Friday uncertain

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

• Friday uncertain.
• ES pivot 1408.17.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

I can't feel too bad about continuing to make "uncertain" calls because yesterday the market was down a bit and today the market was up a bit with the Dow gaining just 26 points.  The market seems to be struggling to make a turnaround these past two days.  Let's peruse the charts now to see if any of this is going to translate into some real action on Friday.

The technicals (daily)

The Dow: We now have two reversal candles in a row from the Dow - yesterday's inverted hammer and today a spinning top at the same level.  While either of these alone is not a great reversal indicator, the two together often signal a bottom.  The indicators support this, with RSI now more oversold than any time since May at 6.57.  However, today's sideways action still did not move us out of the descending RTC and the stochastic stubbornly refuses to form a bullish crossover.  I can't really get behind a higher Dow until I see both of those happen.

The VIX:  I called for a lower VIX last night and got it, with a 1.15% loss.  But the call feels wrong since the candle was green and closed back up over the 200 day MA.  We did however pry ourselves off the upper BB and the indicators remain quite overbought.  The futures are looking lower too so I'd say the VIX could continue down again on Friday.

Market index futures: Tonight all three futures are down at 1:12 AM EDT with ES lower by an alarming 0.89%.  That's a lot for this time of night and it continues trending lower as I write.  Today's small gain provided us with a second doji just like in the Dow and also traded outside the descending RTC for a bullish setup.  But the steep decline in the overnight is sending us right back into the RTC even as it sends the indicators deeper into oversold territory.

And the stochastic is now close to forming a bullish crossover but still has not done so.  We also gave up the important 1400 support line a few hours ago.  Next support is close by at 1393 but it's not that great and there's no telling if it will hold.  We're at the lower BB now but we've been dribbling down that for four days now.  None of this is a good sign and I'm not liking the turn of this chart tonight.

ES daily pivot: Tonight the pivot blips up from 1407.33 to 1408.17.  With ES getting pounded badly in the overnight we're doing nothing but continuing to sink below the new pivot.  All in all, this isn't looking good.

Dollar index: The dollar opened lower today but then rallied to finish up 0.13% with a bullish engulfing candle.  At 55.17, the $USDUPX is now at the upper end of its recent trading range.  It is also now officially overbought and today's close just managed to keep it inside the rising RTC.  But with this up/down/up action, I can't really pick a direction for Friday.  My guess would be lower simply because today was higher - and that's not a particularly elegant line of reasoning.

Euro: The euro meanwhile continued a march lower than began on the 17th and has now arrived at oversold levels below those from which the past two reversals occurred.  But it remains solidly in a descending RTC, there's no reversal candle, no near-term support, and the overnight is simply continuing lower.I'd have to say the euro isn't done declining./

Transportation: After getting hammered yesterday, the trans posted a 0.61% gain today that respected the 5000 support line.  This isn't strictly speaking a reversal though and we remain in a descending RTC with indicators near but still not quite at oversold.  So I'm hesitant to call the trans higher again on Friday.  Whether today's gains are enough to help the market is open to question.

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      6      5           0        .571     -19
October    8      4      7           0        .667     219  

     And the winner is...

There are once again some reversal signs in the charts of a move higher, but they're still not as strong as I'd like to see.  And more importantly, they haven't improved much since last night.  We're also getting decidedly negative moves from both the futures and currencies in the overnight.  So pretty much everything I said last night holds again tonight.   We've declined enough lately that I'm reluctant to go short at these levels, and yet I'm not seeing enough signs of a reversal to go long yet.  And that only adds up to one thing: Friday uncertain.

ES Fantasy Trader

Portfolio stats: with no trade again last night the account remains at $193,875 after 68 trades (53 wins, 15 losses) starting from $100,000 on 1/1/12.  With continuing uncertainty, we're going to sit this one out again.  Last night I was reaching for my long hat, but I've put it back on the shelf for now.

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, bias higher

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

• Thursday uncertain, bias higher
• ES pivot 1407.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

I think "uncertain" was a pretty good call for today as first the Dow was up a bit and then it was down a bit, finally closing off just 25 points, a move an order of magnitude smaller than yesterday.  Anyway, things are starting to get interesting here, so let's get right to the charts.

