Friday higher

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

• Friday higher, low confidence..
• ES pivot 1437.67.  Holding above is bullish.
• Next week bias higher technically.
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

Last night's call worked out really well as the Dow reversed course today to finish up by 72 points even after a mid-afternoon slide off its intraday highs.  With just one trading day left to the month, I'd say that this September has shown surprising strength for what is normally the worst month of the year for the Dow.  Even this week which is usually the worst week of the month hasn't been all that bad so far.  Now there's just one question mark left for the last day of the month and the quarter - up or down?   Let's do our usual rundown and see what's what.

The technicals (daily)

The Dow: The Dow completely retraced yesterday's losses and then some today on a candle that's almost a bullish engulfing pattern.  While we're still inside the descending RTC, RSI has now clearly bottomed at oversold and the stochastic is now very close to forming a bullish crossover.  While none of that guarantees continued higher, that seems more likely than a move lower at this point.

The VIX:  This one fooled me today.  I figured we'd get more upside here but instead the VIX plunged nearly 12% today on a big red marubozu that caused RSI to form a top and the stochastic to line up for a bearish crossover, possibly tomorrow.  It also dumped us out of an admittedly short descending RTC, another bearish sign.  So now I'll say that we could see more downside here on Friday.

Market index futures: Tonight the futures are essentially flat at 1:24 AM EDT with ES up by just 0.03%., YM up only one tick and NQ down 0.04%.  ES gave us a tall green candle almost identical to the Dow's.  RSI has bottomed, and we've now just gotten a bullish stochastic crossover.  The overnight candle so far is sitting right on the edge of the descending RTC for a bullish setup.  Right now this chart's looking in pretty good shape.

ES daily pivot: Tonight the pivot bumps up from 1430.25 to 1437.67.  That still leaves us above the new number, though not as much as before.  Still, unless ES goes below the pivot by morning, it's a positive sign.

Dollar index: The dollar dropped 0.45% today on a gap down red candle that completes the evening star pattern and send us completely out of the rising RTC for a bearish setup.  And RSI has now topped out at overbought, and the stochastic has just executed its bearish crossover.  That's four bearish signs for the price of one.  I'd say the dollar's going lower on Friday which should be good for stocks.

Euro: And as the dollar fell the euro rose today enough to exit its descending RTC and give us a bullish setup.  When further gains in the overnight, the new candle is signaling a bullish trigger..  The euro, now at 1.2940 would have to fall below 1.2848 on Friday to cancel that, not very likely.

Transportation: Today the trans confirmed yesterday's doji with a respectable 0.56% gain that exited the descending RTC for a bullish setup.  Any close here on Friday above 4845 will result in a bullish trigger.  Considering that RSI has bottomed at oversold and the stochastic is primed for a bullish crossover, continued higher seems entirely possible 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     8      6      8           1        .600     -78
September  8      5      5           0        .615      30

     And the winner is...

Well normally the last day of Q3 is pretty poor, but I have to say that tonight the charts are generally looking pretty positive.  I'll add that copper had an impressive 1.8% gain today, the TLT dropped 0.71% and the Swiss franc has turned upward.  While I'm feeling a bit nervous about saying it, I'm going to call Friday higher anyway.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside once again, in light of the historical risks associated with the last day of the quarter.

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 higher

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

• Thursday higher, low confidence..
• ES pivot 1430.25.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

We got the decline I was looking for today as the Dow gave up another 44 points for its fourth straight decline.  With Europe starting to perk up again is there more downside coming on Thursday?  We summon the force of the charts for an answer.

The technicals (daily)

The Dow: I figured the sell off wasn't done yet and the Dow indeed shed another 44 points today.  We now have a solid descending RTC going here and we're right in the middle of it.  Aside from the fact that the indicators moved a bit more into oversold territory today, there's still no real reversal sign on this chart.

The VIX:  Last night I said that "a distinct possibility for the VIX to move higher still" and sure enough, it gapped up almost 9% today on a tall green marubozu.  That was enough to propel the indicators to overbought but there are still no reversal signs on this chart.  The futures though put in a spinning top, so that's at least a second order reversal sign, but I can't call the VIX lower on that basis.  It looks higher to me.

ES daily

Market index futures: Tonight all three futures are up for a change at 1:06 AM EDT with ES higher by a substantial 0.42%.  This move has caused all the indicators except momentum to hook up from oversold levels, indicating a bottom is in and move the stochastic into position for a bullish crossover, possibly on Thursday.  While we remain inside the descending RTC, this chart is looking healthier tonight than yesterday and a move higher is not out of the question.  Take a look.  The indicators are my Fave Five, from top to bottom: RSI, momentum, money flow, stochastic, and OBV.  Moves like this generally indicate a reversal is coming.

ES daily pivot: Tonight the pivot drops from 1443.08 to 1430.25.  This big dump combined with the evening gains in ES put us back above the pivot right at midnight.  Unlike last night when we were below and stayed there, this is a positive development.

