Friday higher if pivot passed

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

• Friday higher if pivot passed, else lower.
• ES pivot 1351.83.  Holding below is bearish.
• Next week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remaining long at 1376.25.

Recap

Today we finally got something different.  Instead of a steady sell-off, we got a market kind of hunting for direction.  And although it went down again, at least the losses were tempered.  But we got faked out like this just three days ago.  Is this a turn around or just a breather before the selling resumes?  We weigh the evidence in the charts.  (And Blogspot's spell checker is broken again, so I apologize in advance for any typos I might have missed).

The technicals (daily)

The Dow: The Dow lost just 29 points on a spinning top.  At least that's a reversal sign but one that requires confirmation.  Meanwhile, the indicators are more oversold than anything all year, including the end of that month-long slide in May.  RSI is now 0.57 and the stochastic is lying flat on the floor.  This is so overextended that I can't imagine not getting some sort of up move soon.  I just don't know if it will be Friday.

The VIX:  Meanwhile,t eh VIX posted  a small gain of 0.39% but that was just enough to keep it above its 200 day MA and complete a bullish crossover.  So it now has support and rising indicators.  I'd say it's possible the VIX could move higher again on Friday.

Market index futures: Tonight all three futures are down at 1:26 AM EST with ES lower by 0.13%.  Like the other charts, ES is now highly oversold with an RSI of just 6.59.  But it remains inside a descending RTC  and although it gave us a reversal candle in the form of a spinning top today, in this environment I need confirmation before calling ES higher.

ES daily pivot: Tonight the pivot drops again  from 1361.42 to 1351.83.  The situation is remarkbly to what we had last night at this time - below the old pivot, then still below the new number but by much less.  Still, until we see ES actually break over the pivot, it doesn't matter how close it gets - it's still bearish.

Dollar index: The dollar stubbornly refuses to go down, poking back over the 200 day MA again today before closing exactly on it at 55.87 with a bearish hanging man.  That's two reversal signs in two days - the dollar has to come down eventually.  It just seems to be out of gas right here.

Euro: Last night I wrote simply "higher euro on Thursday" and that's just what happened today as the curvy E posted another solid gain for a bullish trigger.  We can now officially declare the downtrend over.  The currency is fairly directionless in the overnight so far but the trend is now up.

Transportation: After Wednesday's big dump, today the trans formed a gap-down spinning top good for another 0.24% loss.  However, that was just enough to send it back out of the descending RTC for a bullish setup.  We're also very close to support at 4892 now and the oindicators are now quite oversold with RSI dropping to 10.85.  We're so oversold now that a reversal has to happen soon, but having gotten faked out two days ago I'm not going to believe it until I get some confirmation of today's doji.


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      5      8           0        .615     208
November   4      3      4           0        .571      41

     And the winner is...

The charts all keep getting more and more oversold but we somehow continue moving lower.  But this has to end sometime and Friday being option expiration might just do the trick.  The Dow is up seven of the last nine on this day.  Also the SPX Hi-Lo index fell back to8.33 today, a level from which rallies pretty much always follow.  We're clearly overdue for a rally.  I'd like to say it's coming on Friday but I just can't.  So tonight I'm going to make a conditional call: if ES can manage to get above its pivot and stay there by mid morning, then we'll have Friday higher.  If not, then lower again.

ES Fantasy Trader

Portfolio stats:  the account remains at $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we remain long at 1376.25.

Thursday lower

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

• Thursday lower, low confidence.
• ES pivot 1361.42.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remaining long at 1376.25.

Recap

Ugh.  Boy, when I blow em, I blow em bad.  The stock market did not go up today.  In fact it went down.  Way down.  With the Dow posting a sickening 185 point loss, really for no other reason that I can think of other than the fact that Mr. Market simply does not like Mr. Obama, and with good cause.  It's not looking good, folks.  We'll go over the charts again tonight, but more out of force of habit than anything else.  Right now it's looking like we're already plunging over the Fiscal Cliff.

The technicals (daily)

The Dow: Today's ugly 1.45% loss, when I was expecting a gain, left the Dow at 12,571, just ever so short of the 12,556 point I mentioned last night as being the cut-off for a bullish trigger.  So technically, now we have that.  But it really feels more like jumping out the window time than bullish trigger time.  And there's absolutely nothing in the recent candles to suggest any sort of turnaround on this chart.

