Friday uncertain

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

• Friday lower, low confidence.
• ES pivot 1472.25.  Holding above is bullish..
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remaining short at 1461.25.

Recap

Well it looks like the technicals were trumped on Thursday by some much better than expected housing numbers and so instead of drifting lower, the Dow popped for an 85 point gain after being up triple digits intraday.  I'll be the first to admit this one took me completely by surprise.  This kinda throws a monkey wrench into my market view and I'm now going to have to reassess.  Let's see how today's action affected the charts and what that might mean for Friday.

The technicals (daily)

The Dow: On Thursday the Dow kicked to the curb the army of hanging men that had been marching along for four days now as it closed way above prior resistance of 13,535 to finish at 13,596.  This brought us right back into the rising RTC but it also stopped at the next resistance line established last fall.  With the indicators now useless and the upper BB not until 13,682, I guess there's no reason to believe we can't still go a little higher from here.

The VIX:  To underscore how strange today was, the VIX actually went up 1.12% even as the market as a whole did too.  That's quite unusual.  It's also unusual to exit a descending RTC without moving higher and the VIX remains stuck in a range between 13.30 and 13.85.  Today's close was right in the middle of that, so there's really no telling where the VIX is headed next.

Market index futures: Tonight all three futures are essentially flat at 1:31 AM EST with ES up by just one tick, NQ down 0.12% and YM unchanged.  Like the Dow, ES put an end to four days of dojis with a big burst to the upside on Thursday that exited its descending RTC for a bullish setup.  With today's SPX close at 1481, we're now back to levels last seen in the summer of 2007.  I was expecting to get that but not until around June or July.  With 1500 not that far away and it still being only January, I'm pretty sure the market is going to want to take a peek at that level again.  Meanwhile we remain in a rising monthly RTC with bounds of 1533 on the top and 1355 on the lower end.  My best guess is that we'll see some downside after reaching 1500.

ES daily pivot: Tonight the pivot jumps from 1464.83  to 1472.25..  We were above before and remain above the new number, but by a lot less now - just five points.  Still, that is undeniably a bullish sign.

Dollar index: The dollar confirmed yesterday's evening star today by losing 0.18% bringing it right back near its recent support levels with an inverted hammer.  There's no telling where this chart may go next. .

Euro: And like the dollar, the euro confirmed yesterday's spinning top with a big gain on Thursday that took it right back to its recent resistance at 1.3400.  That leaves it in a range with a lower bound of 1.3300.  With the overnight pretty much just treading water, I'd expect the next move here to be back down again.

Transportation:At least I was right to demand confirmation of yesterday's hanging man here as it was soundly trounced with a 0.66% gain to keep the trans solidly in their rising RTC.  The indicators are all crazy overbought, but they've been overbought so long, they're broken now.  It's like flying an ILS (instrument landing system) approach towards the runway.  The object is to keep two needles centered.  If say the vertical guidance one goes full deflection, you no longer have any idea if you're 20 feet too low or 200 feet too low.  Right now, the indicators are full deflection, so they're useless.  And the chart itself shows nothing but further upside.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    3      4      4           1       0.571     -89

     And the winner is...

I've spent longer than usual tonight staring at these charts (and more) but I'm sorry to report that I'm just not seeing it.  January op-ex Friday is historically a really bad day, but that says nothing about this Friday.  Today's big gains pretty much canceled my week-long bearish thesis.  One thing I do notice is that ES is in a stair-step pattern with big one day gains followed by a consolidation period of about a week.  We've seen three of these now.  If this pattern continues to hold, then we're looking at about five more days of vague, indecisive action.  Accordingly I'm just going to have to call Friday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we remain short at 1461.25.  We're now in heat-taking mode.

Thursday lower

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

• Thursday lower, low confidence.
• ES pivot 1464.83.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remaining short at 1461.25.

Recap

Huh - today looked a lot like a rerun of yesterday with the Dow once again taking a dump out the gate and the clawing its way back up as the day went on.  Only this time it didn't quite make it back to breakeven, snapping a five session winning streak with a 24 point loss.  Is this the top or just a one-off?  The charts know the answer and ve haf vays of making them talk.

The technicals (daily)

The Dow: Very odd - call it the March of the Dojis as the Dow put in its fourth hanging man in a row.  But Wednesday's was different being the first to turn red and also the first to close outside the rising RTC for a bearish setup.  With the indicators still not coming down off overbought, the next logical move here is lower.

