Friday, December 14, 2012

Friday higher only if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher if ES stays above its pivot, else lower, low confidence.
  • ES pivot 1421.75Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

As expected, we moved lower today with the Dow shedding 75 points in a fairly low volume session amid renewed bickering out of Washington over the fiscal cliff.  So far, nothing has changed my view that Congress will wait until 11:59:59 PM on New Year's Eve before reaching some sort of agreement, and that will probably consist of doing nothing more than some traditional can kicking.  In the meantime, the charts stop here so we might as well look them over.

The technicals (daily)

The Dow: Today's red candle confirmed yesterday's doji and took us entirely out of the rising RTC for a bearish trigger.  RSI has now peaked at highly overbought and our bearish stochastic crossover is complete.  This chart looks ready for more downside.

The VIXToday's 3.82% gain in the VIX pretty much was a mirror image of the Dow technically: a big gain that took it out of its descending RTC for a bullish trigger and a bullish stochastic crossover.  Those point to a higher VIX on Friday.

Market index futures:The pin action here is a big gutter ball as all three futures are actually up at 1:15 AM EST with ES higher by a non-trivial 0.30%, most likely on strong Chinese manufacturing data.  That said, today's red candle took us out of the rising RTC for a bearish trigger and left us with declining indicators and a completed bearish stochastic crossover.  Modulo the overnight, this chart looks pretty bearish.

ES daily pivot: Tonight the pivot falls from 1430.58 to 1421.75.  After some real roller coaster action into the close and this evening, ES is now wandering about the new pivot, having broken below and then back over even as I write this.  Whenever this happens at this hour of the night, often the next day is a key pivot day.  Watch this number Friday morning.

Dollar index: The dollar surprised me today by gaining 0.13% on Thursday on a bullish harami.  This was enough to take it out of its descending RTC for a bullish setup.  However, the indicators are kind of all over the place here, so we need confirmation before calling the dollar higher.  Perhaps there's a clue in the euro.

Euro: Last night I noted resistance at 1.3000 for the euro.  Well today the euro struggled with that level, giving us a doji, though still remaining inside its rising RTC.   But there's no confirmation from the overnight so far as  the E continues to rise, now up to 1.3095.  And even at that, we're still not yet overbought so I'd say we could see more gains here on Friday.

Transportation: Tonight I announce the discovery of a new candlestick pattern: I call it the devil's pitchfork.  It consists of three inverted hammers in a row after an uptrend and it's a bearish warning.  And that's what the trans gave us today, even though they managed a 0.14% gain.  The close at 5182 was just outside the rising RTC for a bearish setup, RSI is now quite overbought at 86.49, and the stochastic just formed a bearish crossover.  That all spells lower in my book.


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   7      5      5           0        .583
    135
December   4      1      1           3        .875     284


     And the winner is...

Tonight the daily charts are all looking pretty bearish.  The only question now is how much attention this Chinese data will get come morning.  From the overnight action in both the futures and the currencies, I'm hesitant to make the straight bearish call I would otherwise do in the face of these technicals.  But sometimes the overnight enthusiasm dissipates by morning and the trend reasserts itself.  There's just no way of knowing that so I'm going to resort to a conditional call.  Hey, if the Fed can tie interest rates to jobs numbers, I can claim that if ES manages to stay above its pivot by mid morning, we're going higher Friday, else lower.


ES Fantasy Trader

Portfolio stats:  the account remains at $188,750  after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside again in view of the conditional call.


Thursday, December 13, 2012

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1430.17Holding below is bearish.
  • Friday bias lower technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Quote of the Day
"They might as well have tied it to the orbit of Venus."
          - Rick Santelli, CNBC, commenting on why the Fed linked future interest rates to employment levels.


Recap

I called for today to be uncertain and it was about as uncertain as it gets.  The Dow popped 40 right out the gate, then gave it all back as everyone waited for Uncle Ben to speak.  When he was done, Mr. Market decided he liked what he had heard and the Dow went back up over 80 points.  Then Mr. M. had buyer's remorse and right back down we went, finally closing down all of three points.  A good day for the day traders, not so good for swing trading.  Anyway, now we ca finally get back to worrying about the Fiscal Cliff again.  Let's give the charts the Third Degree and see who confesses.

