I can work, what more do I need?”
                      -  Philipp Freimann, farmer, Zug, Switzerland, in an article on Bloomberg today entitled Swiss Farmers Clash With Traders as Bubble Builds in Town of Zug, with an interesting existence proof on whether or not lowering taxes helps a society.

Recap

Well I'll say one thing - the health of my portfolio certainly improved today.  The Fed spoke and the market jumped.  Thanks, Uncle Ben!  Now that we've finally gotten that bit of uncertainty out of the way, let's figure out how the week might end.

The technicals (daily)

The Dow: The Dow was basically flat this morning until Big Ben dropped his money bomb on the market and then it was up up and away for 206 points of ka-ching, closing at 13,540.  I had to back out all the way to the monthly chart to find out the last time we saw these levels - it was way back in November 2007.  That was just one month after the Dow's all-time high a month earlier and marked the start of the Great Recession with that sickening slide all the way down to 6469 in March of 2009.

Looking on the other side of the 2007 peak, we were also at 13,540 in May 2007,  as we were still moving higher five months before the peak.  Then as now on the monthly chart we were executing a bullish stochastic crossover from a high level.  However, back then OBV was running at 144.5B, whereas today it stands at a much higher 190.27B (not a good thing).

The VIX:  The VIX, as one might expect, took a dump today, down 11% to 14.05.  Its next support is at 13.5 and then at 13.14, its lower BB.  The VIX can be tricky but one possible scenario I can see is that Friday is a reversal day, where the VIX hits  the lower BB and bounces off.

Market index futures: Tonight all three futures are up at 1:32 AM EDT with ES higher by 0.27%.  Although it's started dropping in the last 25 minutes, I'm still surprised to see this much follow-through in the overnight after such a big run-up today.  And today's big green candle for ES punched right through the upper resistance line of the rising wedge.  That's the first time that's happened since the wedge began o May 23rd.    We need to see now if this is a fake-out breakout or if the whole wedge is invalidated.  That answer should come on Friday.

We had a fake-out breakdown of the wedge back in July and that lasted three days.  If ES continues higher on Friday, I'd forget the whole idea.  If ES pulls back below 1447, we're back in business.  It's interesting that ES it a high of 1464.25 today, less than a point shy of the point where the wedge ends next Friday.  Although there's no comparable point on the ES chart, 1465 should serve as some sort of resistance.

ES daily pivot: Tonight the pivot vaults from 1436.08 to 1452.17.  Although it gave up a bit into the close, ES has been trending higher in the overnight, so we're still comfortably above the new level, a positive sign.

Dollar index: The dollar today continued its slide as soon as the Fed announcement came out to remain inside a steep descending RTC.  However, it is now close to year-long support at 54.50 and its indicators are even more oversold now.  While the dollar still has a bit of room to run lower, we'll watch closely to see if it respects this support level or not on Friday.

Euro: And the euro obviously moved higher again today for the same reasons as the dollar declining, leaving the 200 day MA in the dust.  And it's still gaining in the overnight, now at 1.3024, a level last seen on May 8th.  The indicators are now overbought-broken and there's no sign of reversal on the chart, so I'd have to say the euro's going still higher on Friday.

Transportation: As I expected, today the trans managed to squeeze out another advance, gaining 0.54% to stop at 5202, right at resistance established by last month's highs on August 21st..  This was only about 1/3 of the broader market's gains though and with all the indicators now quite overbought we need to see if the trans can remain in their rising RTC or if this is another top.  Friday should tell the tale.

Copper Update: Ha - marketwatch.com must read the Night Owl because today they published a piece entitled Copper may soon run out of steam, two days after I wrote a little section called "A copper top" in this post.  Suffice it to say that copper had a big gain today, along with everything else and moved to just under its 200 day MA.  We'll now have to see if Dr. Copper can break through this resistance on Friday.  It just might be the catalyst to send it lower.

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    8      6      8           1        .600     -78
September 3      2      3           0        .600     -62


     And the winner is...