The VIX:  After posting two days of odd declines in the face of stagnating markets, today the VIX took off, gaining 7.63% on a green marubozu that broke back over the 200 day MA with a convincing bullish engulfing pattern and a bullish RTC setup.  With a stochastic now getting ready for a bullish crossover, all signs point to a VIX that could go higher again on Thursday.

Market index futures: Tonight all three futures are up at 1:00 AM EST with ES higher by 0.18%.  But ES is now in a pattern of rising in the overnight only to collapse as the following day goes on, so I'm not getting too excited about this move.  And of course Wednesday's miserable dump didn't help matters any, slicing right through the 200 day MA.  The only good thing here is that the indicators are now quite oversold.  RSI stands at 6.23.  And OBV is actually moving up now, indicating money flowing in.

ES daily pivot: Tonight the pivot drops from 1374.33  to 1361.42.  This still leaves ES under the new pivot but only by six points now.  Still, we'll need to see it mount an attack on this number by morning to make me feel the love.

Dollar index: The dollar did indeed move lower today, if only by 0.05% but that didn't help anyone.  Still, it broke back under the 200 day MA with a doji and left the indicators now finally coming off overbought.  I'd say the dollar could go lower from here.  The conventional wisdom is that this helps stocks.  Now I'm not so sure.

Euro: Last night I wrote "If the euro can manage a close above 1.2732 on Wednesday, that will be a bullish setup."  Well despite the US averages cratering, the euro finished easily above that, closing at 1.2750.  In daily candles, we now have, small doji star, big doji, RTC breakout.  And the overnight is trading higher again.  To me that spells higher euro on Thursday as it's now looking like the nearly month-long downtrend may be over.  I'll note here also that the Swiss franc is tracing a similar move but it even more bullish right now.  These are good signs.

Transportation: And as if the drop in the Dow wasn't bad enough today, the trans were simply obliterated with a 2.55% plummet down to 4926 that punched right through the lower BB and dove right back into the declining RTC leaving the indicators all in oversold-broken mode.  So now there's no telling when a turn-around might happen.  Like Jim Cramer likes to say "Nothing can go lower than zero".


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      5      8           0        .615     208
November   3      3      4           0        .500      12

     And the winner is...

Today's sell-off had a hint of panic to it and that's what I like to see.  It's real easy to go "Oh my God!", throw up your hands in despair, and sell everything.  Been there, done that, got my head handed to me.  Because generally when you start getting that feeling, that's exactly the time to buy, not sell.  What's the old saying about the time to buy is when there's blood running in the streets?  Well, I'm seeing a lot of red lately.

Note too that the SPX Hi-Lo index now stands at a meager 19.  Every time we've hit these levels this year, a rally followed soon after.  We hit 19 on July 25th and SPX rallied hard the next two days running.  So while it's tempting to throw in the towel after an awful November since you-know-who got elected, we're going to hang tough and take the heat.  That's part of being a successful trader.

I think that right now we're at a point where it's too late to go short but still too early to go long and I'm not interested in catching this particular falling knife.  So while I do see a few encouraging signs in the currencies tonight, that just hasn't been working lately so I'm simply going to go with the majority and call Thursday lower.  I'll be delighted to be proven wrong.

ES Fantasy Trader

Portfolio stats:  the account remains at $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we take the heat and remain long at 1376.25.

Wednesday higher

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

• Wednesday higher, low confidence.
• ES pivot 1374.33.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going long at 1376.25.

Recap

Today continued a recent pattern now six days long of early gains evaporating into the close as the market continues to search for reasons to move higher while the bears continue having problems pushing it lower.  Which way will this tug-o-war resolve?  We bring out the loupe and pore over  the charts for clues.

The technicals (daily)

The Dow: The Dow lost 59 today, giving up its recent support around 12,815.  But it also gave us an inverted hammer and that makes three reversal candles in a row now.  But today's was different - it traded entirely outside the descending RTC fore a bullish setup.  If the Dow closes above 12,556 on Wednesday (which seems likely) then it will be a bullish trigger.  Today's loss did delay the bullish stochastic crossover, but the indicators are still pretty oversold.  So despite  another losing day, I'm starting to see signs of a bounce here.

The VIX:  Once again we got the unusual situation of the VIX declining along with the major averages, this time dropping 0.18%.  The VIX now has support right at today's close of 16.65 but the indicators are only halfway from overbought to oversold so I'd say that there's a good chance for still lower from here on Wednesday.