Dollar index: The $USDUPX took a big pop today gaining 0.43% on a bearish evening star that extended the indicators further into overbought territory.  But it also brought us right back into the rising RTC, canceling yesterday's bearish setup.  Still, the evening star is a powerful reversal pattern, so combined with the indicators, I'd say we've got a shot at moving the dollar lower on Thursday.

Euro: There's more clarity in the euro chart.After dropping almost to its 200 day MA today, the euro reversed course and has been gaining since 2 PM Wednesday, now up 0.17% i the overnight.  This move was enough to cause RSI to start rising again from oversold and set up the stochastic for a bullish crossover.  It's looking good that we might see the euro move higher on Thursday.  That meshes well with the idea of the dollar going lower.

Transportation: After bouncing around for thee days the trans finally settled down, dropping just 0.06% today on a narrow spinning top reversal candle.  The indicators are quite oversold now and tomorrow's candle will produce a bullish setup as long as the trans can remain above 4893.  The trans do seem to be finding some support at the 4900 level.

Jesse's take on gold

Chart of the Day: Today I bring you a daily gold chart from one of the blogs I follow, Jesse's American Cafe  Dude - ya got enough lines on that chart?  I'm not entirely sure quite what to make of that but my take is that gold just fell out of its daily rising regression trend channel from August 15th and is going lower.  What are all those lines anyway?

Anyway, since gold is highly correlated with the market as a whole, this doesn't look good.  Here's a YTD chart of the SPX vs. GLD.  The correlation isn't perfect of course, but the major trends are all there.

SPX (blue) vs. GLD (red)

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  7      5      5           0        .583     -42

     And the winner is...

Despite a weak looking Dow chart and a questionable VIX, tonight we're getting some good vibes from the futures and the currency market.  The euro in particular has been doing a good job of providing short term guidance lately and its saying we're going higher so that's my call: Thursday higher.

Oh yes, and although gold looks to be in a medium term downtrend, it put in a hammer today, indicating it could go higher on Thursday, another good sign.  I still think we're in for some bearish action next month, but I don't think it will come tomorrow.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we're standing aside again because we've already had a decent move to the upside and although I think the market's going higher Thursday I don't want to end up in one of these situations where I lose money anyway because I got in too late.  So regrettably I'll just have to watch this bus recede into the distance without me.

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

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

• Wednesday lower, low confidence..
• ES pivot 1443.08.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

Well we finally broke out of our narrow trading range today and the direction was down.  Frustratingly though, this now raises some new questions: is this the start of a new downtrend that everyone's been waiting for, or was today's decline just clearing the air in an over-reaction to prepare for further upside?  We'll now read the technical tea leaves to sort it all out.

The technicals (daily)

The Dow: The Dow's 101 point dump today took us out the bottom end of our recent trading band.  That alone is a bearish sign.  But it also drove the indicators, which had already been falling, down to oversold levels.  RSI is now down to 19.61, lower than where most reversals have come from this year.  The stochastic though has not yet begun to set up a bullish crossover, so it's still a bit premature to call for a move higher from here on Wednesday.

The VIX:  The VIX had a big day on Tuesday, gaining just over 9% on a strong bullish engulfing pattern.  Even that was only enough to send it off oversold, so there's a distinct possibility for the VIX to move higher still on Wednesday.

Market index futures: Tonight all three futures are actually up at 1:35 AM EDT with ES higher by 0.14%.  Today's big drop here drove ES even more oversold than the Dow.  RSI in fact hit 3.22 today - very low indeed.  The failure to gain any pin action in the overnight makes me wonder if this might not signal a move higher on Wednesday.

ES daily pivot: Tonight the pivot dips from 1450.25 to 1443.08.  With ES essentially flat in the overnight so far, we're still beneath the new pivot, but much closer.  If ES can break above the new number in the morning, that would be a positive sign.

Dollar index: Like yesterday when the dollar moved higher on a red candle, today it moved up just a bit, but on a green candle largely below Monday's.  And this one took us just off the edge of the rising RTC for a bearish setup.  It also propelled the indicators to overbought levels.  This indicates the possibility of the dollar moving lower on Wednesday.

Euro: On the other hand, the euro's recent decline continues unabated. We're gone from a peak of nearly 1.32 just over a week ago to 1.2887 now.  And we're still solidly inside the descending RTC.  The only support in view is the 200 day MA, fast approaching at 1.2837.  That's not out of reach on Wednesday considering the pace of recent daily drops.

$TRAN, daily

Transportation: The trans surprised me today, that's for sure.  After yesterday's big 1% up day, I was convinced we'd go higher again today.  No such luck.  Instead the trans went right back down again by nearly as much, specifically, 0.89%.  This down/up/down action reminds me of last summer when the VIX was above 40.  What are we to make of this yo-yo action?  Not much, I'm afraid.  The only clue here comes from the indicators, which are now quite oversold.  On that basis alone, I'd be inclined to call the trans higher on Wednesday.  We're due for it.  Look at the chart.  We've already bounced off the lower BB.  Usually when we're in a major decline, the candles will just slide down the lower BB.  That hasn't happened 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    8      6      8           1        .600     -78
September 6      5      5           0        .545     -86
     And the winner is...