Today's big moves brought a lot of charts very close to a variety of tipping points.  Friday is going to be a key day to determine if we can continue higher or if we've run out of buyers.  My guess is that today's Fed reaction was kind of overdone and that we may just see some profit taking, especially since tomorrow is Friday and traders will want to lock in their gains for the week.  Right now I'm thinking another doji day is in order.  Therefore I can't really make a reasoned call higher or lower and will simply call Friday uncertain as Mr. Market takes a breather and decides what to do next.

With copper looking toppy, an impending reversal in the TLT, and the VIX nearing support, I can't help but feeling that next week's looking lower.

ES Fantasy Trader

Portfolio stats: the account remains at $178,125 after 62 trades (47 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside again.  At this point I'd rather risk leaving some money on the table than risk losing a bunch.

CUA (Commonly Used Acronyms)

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

Thursday, September 13, 2012

Thursday uncertain pending Fed

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain - waiting on the Fed.
  • ES pivot 1436.08.  Breaking below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

Well I guessed right about the German court decision and we were spared a big market collapse today with the Dow ending higher by just 10 points, a number I think was moderated by the upcoming Fed news on Thursday.  Let's take a look at the charts now to see if there might be any clues as to what Uncle Ben will say there.

The technicals (daily)

The Dow: The Dow touched its upper BB intraday before closing to form a small shooting star.  That's at least a reversal warning but may not mean much as I believe the upper shadow was all simply a reaction to the German news.

The VIX:  I was wrong about the VIX last night.  It moved lower today by 3.72% but did it on a green spinning top.  With no clear trend and lots of news this week, there's little to go by on this chart.

ES daily
Market index futures: Tonight all three futures are down at 1:34 AM EDT with ES lower by 0.17%.  I'm bringing up the daily ES chart again to show you how well the rising wedge is working.  Over the course of the paste week, ES has remained almost entirely within the wedge.

Today we made it almost to the upper resistance line on a tall green candle.  Having gotten that far, the overnight is now running lower again.  The expected range for Thursday thus narrows once again to between 1429.34 (support) and 1443.17 (resistance).  So we remain on track for the wedge to close by the end of next week after which the conventional wisdom projects a big downward break.

ES daily pivot: Tonight the pivot rises from 1429.83 to 1436.08.  With ES beginning to drift lower, we're now very close to the new number, just a point above.  That puts the pivot in play.  A break below would be bearish.

Dollar index: Last night I wrote "the dollar could still go lower yet" and it indeed continued its slide today, down another 0.14% to end at 55.02 on the $USDUPX.  There's now no support until 54.75, so there's still room to run lower despite oversold indicators.

Euro: And as the dollar sank, the euro continued higher, breaking above its 200 day MA for the first time since October 27th, 2011.  And the overnight is continuing higher still, now at 1.2921.

Transportation:Last night I called for "continued higher" here and that's what we got with the trans advancing another 0.79% today and remaining solidly within their rising RTC.  This strong showing also confirmed their breakout above the 200 day MA.  On the other hand, the stochastic is just about to form a bearish crossover.  To me, it looks like we might squeeze one more day of gains out of this chart but the risk is beginning to increase.


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    8      6      8           1        .600     -78
September 3      2      2           0        .600     -62

     And the winner is...

Right now the markets are once again in holding pattern mode, awaiting the pronouncements from the Fed.  If we get QE3 or some approximation thereto, we go higher, else lower.  Simple as that.  Therefore while I hate to do it, I have no choice but to call Thursday uncertain.  My wild guess though is that Uncle Ben will not disappoint and we'll go higher.  But that's just a guess.  I do note that the euro traders seem to be expecting some good news from the Fed and they seem to know what's what.

And to the copper watchers - today's spinning top only strengthens my feeling, as I mentioned last night that copper is due to go lower any day now.

ES Fantasy Trader

Portfolio stats: the account remains at $178,125 after 62 trades (47 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside again given the uncertainty around the Fed.  There will probably be some good day trades on Thursday, but that's not my style.

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, September 12, 2012

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 1429.83.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

Ouch.  I hate being wrong and I blew this one badly today.  The market did not go lower as I had expected last night.  Instead the Dow gained a solid 69 points, completely retracing yesterday's losses and then some.  As this complex week moves along, I will try to navigate the mine field and see if I can call Wednesday without blowing up.

