Thursday doji day expected

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

• Thursday uncertain, doji day expected.
• ES pivot 1451.08.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias uncertain.
• ES Fantasy Trader standing aside.

Recap

Yowza!  That's what I'm talking about.  After spending most of December pricing in the fiscal cliff, Mr. Market found a trampoline at the bottom and bounced clear over last month's highs with an eye-popping 308 point skyrocket.  Looks like they bought the rumor and then bought the news too, hand over fist.  Looks like I worried about that needlessly last night.  My quote pages were a lovely sea of solid green today.  A nice way to start the new year.  Now that we finally have some data to work with, let's take a quick trip through Chartland to figure out where Thursday's headed.

The technicals (daily)

The Dow: Today's king-sized green marubozu is a sight to behold.  In just two days, the Dow has traveled from its lower BB, out of its descending RTC, up through its 200 day MA and clear to its upper BB.  And witrh all that, it's not even close to being overbought yet, indicator-wise.  My only concern at this point is the usual tendency of the market to take a breather after big one day up moves, and they don't come much bigger than Wednesday's.

The VIX:  Ad today's VIX chart was equally spectacular, as the VIX plummeted 18.53% o the express elevator to the basement, leaving behind a gap the size of a small planet.  (Planet X?)  The VIX didn't even fall through its 200 day MA, it never even visited there, opening way under it.  It's final stop at 14.68 is right at recent support but still above its lower BB at 13.72.  And as the Dow's not overbought, the VIX is still not oversold yet.

Market index futures: Tonight all three futures are lower with ES dropping 0.26% at 1:45 AM EST. Like the other charts, today's ES action was a sight to behold.  I've never seen the likes of this in the eight years I've been watching the markets - a huge gap up that ended above the upper BB.  Like the Dow, ES made a two day trip from lower to upper BB, all without becoming overbought.

ES daily pivot: Tonight the pivot leaps from 1409.75 to 1451.08.  With ES sagging a bit in the overnight, this now leaves us still above the new pivot, but not by much.  But it's not showing much enthusiasm for cracking below this line.  Still it bears watching.

Dollar index: You'd think the dollar would have cratered on a day like today, but instead it actually rose as the day went on after opening lower, ending up by 0.10%.  That leaves it highly overbought now (RSI = 93.9) so I'd expect it to be moving lower soon.

Euro: Today the euro broke out of its recent consolidation range to the downside, but it has no support til 1.3135 and is not yet oversold, so I'd expect it to continue lower Thursday.

Transportation: And finally, same story with the trans which gained even more than the Dow with a 2.43% blast that took us back to levels not seen since July 2011.  And even after that, they're also nowhere near overbought yet.  Amazing.

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 final cumulative list for 2012.
 

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  28/47

 48  11/26      48         26        +     1409  29/48

 49  12/3       57         21        N     1416  29/48

 50  12/10      46         29        N     1418

 51  12/17      52         28        -     1414

 52  12/26      52         26        +     1430

  1  12/31      40         48        - -   1402 

  

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 I voted "Neutral" four weeks ago (because I felt I had no way to predict the outcome of the Fiscal Cliff), so that counts as neither right nor wrong.  Therefore, as we fill in the last few calls for 2012, I remain 29 for 48 or 60%.  I will remove all the 2012 entries in three weeks when we have a complete chart for the year.

Beginning this year, I'm going to track not only how I voted, but also how the majority of the poll participants voted, so we'll see how I did relative to everyone else.  So for this week, we see that "- -" means I voted Bearish and so did most of the rest of the voters.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    0      0      1           0        .000       0

Performance:

Here are my final performance stats for  2012.  The first two columns are for my trading account.  The next, "ESFT", is the ES Fantasy Trader.  Following that are the results for my IRA.  The last is the Dow, my reference benchmark that I try to beat or at least match.

 Date    Trading, Month  Tr. YTD  ESFT YTD   IRA YTD   Dow YTD

 

1/31/12       7.41%        7.41%   -0.50%     6.18%     3.41%

2/29/12       3.67%       11.35%    7.88%     9.02%     6.02%

3/31/12       1.76%       13.31%   29.88%    10.05%     8.16%
4/30/12       2.35%       15.97%   41.75%    10.90%     8.17%

5/31/12      -1.92%       14.23%   26.63%     4.91%     1.45%

6/30/12       4.33%       19.17%   40.38%     2.80%     5.44%

7/31/12       2.96%       22.69%   76.00%    10.98%     6.49%

8/31/12       2.75%       25.64%   66.25%    13.16%     7.17%

9/28/12       3.59%       30.15%   80.88%    15.37%     9.98%

10/31/12     -2.59%       26.77%   93.88%    14.04%     7.21%

11/30/12      2.17%       28.94%   98.00%    11.42%     6.63%

12/31/12     -1.42%       27.52%   93.50%    10.13%     7.29%

Mean          2.09%  

I'm pretty happy with those numbers.  I have beaten my benchmark with all three of my accounts and I'm in the ballpark of my recent annual results.  For the record here is how my trading account has done: since I started keeping records

        Michele     Dow
2007    -10.83%     6.43%
2008    -16.68%   -33.84%
2009     30.57%    18.88%
2010     31.99%    11.03%
2011     -0.01%     5.51%
2012     27.52%     7.29%

I started trading as a full time occupation in 2004. Of course I lost my shirt at first and didn't even keep any records for the first three years because it was all too depressing.  But I think by 2008 I was starting to get the hang of it.  I still lost money that awful year, but it was the first year I did better than the Dow.  Since then, I've been reasonably profitable.  I haven't made the outsized triple digit returns you see some people posting on the web, but on the other hand these are real numbers and they're better than I could have gotten in any bond fund or mutual fund.

     And the winner is...

After a wild ride like on Wednesday, the conventional wisdom would suggest that the market needs to pause and take a rest before its next move.  And with the indicators still not at extreme readings, and no reversal patterns in sight, it would seem that there's still at least a bit more gas in the tank before any profit taking kicks in.  But I'm fairly sure the big move is over, so I'm going to call Thursday uncertain, in the sense that I'm expecting a doji day as the market digests Wednesday's gains.  After that, we could see a pullback as buyer's remorse starts to set in.


ES Fantasy Trader

Portfolio stats:  the account remains at $100,000 as we wait for the right moment to enter our first trade of the year.  With no clear edge, tonight we stand aside again.  I always like my first trade of the year to be a winner, so I'm going to exercise a bit of patience and wait for something more tempting.