The technicals (daily)

The Dow: Hmm, so I'm wondering how much faith to put into this tall gravestone doji-ish thing we got today.  It's possible the candle was distorted by Uncle Ben's speech.  On the face of it, it's a fairly bearish pattern, however we did remain inside the rising RTC, just barely.  On the other hand, RSI is now a very high 94.63 and we just got a completed bearish stochastic crossover.  I think I'd like to see some confirmation before calling this chart lower, just because it seems that nothing can pull this market lower going all the way back to November 16th.

The VIXToday the VIX completely retraced all its losses from Tuesday, plus a bit more for a net gain of 2.44%.  This took it almost to the edge of its descending RTC.  And its stochastic is starting to flatten out at oversold.  So no bullish call here yet, but it could happen by Friday.

Market index futures: Tonight, all three futures are higher with ES up 0.05% at 1:13 AM EST.  Last night I said ES was due for a pullback and we got one today, snapping a five day winning streak with an inverted hammer that failed to take out yesterday's highs, and I don't mean dinner and a movie.  But this is where it gets tricky.  Today's ES close at 1427.25 was still good enough to keep it in its rising RTC.  However, because this RTC is so steep, we're now trading outside it in the overnight, so even though ES is up a tad, it's still a bearish setup.  And its indicators remain quite overbought, and the stochastic just squeaked out a bearish crossover.  So I'd say there's a fairly good chance we'll see ES lower if not Thursday then on Friday.

ES daily pivot: Tonight the pivot moves from 1426.92 to 1430.17.  Combined with ES in just a shallow rise this evening, we're now below the new pivot, a bearish sign.

Dollar index: The dollar gapped down again today, for the fourth time in four days, this time losing  0.30%.  There's now a clear downtrend going here, no support until 54.83 on the $USDUPX, and a lower BB all the way down at 54.70.  So with the bearish stochastic crossover completed, it looks like the dollar could continue lower on Thursday.

Euro: And while the dollar sank, the euro continued higher on Wednesday to give us a bullish three white soldiers pattern.  In fact it has been posting increasing gains every day for three days.  The problem there is that its now taking on the flavor of an exponential run-up and we all know how those end.  The euro now faces nearby resistance at 1.3100 and is not showing much enthusiasm for testing that level right now, having peaked at 1.3091 earlier tonight.  But we remain in a rising RTC and have rising indicators including a recently completed bullish stochastic crossover, so it's premature to call the euro lower yet.

Let me add here that I took a look at the yen chart at the suggestion of alert reader Daniel.  The question being, what's up with the yen.  One look at this kamikaze chart and the answer is obviously, nothing's up - it's been all downhill since the middle of September.  Why?  I haven't a clue. The best I've been able to come up with is speculation about a possible intervention by the BOJ.

Transportation: Probably the weakest chart of the night, the trans today lost 0.29% on a long red bearish inverted hammer.  This represents a complete failure to take out resistance at 5200 and leaves the stochastic just about to form a bearish crossover.  Combined with yesterday's doji at these levels, we now have two reversal signs in a row and those often signal a top.  If I had to guess, I'd say the trans are ready to move lower on Thursday.


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   7      5      5           0        .583
    135 
December   3      1      1           3        .833     209

     And the winner is...

The technical position of the charts continues to deteriorate, but on the whole they still not not yet look outright bearish.  In addition, there's some news out of Europe tonight about some ECB agreement which will no doubt be positive for the markets.  Nevertheless, the general impression I'm getting the general impression that this market is feeling a bit toppy.  And there's some bearish RTC action on the hourly charts too.  I'm more than a little worried to be standing in front of this particular bus, but I will go out on one of the limbs of my tree that I reserve specially for this purpose and declare Thursday lower. We'll see.


ES Fantasy Trader

Portfolio stats:  the account remains at $188,750  after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside again, this time because while I'm guessing Thursday's going lower, I'm not putting on a trade until I see the evidence.