The VIX:  After a valiant attempt to rally on Tuesday, the VIX sank back into its recent consolidation range on Wednesday.  And although we have a bullish RTC trigger, this is clearly the chart that's fallen and can't get up.  And don't look to the futures for any help either - they've been falling all month.  It's hard to believe that with VXX now sitting at 25.49, it was at a split-adjusted $1904 (!) back in May 2009.  I'm not looking for any big spikes in the VIX any time soon.

Market index futures:Tonight all three futures are lower at 1:00 AM EST with ES down by 0.17%.  ES continued its recent nervous trading patterns on Wednesday putting in a red spinning top sitting just above Tuesday's doji.  The overnight action is forming yet another spinning top, this one lower.  This leaves us inside a descending RTC with still overbought indicators.  The logical direction for this chart is continued lower.

ES daily pivot: Tonight the pivot inches up from 1463.33  to 1464.83.  After spending most of Wednesday above the pivot we dipped below the old number at 10:20 PM and remain below the new one, a bearish sign.

Dollar index:The dollar did move higher as I expected on Wednesday, but did it with a small red spinning top, giving us a reversal warning.  However, with the indicators having only recently bottomed at oversold and the stochastic just finishing a bullish crossover, it's premature to call the dollar lower on Thursday.  If anything, more upside seems more likely. .

Euro: And the euro seems to support that idea.  It put in a red spinning top of its own on Wednesday for a bearish RTC trigger.  This is being confirmed in the overnight as the E continues lower, now down to 1.3207.    With the indicators still on overbought and a bearish stochastic crossover now complete, more downside is likely here on Thursday.

Transportation:The trans just continue motoring higher, but may be running out of gas, adding just 0.07% today and forming a hanging man.  With highly overbought indicators, this is at least a reversal warning though in the absence of an RTC breakdown, I'm not ready to call the trans lower just yet.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    3      3      4           1       0.571     -4

     And the winner is...

One day seems pretty much like another lately, as a veritable army of dojis soldiers across our charts.  The basics from last night remain in place - mildly bearish but no real push in either direction.  The one exception is Dr. Copper, who has been moving decidedly lower for five days now.  And the SPX Hi-Lo index has been stuck at 100 for an amazingly long nine days now.  Add it all up and I have to believe we're closing lower Thursday.

ES Fantasy Trader

Portfolio stats: the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we remain short at 1461.25.  Once again, early this morning, we briefly dipped into profit territory, but that can't be helped.  I still believe this one is going to work out OK.

Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1463.33.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remaining short at 1461.25.

Under Lenin's banner, Forward!

Photo Montage of the week

And looking to the left....

 

 
 
 







Recap

Well it was looking good for my call for a lower close Tuesday with a big dump out the gate, but then the Dow spent the rest of the day staggering back up to finally finish actually up 28 points.  The Dow continues to put in one day of small gains after another, for five straight now.  And interestingly enough, the SPX has basically been just treading water during the same time.  It's hardly a ringing endorsement for the bulls but it is curious that the bears have been unable to gain any traction at all lately.  I blew this one - maybe I can do better for Wednesday.

The technicals (daily)

The Dow: The Dow has been in a strange melt-up mode the past few days, putting in one hanging man after another, each one a bit higher than the one before.  Today's was the biggest yet.  And so we are still in a now six day rising RTC and the indicators are still very nearly overbought and we have a third reversal warning in a row.  And once again, I'm going to have to wait for an actual close lower before declaring a reversal.  In the meantime, with the upper BB at 13,623, it's up, up and away!

The VIX:  And the VIX chart is just as odd as the Dow.  The VIX has been moving higher for three days now, but doing it by taking backwards baby steps, with three red candles in a row, each with a higher top.  We did trade outside the descending RTC today for a bullish trigger though and the indicators now seem to have bottomed at oversold.  So I continue to believe the VIX will be moving higher and that has to be bad for stocks (though today's gain didn't seem to hurt anything - another unusual divergence).

Market index futures:Tonight all three futures are lower at 12:49 AM EST with ES down by 0.19%.  In another interesting bit of divergence, ES, which normally tracks the Dow very closely, has been slowly drifting lower even as the Dow has been drifting higher the past three days.  Today's long-legged doji keeps us inside a developing descending RTC and the developing new candle is a big bearish engulfing pattern.  I have to think this chart looks lower for Wednesday.

ES daily pivot: Tonight the pivot dips from 1465.25  to 1463.33.  ES made three vain attempts to break under this evening before finally succeeding in a dive right after midnight.  This turns the new pivot into resistance and is a bearish sign.