The technicals (daily)

The Dow:Last night I said this chart was looking scary.  Unfortunately, today's smaller loss than yesterday didn't do much to unscare me.  We're still well inside a steep descending RTC and while the indicators have now finally gone oversold, the stochastic looks like it's still a couple of days away from a bullish crossover.  Meanwhile, the 200 day MA looms ever closer, now just 108 point below today's close.  We're also fallen out of a long-running rising RTC and I just don't see a bottom here yet.

The VIX:  It looks like the VIX tradition is beginning to kick in.  After gapping up huge yesterday way above the upper BB and the 200 day MA to boot, today the VIX fell back 2.66% on a small doji.  The indicators are also now overbought ad the stochastic is about to execute a bearish crossover.  Last night I wrote "this chart looks really ready to move lower on Wednesday" and I think I can say the same for Thursday.

Market index futures: Tonight all three futures are up at 1: 44 AM EDT with ES higher by 0.34%.  After yesterday's big drop, today ES gave us a small doji suggesting a reversal.  The overnight seems to be confirming that so far.  Even better, the developing candle is now trading outside the latest descending RTC and unless ES drops below 1403 tomorrow, that will be a bullish setup.  Note also that the 1403 area is right where support has kicked in the last two days.  The indicators are also all now finally oversold and the stochastic is flattening out for a bullish crossover, maybe as soon as Friday.

ES daily pivot: Tonight the pivot drops from 1414.00  to 1407.33.  Because of this drop and the overnight gains in ES, we're now back above the pivot, a bullish sign.  I note also that ES successfully tested the pivot at 12:50 AM, also encouraging.

Dollar index: I called the dollar lower last night and got that right at least as the $USDUPX gave up 0.08% today on a small red spinning top.  Unable to make any headway today, this pattern suggests more downside to come.

Euro: Meanwhile the euro gave us a decent hammer today, albeit one that remained inside the descending RTC,  The indicators are also still not down to oversold levels.However, the euro has been drifting higher in the overnight, so this amounts to a suggestion that it might close higher Thursday, but we need confirmation before calling this downtrend over.

Transportation: The trans seem to be really decoupling from the market here.  Yesterday the Dow tanked but the trans were actually up.  Today, the Dow was off just a bit but the trans simply dove off a cliff, losing 2.01%.  This completely canceled any bullish signs in effect on Tuesday but it also brought us right down to some decent monthly support at 5000.  But the indicators are not yet oversold so this chart is too hard to call.  We need to see if the trans are going to respect 5K on Thursday or not.  I'll add that the weekly chart is looking worse than the daily.


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      6      5           0        .571     -19
October    8      4      6           0        .667     219   

     And the winner is...

Tonight we're starting to see some better reversal signs than last night.  In a different environment, I'd go ahead and call Thursday higher, but given the rotten seasonality of October and the trouble this market has been having in finding any traction at all for a week now, I'm going to play it conservatively and call Thursday uncertain once again, but with a bullish bias.  I'd not be shorting at these levels but I think one might be better served waiting a day before going long again.

ES Fantasy Trader

Portfolio stats: with no trade again last night the account remains at $193,875 after 68 trades (53 wins, 15 losses) starting from $100,000 on 1/1/12.  With continuing uncertainty, we're going to sit this one out again.  But I think I'm getting very close to putting my long hat on, like tomorrow night.

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

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

• Wednesday uncertain, bias higher
• ES pivot 1414.00.  Breaking above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Whoa! When I called today "uncertain" I sure wasn't expecting a 243 point collapse from the Dow, its second triple digit loss in three days.  But looking at it another way, we're now back to where we were  on September 5th, just over a month ago.  And back then 13,102 was looking pretty decent.  But that was then and this is now.  And tomorrow, well tomorrow is a shimmering mirage in the charts, just waiting for us to grab it and hold it up to the light.  So let's get right to it.

The technicals (daily)

The Dow: Today's ugly 1.82% drop actually did a fair amount of technical damage to this chart. We blasted right through support at 13,300, through another support line at 13,180, fell out of a long rising RTC for a bearish trigger, and even moved 100 points below the lower BB.  And even after all that, the indicators, amazingly enough, still aren't quite yet down to oversold levels.  And on top of that, the 200 day MA is now only 46 points below us.  This chart is now beyond ugly, it's downright scary, the worst I've seen all year.