Wednesday, December 12, 2012

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1426.92Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

Once again, ES flirted with its pivot in the wee hours, then took off around 3:30 AM and never looked back.  The result was a decent day with the Dow gaining 79 points.  And remember the cup & handle I pointed out on the SPX chart last night?  We got the breakout today as that index finally managed to close above the dreaded 1420.  So what's next?  Let's run the charts up the flagpole and see who salutes.

The technicals (daily)

The Dow: I've been expecting the Dow to make a run for its upper BB and today it took a stab at it, getting very close (just seven points shy) before retreating for a still respectable 0.60% gain.  However, this left us with a looming upper shadow on the candle that's close to an inverted hammer and that would be bearish.  Nevertheless, we remain inside the latest rising RTC and while the stochastic is trying to set up a bearish crossover, it hasn't done so yet.  So there's still really no turn-around evident on this chart.

The VIXLast night I wrote "I'd not be surprised at all to see the VIX move lower again on Tuesday".  And so I was in fact not surprised, as the VIX dropped another 2.99% on a move that keeps it in its descending RTC and keeps the indicators moving towards (but not yet in) oversold territory.  With no support til 15.1, I'd say we could see more downside here again.

Market index futures: Tonight all three futures are higher, sort of, at 1:44 AM EST with ES dead flat, NQ up 0.06% and YM up just 0.03%.  This is different from what we've been seeing at this hour the past few days.  With a big nearly 0.9% up move today that drove RSI to 94.54 and the SPX Hi-Lo indicator to 100 for the third day in a row, ES is starting to look tired here.  And although we finally broke 1420, the current level at 1431.75 is the next resistance line.  We've also had five straight days of decent gains, so this streak is starting to get a bit long in the tooth.  It might not be Wednesday, but I'd say ES is due for a pullback before the end of this week.

ES daily pivot: Tonight the pivot jumps from 1417.33 to 1426.92.  Despite the meandering of ES in the overnight, we remain above the new number, but by a lot less, now only four points.  While still bullish, this is close enough to bear watching.

Dollar index: The dollar continued its herky jerky motions with a 0.34% gap down on Tuesday.  That was enough to peak the indicators and just cause a bearish stochastic crossover.  This leaves the dollar at an interesting juncture, having now retraced 50% of its last move up and with a big gap wanting filling, but also with indicators suggesting more downside.  So I'm not going to touch this one tonight.  We'll get some resolution here on Wednesday.

Euro: I called the euro right again today as it posted some good gains to close at 1.3004, a move that gave us a bullish RTC trigger and a bonus bullish stochastic crossover..  However, it's drifting lower in the overnight and I'll note that the euro seems particularly susceptible to BMS (Big Move Syndrome), where a big up day is often followed by a day of retrenchment.  So I'm a bit wary about calling it higher on Wednesday here - just too risky, IMHO.

Transportation: On Tuesday the trans gained 0.13% and here's where the divergence from the Dow shows up.  Today's candle here did in fact hit its upper BB and then fell back to form a good inverted hammer, almost a gravestone doji.  Either way, it's a decent bearish warning.  And with resistance at the 5215 level tested unsuccessfully today, I'm thinking we could see the trans move lower now, possibly as soon as 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      5      8           0        .615     208
November   7      5      5           0        .583     135
 

December   3      1      1           2        .833     209

     And the winner is...

Pretty much everything I said last night is still true tonight, but not quite as much.  However, with a Fed announcement coming on Wednesday, that's pretty much what's going to determine the outcome, not the technicals.  Accordingly, although I do still see a positive, though diminishing bias here, as I generally do ahead of the Fed, I declare Wednesday uncertain.  One thought that comes to mind is that we could get a topping day.


ES Fantasy Trader

Portfolio stats:  the account remains at $188,750  after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside again ahead of the Fed.  No point taking unnecessary risks in the face of the unknown.


Tuesday, December 11, 2012

Tuesday higher if pivot holds

[I accidentally deleted this post earlier today.  Fortunately, I did finally manage to finad a copy in my browser's cache.  So here it is again.]
 