Dollar index:On Tuesday the dollar gained 0.37%, thereby negating yesterday's negation of Friday's star doji.  I know, I don't understand that myself.  At least the indicators appear to be acting a bit more reasonably, having now bottomed at oversold and the stochastic just forming a bullish crossover.  Today's action was also a bullish RTC trigger, so I'm feeling more confident in calling the dollar higher again on Wednesday.

Euro: A look at the euro seems to confirm that.  The euro took a big drop on Tuesday to close regular trading at 1.3304.  This move was enough to drop it out of its rising RTC for a bearish setup and it confirmed yesterday's spinning top doji.  Add in a freshly completed bearish stochastic crossover and further downward pressure  on it in the overnight, and all the signs seem to point to a lower euro on Wednesday.

Transportation:The trans remain on fire, extending their winning ways to five straight now (OK, four plus a doji).  Nothing much has changed here today.  We remain in a rising RTC, the indicators remain overbought.  There is still no indication of a top here.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      3      4           1       0.500     -28

     And the winner is...

I don't know - the charts are looking a bit more bearish to me than last night, and all the factors that were in play then remain so now.    Still not a screaming short, but I would really hesitate to pile in long right now.  I have to believe that we're due for at least a one-day pullback, so at the risk of turning from a Night Owl into a Chicken Little, I am once again going to call for Wednesday lower.

ES Fantasy Trader

Portfolio stats: the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we remain short at 1461.25.  In a classic case of "you snooze you lose", the time to exit this one was early Tuesday morning, but of course I was asleep.  However, one never knows -  this one may still pan out yet.

Tuesday lower

• Tuesday lower, low confidence.
• ES pivot 1465.25.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1461.25.

Recap

Yawn - another "uncertain" call and another uncertain day it was as the Dow gained 19 points while the SPX lost 1.37  I've heard of the summer doldrums but this looks like the January doldrums.  Even yet another long-winded chest-thumper of a speech by Comrade Stalibama this afternoon wasn't able to tank this market.. So we continue, with the Dow drifting aimlessly higher as the SPX drifts aimlessly lower.  When will it all end?  We bow down to the chart gods and pray for deliverance.  Or at least some direction.

The technicals (daily)

The Dow: Today's ho-hum 0.14% gain belies the fact that the Dow is now on a four day winning streak.  This now gives us a decent rising RTC with an excellent Pearson's coefficient of 0.990.  And so far the Dow shows no signs of breaking out of that.  With indicators remaining stubbornly just shy of overbought I still can't call this chart lower yet.

The VIX:  Meanwhile, the VIX finally managed to post a winning day, up 1.20%.  But it did it with a red spinning top, suggesting a lack of enthusiasm for pushing higher.  Still, today's close at 13.52 is just outside the descending RTC for a bullish setup, and the previous three candles suggest that a bottom has been put in.  I'm more comfortable tonight calling for more upside here on Tuesday.

Market index futures:Tonight all three futures are lower at 12:48 AM EST with ES down by 0.19%.  After a hanging man last Thursday and a spinning top on Monday, the overnight seems to be providing some direction, and the direction is down.  Today's close was just outside the rising RTC for a bearish setup.  We' need to close above 1470.25 on Tuesday to cancel that, and I don't think that's going to happen.  With indicators now finally looking to have topped at overbought, this chart is now looking officially bearish to me.

ES daily pivot: Tonight the pivot inches up from 1467.00 to 1465.25..  We were below the old number all day and with a downward drift this evening, we're still below, so that's bearish.

Dollar index:Today's 0.09% drop in the dollar canceled Friday's morning star, all the while driving it to oversold levels.There's support after a fashion nearby at 54.69 but with the stochastic still falling, I'd say there's at least a bit of room to run lower again on Tuesday.

Euro: And the euro seems to be ;lagging the dollar by a day.  It put in its own spinning top today, closing on its upper BB again at 1.3385.  However, it is moving decidedly lower in the overnight, down 0.18% already and that is' so far at least, confirming the spinning top as a bearish sign for Tuesday.

Transportation:And the trans continue to roll on with a four day winning streak of their own, up an impressive half a percent on Monday.  The indicators remain overbought-broken and we remain in a rising RTC, so still no signs of a top here yet.

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  29/49

 50  12/10      46         29        N     1418  29/50

 51  12/17      52         28        -     1414  29/51

 52  12/26      52         26        +     1430

 

  1  12/31      40         48        - -   1402 

  2  1/7        47         30        + +   1466

  3  1/14       52         15        + +   1472

  

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 bearish four weeks ago, so that was a miss.  Therefore, as we fill in the last few calls for 2012, I am now 29 for 51 or 57%.  I will remove all the 2012 entries after next week when we have a complete chart for the year.