The VIX:  As befits a down day, the VIX shot up like a skyrocket today, leaping right over its 200 day MA on a whopping 13.30% gap up that also left its upper BB in the dust.  The good news is that the candle is a bearish shooting star, the indicators are now overbought, and today makes three days of hanging around the upper BB without retreating.  We've had just one instance in the last two years where the VIX spent more time on its upper BB before falling back.  Right now this chart looks really ready to move lower on Wednesday which would be good for stocks.

Market index futures: Tonight all three futures are actually up at 1:15 AM EDT with ES higher by a non-trivial 0.43%.  Today's big red candle broke support at 1420 but further support at 1408 held.  Meanwhile the indicators continue to decline and are nearly oversold.  Also, the current 1412.75 puts us just on the right edge of the descending RTC.  Of all the charts tonight, this one looks the most encouraging, though it's still not a given that it will close higher on Wednesday .

ES daily pivot: Tonight the pivot drops from 1426.00 to 1414.00 even.  With ES trending higher in the overnight, it pretty much nailed the new level and is now threading around it.  So we'll want to watch which way it decides to go by morning.  Captain Obvious says higher - good, lower - bad.

Dollar index: It was a day of gaps, with the dollar gapping up 0.43% to close exactly on a two month resistance line at 55.15.  However, the upper BB is still waiting at 55.28, we're still in a rising RTC, and the indicators are still not overbought.  So the $ is at a critical juncture.   It either breaks resistance tomorrow or moves lower.  I vote for the latter.

Euro: As the dollar rose, the euro fell all the way to 1.2979 today on a long red marubozu that remains inside a descending RTC.  And even at that, we're still not oversold.  Nevertheless, we may be in for a bit of a DCB here on Tuesday and the euro is indeed gaining a bit in the overnight, now at 1.2990.  But that's hardly a ringing endorsement and we have no real technical turnaround signs here yet.

Transportation: Here's an interesting divergence.  On a day where the market was just pounded, the trans were actually up by a healthy 0.85%.  This confirmed yesterday's hammer and with a bullish engulfing pattern to boot.  Although the indicators are not yet oversold, we've seen other instance this year where the trans reversed higher without that.  I'd say they have a good chance at moving 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     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19
October    8      4      5           0        .667     219   
   And the winner is...

Bellwether IBM failed to rally today as I'd been thinking it might, the Dow is dogging it, and Dr. Copper looks like he needs a doctor right now.  Also the TLT is definitely in bull mode right now.  But what's nagging at me tonight are the VIX which is giving strong reversal signals, and the rise in both ES and the euro.  Also the Dow is now near a series of support lines: 13,100, 13,000, and the 200 day MA at 12,966.  So I'm thinking that after such a steep, fast decline, the selling might be exhausted at least temporarily.

On the other hand, I don't really have enough reversal signs to call tomorrow higher, so once again I'll just have to call Tuesday uncertain, paticularly since it's a Fed day and those are always uncertain.  But if ES can break above its pivot and no further bad earnings misses come out, we could actually have a positive day.  I do think we could have a rally before the end of the week though.  The Dow is now very extended from its daily pivot and that can't go on forever.  And the VIX effect  will kick in too.

ES Fantasy Trader

Portfolio stats: with no trade again last night the account remains at $193,875 after 68 trades (53 wins, 15 losses) starting from $100,000 on 1/1/12.  With continuing uncertainty, we're going to sit this one out again.

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, bias higher

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

• Tuesday uncertain, bias higher
• ES pivot 1426.00.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Wow, it sure looked like my call for a higher close was going to look pretty foolish today with the Dow sinking ever lower all morning and through lunch time - until a late day rally appeared to save the day.  OK, so the close was only 2 points higher but that sure beats 100+ points lower.  Whatever the cause, I'll take it.  Now let's move on to Tuesday as we beat the charts into submission until they tell us what we want to hear.