The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher if ES stays above pivot, else lower, low confidence.
  • ES pivot 1417.33Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

Well after submerging in the pre-dawn hours (but that doesn't count) ES broke above its pivot in convincing fashion exactly at the open Monday morning and that was that.  Despite sagging somewhat later in the day, we still managed to pull out a win, meager as it was, with the Dow gaining 15 points.  Forget pyramid power folks, pivot power is where it's at.  So one day down in Interesting Week and four to go.  Now let's put all the charts on the 5:12 to Glendale and see where they get off.

The technicals (daily)

The Dow: The Dow's slim gain today kept it inside the rising RTC but with a spinning top.  The indicators are beginning to look weak here.  RSI has peaked at overbought, money flow is highly overbought at 79.08, and the stochastic is leveling out to form a bearish crossover.  So although I can't immediately call this chart lower, I'd guess we'll see a drop in a couple of days at the most.  Right now the upper BB at 13,253 is looking out of reach.

The VIX:  Another funny day here - the VIX gained 0.94% but did it on a long red closing marubozu.  So despite the numeric gain, the pattern doesn't look particularly bullish.  In fact we remain inside a surprisingly good descending RTC (Pearson's = 0.941) and the indicators are nowhere near oversold.  So I'd not be surprised at all to see the VIX move lower again on Tuesday.

Market index futures: Tonight all three futures are down at 1:20 AM EST with ES lower by 0.19%.  Today's continued gains were the payoff for yesterday's three white soldiers pattern I mentioned.  They kept us inside the rising RTC.  But - with the RTC rising so steeply, it didn't take much to fall off the right side and that's what's happening now.  We're really just clinging to the edge here.  And the indicators are ambivalent too, with RSI. money flow, and OBV heading lower, but momentum and the stochastic moving higher.  This sort of indecision is typical of a pre-Fed day.

ES daily pivot: Tonight the pivot rises from 1415.58 to 1417.33.  The drop in ES after the close plus the rise in the pivot lands us smack on top of the new number.  Right now as I write, ES is teetering on the edge trying to decide which side to come down on, with an ever so slight edge to the bulls.

Dollar index: The bearish evening star I spoke of last night completed today with a 0.09% gap down for the dollar.  Although the indicators are still not quite overbought, I'd not be wanting to place any long bets on the dollar in the face of a chart like this right now, especially considering the state of the euro (see next).

Euro: Looks like the euro decided to completely ignore what's 'is name's resignation in Italy as it posted strong gains today with continued upside i the overnight, now at 1.2958 following a big pop at 11:20 PM caused by, um, well nothing really jumps out at me on the news wires right now.  That's why I like technical analysis - I don't have to spend a lot of time reading news articles all day long.  The important point is that this move took the euro out of its latest descending RTC for a bullish setup.  Unless the euro closes below 1.2859 on Wednesday (which seems unlikely), further upside will no doubt follow and that should be good for the markets.

Transportation: And on a very positive note, the trans on Monday took a 1.08% pop to bust through resistance at 5150 and come close to their upper BB at 5212.  We now have a clearly defined rising RTC, support at the 200 day MA and 5150, a completed bullish stochastic crossover, and rising indicators that are not yet overbought.  No bearish signs here, folks.


 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 (it's getting pretty long):


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  26/43
 44  10/29      36         43        -     1412  27/44
 45  11/5       44         33        -     1414  27/45
 46  11/12      38         46        -     1380  27/46
 47  11/19      52         34        +     1360
 48  11/26      48         26        +     1409
 49  12/3       57         21        N     1416 
 50  12/10      46         29        N     1418   

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 11/12 was wrong, the S&P now being  higher than then. I'm using the column "Accuracy" to track my calls.  So now with just two weeks to go in 2012, I'm 27 for 46 or 59%.

It's interesting to see how in the space of one week, the spread in sentiment narrowed considerably.  Personally I'm sitting on the sidelines again for the second week in a row and it looks like I've got company.  Still waiting for the fiscal cliff to resolve.

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   7      5      5           0        .583     135
December   3      1      1           1        .800     130


     And the winner is...

SPX daily
It's looking to me like the market is already pricing in some good news ahead of the Fed on Wednesday, so I think Tuesday's pretty much going to be a wait & see day.  Technically, the charts are still in pretty good shape, so I'm going to make another conditional call.  If ES stays above its pivot by mid-morning Tuesday, we close higher, else lower.  Either way though I'm not expecting any big moves on Tuesday.