The technicals (daily)

The Dow: Today's green candle was a pretty close approximation to a bullish engulfing pattern.  However, the stochastic is just about to form a bearish crossover and the RSI is now well into oversold territory.  With the indicators and the candlesticks at odds with one another, it's difficult to draw any conclusions here.

The VIX:  We got an unusual divergence today with both the VIX and the market moving higher, the VIX finishing up by 0.80%.  At least I had the part about the VIX moving higher correct.  The result was a small hanging man but also a bullish RTC trigger and a completed stochastic bullish crossover.  I'd say we're due for further advances here on Wednesday.

Market index futures: Tonight all three futures are higher at 1:18 AM EDT with ES up by 0.24%.  I want to bring up the rising wedge again.  Last night ES attempted to move lower but the lower support line, then at 1425 held firm and ES traded back inside the wedge today.   The developing candle tonight continues the trend.  The ES range for Wednesday is now down to 1427.42 (support) and 1441.50 (resistance) as the wedge continues to narrow.  I'd expect ES to continue trading within this range and since we're still closer to the support line than resistance right now, the expectation is for a move higher.

ES daily pivot: Tonight the pivot barely ticks lower from 1430.08 to 1429.83.  We broke above the old number earlier this evening and remain above now, a bullish sign. 

Dollar index: I missed this one too.  Yesterday's doji in the dollar was canceled as we sank another 0.63% taking the dollar down to quite oversold levels.  While there's no reversal sign on the chart, the stochastic is just about to form a bullish crossover.  But the candlesticks look more convincing for now, so tonight I'm thinking that the dollar could still go lower yet.

Euro: Today was big for the euro.  After ending the day right on its 200 day MA at 1.2855, the euro broke through in the overnight and is currently at 1.2874.  Although the indicators are all overbought, this type of MA crossing is not to be discounted.  We could see further euro gains on Wednesday.

Transportation: I thought today we'd see some topping in the trans but bzzzt, wrong again.  Instead we've now got a classic three white soldiers pattern that attacked and busted right through the 200 day MA on their first try.  We're now is a strong rising RTC and still a long way from the upper BB.  That all spells continued higher here.

A copper top
Copper daily
A copper top: And finally tonight  we present a special guest appearance by Dr. Copper.  I'm looking at the daily copper chart (the $ISE Global Copper Index to be precise) and I'm seeing a top.  No, not that copper top, this one.  Specifically, I see a bearish evening star hugging the upper BB and sitting right at the top of an exponential run up.

And note the RSI sitting at a very overbought 96.5.  And at the bottom we have a stochastic that's just about to form a bearish crossover.  Copper is even very close to overbought and near the upper BB on the weekly chart where the current candle is forming a doji.  Add it all up and it spells lower copper.  Maybe not on Wednesday, but by the end of the week.

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    8      6      8           1        .600     -78
September 2      2      2           0        .500     -72


     And the winner is...

Very tricky.  The charts are mixed and there are some concerning storm clouds on the horizon, particularly from copper and the continuing ascending wedge in ES.  However, I think Wednesday is going to hinge on whatever ruling the German Federal court hands down about bailing out the teetering EU.  The overnight action in the euro seems to suggest that traders believe this ruling will be favorable.  And so far, few people seem to be thinking that Uncle Ben is going to actively throw cold water on the markets on Thursday.

And tonight there's noises out of China about more stimulus there.  And we're entering the strongest part of September, historically.  And the TLT seems to be having trouble making any headway.  So all things considered, I'm going to reverse course again, flip a coin, and hey presto, we're going higher Wednesday.  If the Germans equivocate or pull back though, then all bets are off.

ES Fantasy Trader

Portfolio stats: the account now rises to $178,125 after 62 trades (47 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside because although I think the market will close higher on Wednesday, there's just too much event risk to put money down on it.  With a 78% YTD gain and 62 trades already, I don't really need to push things at this point.

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, September 11, 2012

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower, low confidence.
  • ES pivot 1430.08.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

I was looking for lower today and got it, with the Dow dropping 52 points in a slide that accelerated into the close.  With more event risk on the horizon surrounding Europe and expectations of what Uncle Ben might have to say on Thursday, this is going to be an interesting week.  I don't have a bug in the Fed's meeting room, but I've got the next best thing - a bunch of charts that I will now tap into for clues as to where Tuesday may go.