The technicals (daily)

The Dow: I'm not quite sure what that late day rally was on about - I was out running errands at the time.  But it was enough to create a deep doji star, almost a dragonfly doji.  Either way, it's a pretty good bullish reversal indicator.  We did poke through the lower BB intraday but recovered.  However, the indicators are still only halfway from overbought to oversold and we're now sitting right on the edge of a long running rising RTC all the way back to June 4th.  Technically we closed outside it yesterday for a bearish setup and today's trade was entirely outside for a bearish trigger.  However, given that it's a weekly RTC, I'm willing to give it a pass for a day or two to see if the Dow can manage to bounce back.  We'll want to see a close above 13,380 on Tuesday to cancel this bearish signal.

The VIX:  Of all the charts tonight, the VIX has the clearest picture: a 2.58% drop on a classic dark cloud cover that just touched the 200 day MA before backing off.  It's also our second day on the upper BB and the VIX rarely spends more than that before declining.  I'd have to say the VIX is moving lower on Tuesday.

Market index futures: Tonight all three futures are down at 1:09 AM EDT with ES lower by 0.12%.  After yesterday's big dump, ES today gave us a small DCB-style green hammer, pretty much what I was expecting.  However, the stochastic still hasn't moved into position for a bullish crossover and the overnight action isn't showing much enthusiasm at this point, possibly on fallout from the last (thank God) presidential debate.

ES daily pivot: Tonight the pivot rises from 13433.67 to 1426.00 even.  And even though ES is currently down a bit, this means that we're now above the new pivot, a positive sign.

Dollar index: Today the dollar gave us a rare, almost textbook perfect  three candle pattern known as side-by-side white lines.  This is a high reliability bullish continuation pattern and is confirmed by rising indicators and a lack of any near-term resistance for the $.  I'd have to say this chart looks set to move higher again.

Euro: The euro stopped its two day slide today with an unusual gain on a day that the dollar also moved up.  The new candle forming in the overnight is a red gap-up spinning top indicating a possibility that the euro may move lower on Tuesday.  However, this candle is now outside the descending RTC for a bullish setup and the stochastic seems to be narrowing to set up a bullish crossover from a high level.  That all makes this chart too hard to call.

Transportation: Unlike the Dow, the trans continued lower today, but like the Dow they gave us a reversal candle in the form of a decent hammer.  But also like the Dow, the indicators are still descending from overbought so we'll want some confirmation of this hammer before calling the trans higher.

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  22/36

 37  9/10       54         29        +     1438  23/37

 38  9/17       63         22        +     1466  23/38

 39  9/24       52         30        +     1460  23/39

 40  10/1       39         39        -     1441 

 41  10/8       52         34        +     1461

 42  10/15      41         32        -     1429

 43  10/22      38         41        -     1433

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 9/24 was wrong again, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with 9 weeks to go in 2012, I'm 23 for 39  or 59%.


For the record, I voted bearish again on this weeks poll.  I note that the weekly SPX chart exited its rising RTC going back to June for a bearish setup last week.  So far this week we're still outside.  Unless the SPX can trade above 1460 by Friday that will be a bearish trigger.  And moving out to the SPX monthly, so far the current candle has also dropped out of its rising RTC for a bearish setup there.  I just can't be bullish in the face of that kind of statistics.


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      6      5           0        .571     -19
October    8      4      4           0        .667     219

     And the winner is...

Hmmm - the market seems to be trying to set up a rally but is being a bit uncoordinated about it.  On the plus side, the VIX, the trans, and the ES pivot are looking positive.  Also bellwether IBM seems to be bottoming here.  On the other hand, the dollar, and copper are looking negative.  Meanwhile, the Dow and the trans are looking like possible reversal candidates that require confirmation.

On the other hand, Rob Hanna, who I respect greatly, put up some convincing numbers of a coming rally.  On the other other hand, J-Trader is part short, part cash.  All of which just leaves me scratching my head tonight like the "before" picture in a Head & Shoulders ad.  I'd like to call it long but I think it's a bit premature.  On still yet another hand, I can't see going short at these levels either so I'll just have to settle for calling Tuesday uncertain but I'll throw in a bias higher.  I think we'll have more clarity for Wednesday.


ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $193,875 after 68 trades (53 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside amid so much uncertainty - no edge here, nothing to see, move along..

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 higher

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

• Monday higher, low confidence
• ES pivot 1433.67.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Quotes of the Day

“I grew up in a socialist country and I know what that does to people.  There is no hope, no freedom, no pride in achievement.”