I think most of the evidence tonight is pointing to the downside, including the VIX, the trans, and the euro.  However, the bellwether TLT and copper charts are looking like they're getting ready to turn higher so while I'll call for a lower Wednesday, we just might see some upside before the end of this week (even though Friday is the last day of the month and the quarter and is historically quite bearish).  And if not then, then a move higher is more likely next Monday, since that's a historically bullish day.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we're standing aside again because while I do believe we're going lower on Wednesday, I think the majority of the current decline is done and so there's more risk than reward to going short at these levels.

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.
• Rest of week bias uncertain technically. 
• ES pivot 1450.25.  Holding above is bullish. 
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

We were looking for lower today and got it, albeit on yet another tiny move as the Dow lost just 20.55 points and extended its streak of uncertainty to seven straight sessions now.  That now beats the similar pattern we had last month that only ran for six days in a row.  These sorts of runs are the hardest to call because with little candlestick guidance, there's no telling which way the market will move when the break finally comes.  So we'll see what the other charts have to say as we set up for Tuesday.

The technicals (daily)

The Dow: Yet another doji for the Dow today, this one a little spinning top.  Of course in this environment, that counts for little.  About all there is to see on this chart is that the indicators have now exited overbought territory and seem headed down to oversold, suggesting a move lower for the Dow.

The VIX:  And the VIX gave us a 1.22% gain but did it on a funny red candle that traded entirely above yesterday's doji to leaves us right back in the middle of its trading range.  The VIX has closed between 13.6 and 14.2 for five days straight.  Today's action did bring us off oversold levels though and continuing gains in the futures suggest that the VIX could move higher still on Tuesday.

Market index futures: Tonight all three futures are up at 1:36 AM EDT with ES higher by 0.21%. ES is pretty much doing what the everything else is doing - just trading sideways in a narrow range.  And today's small spinning top was no exception.  What today's drop in ES did accomplish was to send it into oversold territory for the first time since August 30th.  However, the overnight gains so far remain firmly inside the trading range.  I need to see ES break above 1455 to believe we're going to see some real upside.  Right now it's not clear that that will happen on Tuesday.

ES daily pivot: Tonight the pivot drops from 1454.92 to 1450.25.  This now leaves us above the pivot for the first time in a few days, a positive sign.

Dollar index: Like the VIX, the dollar gave us a funny gap-up red candle that resulted in a 0.23% gain and kept us inside the rising RTC.  There are no reversal indicators here yet, so one must expect further gains for the dollar.

Euro: And as the dollar rose, the euro continued its decline on Monday remaining solidly inside its descending RTC.  Then after drifting higher in after hours, it suddenly dove again at 1:10 AM, I think on some Chinese news.  So although the euro has now fallen all the way to oversold, it looks like it can run lower still.

Transportation: Last night I expressed some skepticism about the ugly looking recent decline in the trans and sure enough today they rose a solid 1.02% on a bullish piercing pattern.  And the stochastic has now flattened out and looks close to executing a bullish crossover, most likely tomorrow.   I'd say that the trans look likely to move higher 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  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  20/34

 35  8/27       39         29        +     1411  21/35

 36  9/4        31         38        +     1407

 37  9/10       54         29        +     1438

 38  9/17       63         22        +     1466

 39  9/24       52         30        +     1460

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 8/27 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 21 for 35, or 60%.  For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.

Of interest this week is that the bull-bear spread narrowed from the considerable 41 points last week to just 22 points this week.  This takes some pressure off the contraraian bearish stance.

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 6      5      4           0        .545     -86

     And the winner is...

So tonight is pretty much a rerun of last night, except that I'm not quite as bearish.  The failure of the market to move lower today after seemingly be primed to do so makes me wary of calling it lower.  On the other hand, with no convincing indications of buying pressure, I can't really get on the bandwagon for a move higher.  So all that leaves is uncertain for Tuesday, once again.

My feeling though is that Tuesday is going to set up for some non-trivial gains on Wednesday, but that remains to be seen.

ES Fantasy Trader

Well it wasn't much of a trade, but at least it wasn't a loss.  With ES seemingly knowing that my entry point was resistance, I decided to call this one in when it gave me a quarter point sliver of profit.  And I was glad I did, because ES then moved higher.

Portfolio stats: with no trade last night the account now inches up to $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight with no good directional edge, we're standing aside.

BOT    10    false    ES    DEC12 Futures     1,448.250    USD    GLOBEX    13:30:38
SLD    10    false    ES    DEC12 Futures     1,448.500    USD    GLOBEX    SEP 20 01:26:46

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.