Oh yes, and let me add that while the SPX failed to take out 1420 again on Monday, it does have a bullish stochastic crossover going for it and remains in a rising RTC, so all hope is not lost.  And while we're on the subject - am I the only one seeing a developing cup & handle in the daily SPX chart?  That's one of the best bullish patterns out there.  Take a look here and see if you don't agree.



ES Fantasy Trader

Portfolio stats:  the account remains at $188,750  after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside in the face of continuing uncertainty and the expectation of minimal rewards.


2 comments:

Thanks for the kind words, Michele, in your prior comment reply. You create a safe and serious space for posting such speculations. Nobody jumps down anyone’s throat, very rarely does anyone get razzed or ‘held accountable’ for daring to guess the nearterm direction of the stock market and maybe guessing wrong. But you also inject humor and lightness into all your writings and that encourages comments to do likewise.

I understand what you mean by the ancient board game of GO being the closest analogue to short term market ‘swing trading’ and/or ‘intraday scalping’. I never learned to play it but a very close friend was a GO master and he and his wife dedicated a small alcove room right off the living room, in their oddly shaped house (partly built into a hill), to be a beautiful GO room, with a japanese silk screen on the wall and soft lighting, with a board and bags of stones always ready on a low table, and two zafu seats for the players and a love seat for any spectators--often their children.

When my friend explained the basics of the game to me, many years ago, it immediately brought to mind analogies to classic Japanese candle analysis, with their common use of Set Theory and territoriality.

I too learned an entire School of cross-market analysis from Dr. Brett Steenbarger and I was glad that you pointed out to a commentor some nights ago how worthwhile the ‘timeless’ articles on his archival site still are, and that it is by no means a defunct site. I loved his core message (as befitted a shrink, as he is and was), that rather than try to “beat” the market we should rather carefully LISTEN to it... but not like some thunderous voice as would come out of a God of Thunder like Thor... but like as a patient on a couch, with lots of conflicted notions and anxieties...

He used (and taught others how to use) psychoanalysis metaphors and techniques to get at symbolic feelings of what the underlying sentiment or ‘skew’ or expectational set of the majority of market participants might be... and then use that to create distance from the perceived consensus and be appropriately guided whether to fade moves, or pyramid positions into them.

Dr. Brett is and was a unique teacher, who gave much wonderful guidance for years and asked little in return and STILL got heckled by yokels if occasionally he guessed the market direction wrong. (But he was also a zen stoic, and practiced samurai discipline, so such gross embarrassments to planet Earth and humanity as a species just made him chuckle. I know I was far more irked by their unappreciative rudeness than he was.)

Keep your eye on the yen. It continues to be the wild card in the pie, to mix metaphors. In the hieroglyphic language of currencies, the Yen usually is the fixed principle of maximum safety. But a 3-year low in manufacturing output or somesuch has sent the Japanese government and central bankers on a crusade to weaken the currency and help exports. So capital is flooding from the Yen crosses and after the dollar the next hiding place is the Euro, making it seem stronger than it probably really is.

The normally stable yen has broken free and is rolling through the currency solar system like a planet X from the cosmo-mythology of the writer Velikovsky. Correlations are getting wiggly and electromagnetic and not normal, and finally WHAT has gotten into the DAX? What could possibly be so wonderful about the German situation that their stock market has needed to go up 15 days in a row? Much is NOT making sense right now, in terms of correlation analysis.
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  1. Hmm, you noticed that too, eh? Maybe it's because the world is ending in a couple of weeks, according to the Mayans. But we've had several odd things lately, like the market, VIX , and dollar all moving together rather than opposite. I'll have to go mull over the DAX and yen, two charts I don't normally look at.

    I especially liked reading Dr. Brett's posts because my dad was a psychiatrist and a very savvy investor. I used to ask him how he decided when to buy or sell and all he would tell me was that he would psychoanalyze the market. TraderFeed echos a lot of those themes.