                      - Thomas Peterffy, CEO of Interactive Brokers

"You didn't build that."

                     - Barack Obama, President of the United States

Recap

Recall that things were certainly looking toppy last Thursday, and Friday the bottom fell out with the Dow taking a 205 point dump.  There have been four other big down days this year but CNBC was all over this one, comparing it all day long to the October '87 crash, which of course it was nothing even close to.  After a weekend of letting the dust settle, we'll check out the damage on the charts now and see where we may be headed on Monday.

The technicals (daily)

The Dow: Friday's dump took us clear out of the rising RTC for a bearish trigger and very nearly to the lower BB at 13,301.  The 13,325 area is also something of a support line. On the other hand, the stochastic completed a bearish crossover and the other indicators all peaked.  So technically, this chart is still looking bearish.  However, practically, these big down days are often followed by at least one day of DCB, so I'm cautious about calling this chart lower on Monday.

The VIX:  And of course as the Dow fell, the VIX jumped 13.51% on a tall green marubozu that took it to a close of 17.06, which is exactly its upper BB.  Recall that I often mention the propensity of the VIX to not tarry for long around its upper BB, usually coming back down within a day or two.  However, the stochastic just completed a bullish crossover, although that may be distorted by the magnitude of Friday's gains.  I'm thinking the VIX will be moving lower if not Monday, then more likely by Tuesday.

Market index futures: Tonight all three futures are actually up at 1:11 AM EDT with ES higher by 0.32%.

ES daily pivot: Tonight the pivot tumbles from 1453.00 to 1433.67.  While we're still below the new number, it's by a lot less and right now ES seems to be showing some signs of interest in challenging it.  Breaking above by morning would definitely be a positive sign.  Friday's big move down in ES took us almost to support around 1420 and the lower BB at 1418.  Interestingly, unlike a lot of other charts tonight, the stochastic is well past the bearish crossover stage and this evening's gains have been enough to cause RSI and OBV to bottom out.  Although we don't have a classic reversal sign here, it is typical of ES to bounce at least a bit following a big down day and that is what I expect here on Monday.

Dollar index: The dollar gapped up 0.33% on Friday, a move that was enough to just exit oversold territory and complete a bullish stochastic crossover.  I see no technical reason why the dollar can't go higher again on Monday.

Euro: The euro fell again on Friday for a second day in a move that was enough to cause the indicators to peak and complete a bearish stochastic crossover.  That bodes poorly for the euro on Monday.  However, it is actually gaining in the Sunday overnight, now up to 1.3055.

Transportation: The trans were demolished on Friday along with everything else.  Their journey above the 200 day MA was short-lived as they fell right back through it and out of the nice five day rising RTC.  The indicators have all peaked at overbought and the stochastic has completed a bearish crossover. There's some support at 5054, bu that's still a ways from here so I'd say the trans could drop a bit more 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  8      6      5           0        .571     -19
October    7      4      4           0        .636     217

     And the winner is...

I think the futures sum it up pretty well tonight.  While the charts overall are still fairly bearish, the magnitude of Friday's sell-off is likely to lead to a DCB as bargain hunters step up to the table, especially since we stopped right at a number of support lines on Friday.  .  Note too the rise in both the euro and Swiss franc in overnight trading.  I think we still do have lower to go this week before bottoming, but we might actually manage a positive close tomorrow so I'm going to call Monday higher.

ES Fantasy Trader

Portfolio stats: with a successful short trade last Thursday night good for 17.75 points the account now rises to $193,875 after 68 trades (53 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside.  While I do think we're going higher on Monday, I don't want to get caught in one of these traps where the gains all happen in the evening hours leaving nothing for the rest of the night.  I've had cases where I went long, the market closed up, but I still lost money.  No thank you.

Reminder - you can follow these trades live on Twitter @nightowltrader.  We're averaging only a little more than 1 1/2 trades a week so I won't flood your Twitter feed.

BOT    10    false    ES    DEC12 Futures     1433.50    USD    GLOBEX    OCT 19 12:37:40   
SLD    10    false    ES    DEC12 Futures     1451.25    USD    GLOBEX    OCT 19 01:55:56    

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.