Market index futures: Tonight all three futures are up at 1:20 AM EDT with ES higher by 0.38%.  It tested its 200 day MA today for the second time in three days and passed the test, though just barely, closing just one point above it.  The gap-up gains in the overnight are encouraging though and the indicators remain oversold.

ES daily pivot: Tonight the pivot drops from 1377.50 to 1374.33.  This, coupled with the evening climb in ES sent us back above the pivot right at midnight, so this becomes a positive sign.

Dollar index: Today the $USDUPX climbed above its 200 day MA intraday before dropping back exactly to it with a 0.04% gain on a weak looking red spinning top.  This doesn't look like the sort of move that will power higher above the MA and with the indicators remaining quite oversold, I'm going to again call for the dollar to move lower on Wednesday now.

Euro: After getting hammered relentlessly for nearly a month now, the euro appears like it may be putting in a bottom with a small doji on Monday and a taller one today that kept it above the 1.2700 level.  And it's actually rising in the overnight, now at 1.2721.  This is enough to put it very close to the edge of that long descending RTC.  If the euro can manage a close above 1.2732 on Wednesday, that will be a bullish setup.

Transportation: I was expecting a move higher here on Tuesday but instead the trans dropped 0.07% on a long spindly doji.  But I think the bullish stochastic crossover that just completed is more significant so I'll go ahead and guess that we ight see the trans move higher on Wednesday.

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  24/40

 41  10/8       52         34        +     1461  24/41

 42  10/15      41         32        -     1429  25/42

 43  10/22      38         41        -     1433

 44  10/29      36         43        -     1412

 45  11/5       44         33        -     1414

 46  11/12      38         46        -     1380

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 10/15 was right, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with 7 weeks to go in 2012, I'm 25 for 42 or 60%.

For the record, once again I voted bearish based on my reading of the weekly and monthly SPX charts.


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      5      8           0        .615     208
November   3      2      4           0        .600     197

     And the winner is...

Despite today's modest losses, the charts continue to look poised for some gains, with dojis abounding.  And tonight we're not riding a negative wave in the futures.  Also, the currencies (and copper too) are looking like they may be finding a bottom.  And Wednesday is historically the strongest day of a historically bullish week.  So I think I'm going to go out on a limb and call for Wednesday higher.

ES Fantasy Trader


Mindful of the market's recent tendency for early gains to evaporate as the day goes on, I decided to ring the register on last night's long trade just before lunch today for a respectable 6.25 point profit.  Turns out it was a good move as it was all downhill from there. Portfolio stats:  the account now rises to $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we go long at 1376.25.

Reminder: you can track these trades live on Twitter @nightowltrader.

SLD    11    false    ES    DEC12 Futures     1384.50    USD    GLOBEX    11:22:45 
BOT    10    false    ES    DEC12 Futures     1378.25    USD    GLOBEX    NOV 12 01:28:17     

Tuesday uncertain

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

• Tuesday uncertain.
• ES pivot 1377.50.  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remaining long at 1378.25.

Recap

On Veteran's Day, the Dow put in a pretty directionless session, swinging between small gains and losses to finally end either up one point or down a third of a point depending on how close after 4 PM you looked.  But that still provided the charts with one more data point so let's see what that may mean for Tuesday.

The technicals (daily)

The Dow: Today's perfect doji mirrored Friday's.  And like heads, two dojis are better than one, so I still think the Dow's due to move higher.

The VIX:  Compared to the lackluster moves of all three major averages, the VIX took a big loss today.  I was expecting a move lower, but I didn't think it would be down 10.37%.  This tall red marubozu sliced back under the 200 day MA and completed a bearish stochastic crossover suggesting more downside to come.

Market index futures: Tonight all three futures are down at 1: 38AM EST with ES lower by a non-trivial 0.62% in the overnight after putting in a modest gain for the day.  We actually broke under the 200 day MA at 1370.18 about an hour ago.  At 1369.50 as I write, ES is on the bubble.  The indicators are all oversold now but what's not clear is whether the MA will act as support or if the bots will notice the breach and sell 'em off on Tuesday.

ES daily pivot: Tonight the pivot bumps up from 1375.75 to 1377.50.  We fell below the pivot at 7 PM and are still below, a bearish sign.