The technicals (daily)

The Dow: Today's red candle was a big bearish engulfing pattern against yesterday's spinning top.  It also drove RSI lower from overbought and lifted the stochastic into a position to begin forming a bearish crossover.   With a second failure to break 13,320, I'm not feeling the love from this chart. 

The VIX:  Last night I wrote "the VIX could run lower again on Monday" but the VIX did not cooperate as it instead gained a whopping 13.21% to form a bullish engulfing pattern that also popped it right out of its descending RTC for a bullish setup.  And the stochastic moved into position to begin forming a bullish crossover.  So from looking lower, the VIX now looks like it's moving higher on Tuesday.

Market index futures: Tonight all three futures are down at 1:14 AM EDT with ES lower again by 0.30%.  Today's red marubozu kept ES inside the now shrinking rising wedge I've been talking about, from the upper resistance line to near the lower support line.  The continued decline in the overnight has actually now broken the support line at 1424.64.  Whether this represents  another fake out breakdown like we saw last week or if this is the "big one" is hard to tell at the moment, though I'd vote for the former.  Of more immediate concern is that the stochastic just completed its bearish crossover.  If 1424.64 can't be recovered, next stop is 1416.  Either way, I'm not liking the looks of this chart tonight.

ES daily pivot: Tonight the pivot drops from 1435.83 to 1430.08.  With ES continuing to drift lower in the overnight, we're still about the same amount below the new number as we were before, not a good sign.

Dollar index: Last night I wrote "we could see the dollar move higher before mid-week".  And while the dollar did gain 0.14% today, the resulting doji wasn't the move but rather an indicator of the coming reversal.  With the indicators driven even further into oversold territory, I'd look for further gains in the dollar on Tuesday.

Euro: The euro on Monday was unable to break above Friday's highs and never managed to attack the 200 day MA before retreating with a bearish dark cloud cover.  Further declines in the overnight, along with a highly overbought RSI and a stochastic that just executed a bearish crossover tend to confirm that a short-term top is in for this currency.

Transportation: Last night I wrote "no reason to believe the trans won't go higher on Monday." and in another interesting divergence, the trans in fact gained 0.52% today even as all three major averages were lower.  And even with that, we're still not quite into overbought levels on the indicators.  But today's gains stopped just short of the 200 day MA now at 5122, suggesting that we may run into some resistance here before too long.  It looks to me like Tuesday may be a topping day for the trans.

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  16/30
 31  7/30       43         22        +     1386  17/31
 32  8/6        52         28        +     1391  18/32
 33  8/13       43         21        +     1406  19/33
 34  8/20       46         31        +     1418
 35  8/27       39         29        +     1411 
 36  9/4        31         38        +     1407
 37  9/10       54         29        +     1438

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 8/20 was right again, the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 19 for 33.  For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.

This week was quite unusual.  We got the biggest jump in bullish sentiment of the year so far, from 31% to 54%. This is also the second highest reading of the year.  Bearish sentiment also declined substantially, giving us a 25 point spread, the highest reading YTD.  Nevertheless, this still doesn't represent a gap large enough to be contrarian bearish, in my humble opinion.  That said, I do think we're in for a break by the end of next week so I may be changing my vote to negative soon.

 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    8      6      8           1        .600     -78
September 2      1      2           0        .667      -3


     And the winner is...

Tonight the charts seem to have a fairly consistent negative bias to them so I'm just going to come right out and call Tuesday lower.  But I don't think it's going to be as big as loss as it might otherwise be because I believe we're heading into holding pattern mode ahead of European news and the Fed announcement this week.  This should put a damper on any major excursions and would also square nicely with the position of ES relative to the rising wedge it's still in, as mentioned above.

ES Fantasy Trader

Last night's trade played out well enough, although I was somewhat surprised that the weakness I expected didn't kick in a bit sooner.  Anyway, it was good for 5.25 points.  Why did I get out when I did?  First, these trades are designed to be shorter rather than longer, so if I have a reasonable profit in one day I'm inclined to book it, just to reduce my risk.  Second, we have a bunch of news coming out this week from both Europe and the Fed, so I don't want to hold these trades for very long.  And last, I think that even if there's more downside to come, the current move is already more than half over which makes the risk/reward ratio too high for my taste.

