Friday, January 25, 2013

Friday higher only if pivot passed

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher only if ES pivot passed, else lower
  • ES pivot 1490.75.  Holding below is bearish...
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

I think I was right to call Thursday uncertain.  The Dow advanced once again but with a changed pattern, and the SPX was flat, giving us a perfect doji.  And the Nasdaq of course was dragged into negative territory by the 800 lb. gorilla known as Apple.  So once again like the kids in the back seat we have to ask, in regard to a top, are we there yet?  Don't make me stop these charts!

The technicals (daily)

The Dow: Yes the Dow gained another 46 points on Thursday but it did it on an inverted hammer, the first reversal sign we've seen in six sessions.  We are indeed up five in a row and 10 for 11, which is getting to be quite a long rally without a pullback.  While the indicators are still pegged on overbought and we're still in a rising RTC, I'm getting the feeling that people are looking for an excuse, any excuse to move things lower.  This inverted hammer may be it.  I'd not be going long right now.  I'll also note that the Dow came to within 2 points of its upper BB today.

The VIXThe VIX posted its second day of admittedly small gains, gaining just 1.85% on a long-legged doji.  We remain inside the descending RTC but the stochastic seems to be trying to set up a bullish crossover.  So support around 12.50 continues to hold and with today's close just above that I wouldn't be surprised to see a further move higher on Friday.

Market index futures:Tonight all three futures are lower at 1:10 AM EST with ES down by 0.17%.  On Thursday ES gave us a candle that resembled the Dow's inverted hammer more than the SPX's doji so that alone is not a reversal warning.  What is one though is the new candle which right now is trading outside the rising RTC for a bearish setup.  ES is going to have to close above 1492 on Friday to cancel that one.  So far, one part of my prediction last week has come true - the SPX hit 1500 and retreated.  That alone makes me cautious for Friday.

ES daily pivot: Tonight the pivot rises from 1488.67  to 1490.75. Like last night, we threaded about the old number earlier this evening but remain below the new pivot thanks to this gain.  But ES does seem to be showing some interest in taking a look at ti and now we're only a point and a half below.  That puts the pivot in play for Friday.

Dollar index:The dollar index continues its random bouncing around and gained just 0.02% on Thursday.  We're now overbought and nearly out of the rising RTC, but the action here is so chaotic I'm not getting much utility from this chart right now. .

Euro: Same story with the euro.  It continues to trade in a range of 1.3300 to 1.3400, moving from the lower end to the upper end on Thursday.  But as has been the case lately, in the overnight, we're heading back down again.  Last night I wrote this, and I'll say it again, "expect more sideways motion until this chart makes up its mind which way it wants to go."  Doesn't look like that's happened yet.

Transportation:While the Dow was giving a possible reversal sign on Thursday, the trans were having none of it, posting a big 1.66% gain on a green marubozu.  This actually broke us out of the left edge of the rising RTC, something that can be a bearish sign as that is the behavior you get when a stock goes exponential on you.  And RSI is now at 100 for the second day in a row.  They say what goes up must come down, but you'd never know it from this chart.  I'm wanting to call it lower on general principles, but honestly, there's still no reversal sign here, and that is good for the market.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      5      6           1       0.500     -93

     And the winner is...

Tonight we're seeing a bunch of dojis all over the place warning of possible reversals.  Frustratingly, they all require confirmation.  We now have a long-running rally that's overdue for a pullback but we still have a fair amount of momentum, both qualitatively and quantitatively (the latter stands at 22.25).  So I'm becoming increasingly nervous about continuing to call this market higher but also unwilling to fight the tape by going short in the absence of a definitive top.  Therefore, I'm going to make a conditional call: if ES breaks above its pivot of 1490.75 and stays there by mid-morning Friday, then we close higher.  If ES tries to break above and fails or just drifts lower then we close lower.

ES Fantasy Trader

Portfolio stats: the account inches up to $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Tonight I'm not seeing enough of an edge either way to commit, so we're standing aside.

Thursday, January 24, 2013

Thursday uncertain, doji possible

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain, doji possible.
  • ES pivot 1485.33.  Breaking below is bearish...
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader going short at 1486.50.