Dollar index: No $USDUPX chart tonight.

Euro: Nothing new in euroland either, as the currency continued its slide down the descending RTC unabated.  This streak is now closing in on the slump that lasted the whole month of May.  And still no end in sight.

Transportation: Also diverging from the Dow, the trans today put in a 0.80% gain on a bullish engulfing candle that also just broke out of the descending RTC for a bullish setup.  And the stochastic is now oversold and appears to be lining up for a bullish crossover.  I was figuring a bounce off the lower BB, but we never even came close.  After today's move, I'd guess there's more upside in store 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      6      5           0        .571     -19 
October    8      5      8           0        .615     208
November   3      2      3           0        .600     197

     And the winner is...

As befits a low-volume holiday session, the charts are somewhat conflicted tonight, but I think the overall theme of being due for a bounce remains basically intact, with the Dow, VIX and trans all looking good.  However, I am quite concerned about the moves in ES and the euro in the overnight, so that's tempering my enthusiasm for Tuesday.  Therefore, I am simply going to call Tuesday uncertain.  If we don't go up on Tuesday, then the odds look better for a bump on Wednesday.

ES Fantasy Trader

Portfolio stats:  the account remains at $194,250 after 69 trades (54 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we're staying long at 1378.25 from last night.  This trade has sort of been weaving above and below break-even all day, but I think it has more upside on Tuesday.

Monday higher

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

• Monday higher, medium confidence.
• ES pivot 1375.75.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going long at 1378.25.

Recap

Last Friday got off to a nice start and things were looking fairly good - that is until Emperor Nerobama had to open up his mouth.  His speech managed to erase all the gains and send the Dow back into the red, though it finally managed to eke out a meager four points by day's end.  There's a sure-fire day-trading strategy for you - watch for when Obama's going to give his next speech and then short the heck out of ES, right around the time he says "Good afternoon".  But right now it's night time and that means chart time, so let's go.

The technicals (daily)

The Dow: Friday finally gave us a reversal candle in the form of a clear doji star.  With the stochastic looking ready to start a bullish crossover, this chart's starting to look like last week's wave of post-election selling may be over.

The VIX: And while the VIX gained 0.65% on Friday, it did it with a tall hanging man.  And that's the second one in a row, which strengthens the case for a reversal  The VIX has some resistance in the 18.70 area so I'm thinking the next move is likely lower.

Market index futures: Tonight all three futures are up at 1: 24AM EDT with ES higher by 0.16%.  The interesting thing on this chart is that Friday gave us a classic doji star.  But not just that, ES took an intraday peek below the 200 day MA and apparently did not like what it saw.  This sent the indicators at last into oversold territory and the overnight action just gave us a bullish crossover from the stochastic.  I'm liking this chart more than I have in several days now.

ES daily pivot: Tonight the pivot drops from 1381.75  to 1375.75.  The good news here is that ES has been trending higher since around 8 PM, so we broke above the new pivot at midnight.  So far, that seems to be holding, so that's a positive sign.

Dollar index: On Friday, the dollar posted a second hanging man as its attempts to move higher were blocked by the 200 day MA at 55.88 on the $USDUPX.  And the indicators are back to very overbought.  I still think the dollar is due to move lower and Monday would be as good a time as any.

Euro: Still no end to the euro's continuing decline, remaining in a descending RTC from October 17th.We're up a bit in the overnight, but that hasn't been paying off lately so until we manage to exit this RTC, I say the euro's continuing lower, though some action tonight out of Greece on their budget could provide a bounce here on Monday.

Transportation: And finally, the trans on Friday posted their third consecutive losing day, although the losses have been getting smaller as we go, dropping 0.71% this time.  This helped the indicators all move closer to oversold but they're still not there yet.  Next stop, if I had to guess, would be the lower BB at 4978, then maybe a bounce off it.


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      5      8           0        .615     208
November   3      1      3           0        .750     197

     And the winner is...

November op-ex week tends to be fairly bullish historically, and gets better as the week goes on.  And the charts tonight are finally pointing to a possible rally.  Also, Dr. Copper has reached a strong support line and the TLT's looking toppy.  Add it all up and I'm betting Monday's higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $194,250 after 69 trades (54 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we're going long at 1378.25.  I'm liking the setup with ES not really having taken off yet but with what looks like a decent edge (finally) developing for Monday.