Portfolio stats: the account now rises to $178,125 after 62 trades (47 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside for the reasons in the previous paragraph.

BOT    10    ES    false    SEP12 Futures     1428.25    USD    GLOBEX    16:04:42

SLD    10    ES    false    SEP12 Futures     1433.50    USD    GLOBEX    01:53:14


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, September 10, 2012

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1435.83.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader going short at 1433.50 (this entry corrected from last night - the ESFT section below and the Twitter posting were both correct - I just forgot to update this line).
Recap

Last Thursday I said "I'm expecting a doji day or spinning top on Friday ... with a slight bias to the up side".  I'd say that was a pretty good call considering the Dow finished up just 15 points on a fat little spinning top.  OK, so that was an easy one.  Now things get a bit harder so lets go back to the charts and figure out where Monday is headed.

The technicals (daily)

The Dow: Friday's move played out exactly as expected with that spinning top almost hitting the upper BB.  But even with last Thursday's big gains we're still not quite up to overbought levels on the indicators.  So technically there's no immediate reversal indicator on this chart.

The VIX:  Last Thursday I called for more downside to come for the VIX and it indeed dropped another 7.82% on Friday.  This leaves it in a steep descending RTC and brings the VIX back below 15.  However, even after two big losing days, the VIX is still not quite down to oversold levels on the indicator and has a ways to go before reaching its support at 13.45.  So like the Dow chart, there's no immediate reversal indicator here so I have to say the VIX could run lower again on Monday.

Market index futures: Tonight all three futures are down at 1:35 AM EDT with ES lower by 0.33%.  After managing an unusual small green marubozu on Friday parked at the top of Thursday's big move and trading entirely above the upper BB, the new candle is developing as a bearish harami.  The other interesting point about Friday is that it closed very close indeed to the upper resistance line of the rising wedge I mentioned last week.  Noting that this line has not been crossed successfully since its beginning on May 29th, the logical next move from there is down

RSI and momentum have already turned down from overbought, though the stochastic has not yet started setting up a bearish crossover.  This chart is now giving the impression of running out of gas.

ES daily pivot: Tonight the pivot jumps from 1422.17 to 1435.83.  The size of the gain coupled with ES drifting lower in the overnight means we crossed below the pivot right at midnight, so this signpost now becomes negative.

Dollar index: The $USDUPX took a massive 0.99% drop on Friday on a gap-down red marubozu.  It also failed to hang onto its 200 day MA after clinging on for four days in a row.  But this chart at least is showing some signs of reaching a bottom.  It hit the lower BB on Friday and is now into oversold territory.  I'd say we could see the dollar move higher before mid-week.

Euro: As the dollar moved lower Friday, the euro moved higher on a tall green candle that blasted right through its upper BB and carried the euro very close to its 200 day MA at 1.2859.  With resistance expected there, plus the BB, plus very overbought indicators, plus the fact that the euro seems to be going exponential over the past week, all makes me think that it will be moving lower on Monday.  And it is indeed already backing off in the overnight.

Transportation: The trans are now actually giving us a positive divergence, having gained 0.55% on Friday to the Dow's 0.11% and the SPX's 0.40%.  The pair of green marubozus is a bullish pattern and the indicators are now about halfway up from oversold on their way to overbought.  Like the Dow and VIX, I see no reversal signs in this chart and no reason to believe the trans won't go higher 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    8      6      8           1        .600     -78

September 1      1      2           0        .500     -55 


     And the winner is...

Tonight we have another mixed picture.  The Dow, VIX and trans look positive but the dollar, euro, and futures look negative.  Then there's a bit of bad news coming out of China.right now.  I think that's going to tip the balance for me.  The currency and futures traders seem to be expecting a lower market on Monday.  And copper has gone exponential.  Add in September seasonality and that's a bus I don't want to stand in front of, so I'm calling Monday lower.

ES Fantasy Trader

Portfolio stats: the account now rises to $176,500 after 61 trades (46 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we go short at 1433.50.  I expect this to be a quick trade as I definitely don't want to risk getting caught up in any positive Fed news on Thursday.

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.