This week we're getting a very large bull-bear sentiment spread, as bearish sentiment has now dipped to the lowest level in over a year while bullish sentiment continues to rise.  This is beginning to look contrarian bearish to me, and I say that admitting that I voted bullish in this week's poll.  I'll revisit my stance in a week.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      2      4           1       0.600     0

     And the winner is...

The charts are not screamingly bearish tonight, but I'm going to go with the futures, the pivot, and the VIX, all of which seem to be suggesting a move lower.  Also the SPX Hi-Lo index has now been stuck on 100 since January 4th and that's starting to get old.  It's usually a good sign that a move lower is coming soon.  And I think we have on our side the fact that according to The Stock Trader's Almanac, op-ex week in January is historically weak.  So therefore I am calling Tuesday lower.

ES Fantasy Trader

Portfolio stats:  tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we go short at 1461.25.  I think that we're finally seeing some sort of direction and while this one may not be a big money-maker, there are a few points to capture here.

Monday uncertain

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

• Monday uncertain.
• ES pivot 1467.00.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I called Friday uncertain as a possible topping day.  It is of course too soon to say if we've topped or not but we did get a pretty mixed session with the Dow gaining all of 17 points and the SPX down just 0.07.  Which all leaves us at an interesting juncture for the coming week.  Let's see what the charts have to say about it.

The technicals (daily)

The Dow: Friday's 0.3% gain came in the form of a hanging man.  This of course requires confirmation but with the indicators still overbought and RSI apparently having already topped, I'd say the odds here are at least even for a move lower Monday.

The VIX:  Just when it seemed the VIX couldn't go any lower, it did, dropping another 0.96% on Friday to close at 13.36.  We have to go back to June 2007 to find the last time we were at these levels.  Of course, that was shortly before the VIX exploded, hitting nearly 90 by October 2008.  Can the VIX still go lower?  Sure.  It's lower BB is falling away rapidly, now at a crazy 7.31.  And let's not forget that for four entire years, between 2003 and 2007, the VIX regularly found support down around 10.  We're not quite that low yet, but the longer term view of the VIX is that it has only one way to go, and that's higher.

As for Monday, hard to tell.  We're in a sort of congestion area now between 13.2 and 13.7.  I've been calling for it to move higher for a week now and it hasn't happened, so I'm just going to shut up for a while.

Market index futures:Tonight all three futures are higher at 12:50 AM EST with ES up by 0.12%.  This gives us a green candle for the moment but we're still below the level of the red hanging mannish thing on Friday.  I note that 1471 has proven to be strong resistance three days running now.  Can we break that on Monday?  I'm not so sure.  We had a decent run last week and that put ES at overbought.  People have been calling for 1475 and even 1500 lately, and while I agree we'll see that by springtime, I don't think we'll get there on Monday.

ES daily pivot: Tonight the pivot rises from 1464.00  to 1467.00 even.  With a rise in the Sunday overnight, we remain above the new pivot, so that's bullish.

Dollar index:And what of the dollar?  On Friday, it gave us yet another doji, this one a gap down bullish morning star.  Indicators are still not quite yet overbought and we still have aways to go til the lower BB so some caution is required, but overall I'd say we're at least setting up for a move higher soon.

Euro: Meanwhile, in Euroland, the currency continued its winning ways on Friday, closing at 1.3346, just above its upper BB.  And in the Sunday overnight, it's actually moving higher still, now at 1.3398, entirely above the BB.  This has moved it into overbought territory  but in the absence of a reversal candle, I still can't call the euro lower just yet.

Transportation:Like the hanging man in the Dow, the trans on Friday gave us a reversal candle in the form of a nice star.  Indicators here remain overbought so the next logical move is down.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      2      3           1       0.600     0

     And the winner is...

The SPX Hi-Lo index has been stuck on 100 for three days now.  It's unusual for it to go that long without seeing some sort of pullback.  The charts have bestowed a bunch of dojis on us, but they all require confirmation, so they're not much help.  With no major economic news coming out on Monday and no fake political "crises" looming, it's hard to see what will move the markets.  Maybe some good earnings could power another leg higher.  I just don't know and I'm just not seeing any good direction from these dang charts tonight.  And we're once again entering op-ex week with all the gyrations that generally brings.  So once again, it's Monday uncertain.  But that's OK - our time will come.

ES Fantasy Trader

Portfolio stats:  tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we stand aside once again in the face of a lack of good guidance.