    Of course I was still young and foolish at the time and more interested in other, more trivial pursuits. Now that I'm old and foolish I'm sorry I didn't pay more attention, and of course now it's too late. Perhaps I should add a few books on psychoanalysis to my reading list.

Monday, December 10, 2012

Monday higher if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher if ES pivot holds, else lower, low confidence.
  • ES pivot 1415.58.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.
Recap

Last Thursday, my guess was that we'd go higher on Friday because I thought the Dow would want to check out its upper BB, and it definitely made a good start in that direction, gaining 81 points on the day.  This week promises to be quite interesting.with a Fed meeting on tap and the endless reruns of that popular soap opera, All My Fiscal Cliffs.  But before we move on to the charts, I want to mention the excellent comment left by alert reader Daniel on last Friday's post.  I urge you to check it out (just scroll down).  He makes some very good points.

The technicals (daily)

The Dow: Friday's action was significant because of the follow-through it provided to Thursday's gains.  It kept us inside a rising RTC, solidified the 200 day MA as support, and even caused an unusual bullish stochastic crossover from a high level.  My thesis that the Dow is headed for it supper BB remains intact, and that number is now .13,214.  After that we've got some resistance just shy of 13,250, so I'll say I'm expecting some limited upside here on Monday.

The VIX:  I got the VIX right on Friday too as it gapped down 4.10% and traded entirely outside its rising RTC for a bearish trigger.  Along with a completed bearish stochastic crossover, it looks like the VIX has more room to run lower on Monday, which should be good for stocks.

Market index futures: Tonight the futures are mixed at 1:00 AM EST with ES barely higher by 0.05%, YM up 0.03%, but NQ down 0.02%.  Call 'em basically flat.  In daily candles though, ES has now given us a quite bullish three white soldiers pattern and remains in an admittedly short rising RTC.  And like the Dow, we now have a bullish stochastic crossover from a high level and those are often good for a pop of a few days.  But and this is the big but, ES has been facing some stiff resistance in the 14120 neighborhood for days now.  As Daniel points out, everyone and his brother is watching this level.  Can we crack 1420?  I'd say that technically there's a chance, but a lot will depend on what the Fed has to say this week.

ES daily pivot: Tonight the pivot rises from 1410.17 to 1415.58.  We were above the old number all day Friday and remain above the new pivot, but just barely.  This number will have to be watched closely for signs of a breakdown. between now and the morning.  As long as we can hold above it though, that's a positive sign.

Dollar index: On Friday the dollar gapped up to form an evening star.  But it's not complete yet and the indicators are not yet overbought, so this is just a warning.  And given the day-to-day gyrations in the dollar lately, I'm hesitant to make a call either way off of this chart tonight.

Euro: Fortunately, the euro chart offers a bit more clarity.   After more losses on Friday, the Sunday overnight is continuing the downward trend, off another 0.18% right now at 1.2905.  We remain inside the descending RTC and are not yet oversold, so I'd say this run's not over yet  Note something funny though, for three straight days now the euro has been declining while the Dow has been advancing.  I've never really seen a divergence like this before and I'll admit I'm not quite sure what to make of it.

Transportation: The trans on Friday put in a spinning top with a 0.24% gain that featured a successful retest of their 200 day MA.  The bullish stochastic crossover is complete and we have a bullish RTC trigger, but we also have resistance at 5150, so like the Dow, I'm going to call for some more upside on Monday, but limited.


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   7      5      5           0        .583     135

December   3      1      1           0        .750     115


     And the winner is...

Hard to say.  With mixed economic news from China on Sunday night, cryptic non-sequiturs out of Washington from the Emperor and Herr Boehner, no major domestic economic news on Monday, and a Fed meeting coming up, the winds are looking light and variable.  Right now the trend is still up and I expect that to continue on Monday just because the bears seem to have gone into hibernation lately.  But with so much uncertainty, I think a lot of people won't be wanting to put on any big bets either way on Monday.  We have positive seasonality but this coming week is the weakest of the month.  So I'm expecting some small gains Monday as long as ES can hang onto its pivot.  If we break under 1415.58 in the morning, it's likely we'll close lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $188,750  after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside in the face of so much uncertainty.