Thursday lower

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

• Wednesday lower, low confidence.
  
• ES pivot 1782.83.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Renewed taper talk drove the markets lower on Wednesday so we chalk up another one in the win column.  Is this finally a trend change?  The charts can tell us - read on.

The technicals (daily)

The Dow: The Dow finally dropped out of a nine-day long trend, so that's a bearish setup.  The bearish stochastic crossover is also now complete and the indicators have peaked and begun moving lower from overbought.  So everything's pointing to more downside ahead here.

The VIX:  On Wednesday the VIX was virtually unchanged,, somewhat surprisingly considering the losses in the market.  And it came with a long-legged spinning top that just about touched its upper BB intraday.  Wednesday should have been the payoff for Tuesday's bullish RTC trigger.  That failure makes me wonder if the VIX is losing it mojo around 13.50.  Supporting that is a very unusual 7.25% drop in VVIX.  I'm thinking the VIX may actually be moving lower from here.

Market index futures: Tonight all three futures are lower at 12:26 AM EST with ES down by 0.18%.  After a third down day in a row on Wednesday, ES is now officially in a new descending RTC.  The overnight is continuing lower squarely within this channel and the indicators continue to move from overbought to oversold so this chart continues to look bearish.

ES daily pivot: Tonight the pivot drops again from 1787.00  to 1782.83. Nothing much new here - we remain below the new pivot so once again this indicator is bearish.

Dollar index: Last night I wrote "we have at least a warning that a reversal higher might be coming soon" and so it did in a big way with the dollar up 0.53% on Wednesday with a big green marubozu that ejected it right out of its descending RTC for a bullish setup.  This was also enough for a bullish stochastic crossover and a clear bottom in RTC.  So this one looks higher again on Thursday..

Euro: While I nailed the dollar, I blew it on the euro, which took a big dump on Wednesday crashing right out of its rising RTC for a bearish trigger.  This move was enough to take the indicators all the way off overbought and send the stochastic on its way towards oversold.  But we're not there yet.

Transportation: Last night I wrote "this one looks continued bearish for Wednesday,"  And it was like shooting fish in a barrel as the trans lost another 0.29%.  So with a new downward RTC now established and indicators still just barely off overbought, this one still looks lower for Thursday.

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.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

  1  12/31      40         48        -      -   1402   0/1

  2  1/7        47         30        +      +   1466   1/2

  3  1/14       52         15        +      +   1472   2/3

  4  1/22       50         21        +      +   1486   3/4

  5  1/28       44         26        +      +   1503   4/5

  6  2/5        40         36        +      +   1513   5/6

  7  2/11       43         25        +      +   1518   6/7

  8  2/19       21         43        -      -   1520   6/8

  9  2/25       30         52        -      -   1516   6/9

 10  3/4        29         39        -      -   1518   6/10

 11  3/11       41         26        +      +   1551   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643   13/24  11/21

 25  6/17       32         40        +      -   1627   14/25  11/22

 26  6/24       13         46        -      -   1592   14/26  11/23

 27  7/1        25         42        -      -   1606   14/27  11/24

 28  7/8        42         29        +      +   1632   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692   16/30  13/27

 31  7/29       39         17        +      +   1692   16/31  13/28

 32  8/5        46         27        +      +   1710   16/32  13/29

 33  8/12       32         41        -      -   1691   17/33  14/30

 34  8/19       23         54        -      -   1656   17/34  14/31

 35  8/26       23         50        -      -   1664   17/35  14/32

 36  9/3        21         54        -      -   1633   17/36  14/33

 37  9/9        35         30        +      +   1655   18/37  15/34

 38  9/16       40         28        +      +   1688   19/38  16/35

 39 9/23        52         36        +      +   1710   20/39  17/36

 40 9/30        39         43        +      -   1692   21/40  17/37

 41 10/7        30         33        +      -   1691   22/41  17/38

 42 10/14       48         22        +      +   1703   23/42  18/39

 43 10/21       57         30        +      +   1745   24/43  19/40

 44 10/28       59         19        +      +   1760  

 45 11/4        42         25        +      +   1762

 46 11/11       39         39        +      x   1771

 47 11/18       52         30        +      +   1798 

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.  The "Poll" column is how the majority of participants 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 bullish four weeks ago along with the majority of the poll so we were both right.  Therefore we continue the year with an accuracy of 24 for 43, or 56%.   The poll as a whole improves to 19 for 40 or 48% - it continues to be a tough year for the poll so far.

This week I voted bullish again for the 11th time in a row.  Apparently a number of other poll participants joined me as bullish sentiment rose to 52%, its second highest level of the year so far.  I'm afraid that on the weekly and monthly charts, I'm still not seeing any reversal signs.


Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points
 
January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July      10      2      4           4        0.875    486
August    11      3      6           2        0.813    687
September  8      3      3           3        0.800    485
October    7      5      8           2        0.643    674
November   6      5      1           1        0.583    232
 
     And the winner is...

All the bearish forces mentioned last night remain in place tonight and there are not yet any reversal signs on the horizon, so the call simply remains the same: Thursday lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17  total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside.again.