Doh!  Well that's what I get for trying to call the top.  The market was obviously having none of it, as the Dow posted yet another gain, making it 9 for 10 now.  I should have known better.  I'm about ready to sign up for TFA - that's Tape Fighters Anonymous.  At least I'm always net long, so I'm still making money.  And since that's why we're all here, let's see where the money might be headed on Thursday.

The technicals (daily)

The Dow: Gosh, I should just cut & paste last night's comments here.  Same green candles, same rising RTC, same off the scale overbought indicators, still no sign of a reversal, etc.  I do find it curious that volume declined once again on Wednesday.  But that alone isn't enough to call a top, so we continue waiting.  I still think we're going to touch 14K and then head lower.  That's just over 200 points from here now.  The amazing thing here is that the Dow just executed a bullish stochastic crossover on the monthly chart. 

The VIXAfter yesterday's matching low lines, we did in fact get a gain in the VIX today, slight as it might be at just 0.24%.  And you wouldn't even know it just looking at yet another red candle.  But so far, that support around 12.48 seems to be hanging in there.  The trend is still down though and today's move hardly inspires much confidence in a VIX rally, so I'm going to have to wait til I see a real green candle on an RTC exit before calling the VIX higher.  Fool me once, etc.

Market index futures: Tonight all three futures are lower at 1:27 AM EST with ES down by 0.34%.  Wednesday's candle was a clear doji.  But the overngiht is busy forming yet another green candle.  We're now right on the edge of the rising RTC and the indicators look like they may finally be topping.  But we've seen this movie before.  This is the zombie chart that refuses to die.  I'll believe it's lower when I see it.  And right now I'm still not seeing any really good bearish signs yet.

ES daily pivot: Tonight the pivot rises again from 1485;33  to 1488.67.  After threading about the old number this evening following a drop at the close on Wednesday, we're now three points under the new pivot thanks mostly to its higher level.  But that's still a bearish sign.

Dollar index:The dollar continued its Brownian motion today gaining just 0.02% on a green candle sitting largely below Tuesday's.  The indicators are now trending higher off oversold though and we remain in a rising RTC, so I can at least guess that there's more upside ahead for ye olde greenback on Thursday.

Euro: The euro on the other hand is plagued by indecision, putting in a second doji in a row on Wednesday.  And the overnight continues basically flat, trading around 1.3323.  Without any signs of trends, I guess all we can say is to expect more sideways motion until this chart makes up its mind which way it wants to go.

Transportation:The trans just keep on rocketing up into the stratosphere.  The indicators are all pegged at overbought (RSI hit 100 today) but nothing seems to matter.  We just keep on trucking higher.  Never seen anything like it.  The only indication of an end to this is that today's candle was a star.  It's still inside the rising RTC so we'll need confirmation on Thursday if this is a top or not.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      5      5           1       0.500     -93

     And the winner is...

A very mixed picture tonight.  I keep thinking that like Kansas City, we've gone about as far as we can go, and I keep getting proven wrong.  The trans are screaming hot and Dr. Copper looks like he's gearing up for a move higher.  I'm not seeing any really bearish signs but I'm also not seeing much incentive to keep moving higher.  And with a short-term rally that's getting long in the tooth and some employment numbers coming out, I think I'm just going to take a pass and call Thursday uncertain.  If I had to guess, I'd call it a doji.

ES Fantasy Trader

Bracck brack brack.  That's the sound of the Night Owl imitating a chicken, which is what I got while watching my short profits melt away this evening like a snow man in May.  After my last stinging loss, I didn't want that to happen again, so I got out while I was still in the black, taking my meager half a point and being glad I got that much.

Portfolio stats: the account inches up to $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).

BOT    10    false    ES    MAR13 Futures     1486.00    USD    GLOBEX    21:25:18
SLD    10    false    ES    MAR13 Futures     1486.50    USD    GLOBEX    00:50:46

Wednesday, January 23, 2013

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower, low confidence.
  • ES pivot 1485.33.  Breaking below is bearish...
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader going short at 1486.50.

Going with the flow sure proved to be the thing to do on Tuesday as the Dow just kept on piling on the points, up this time another 0.46%.  OK, enough of that.  Will Wednesday bring more of the same?  Let's check it out.

The technicals (daily)

The Dow: It's three straight now for the Dow, giving us a bullish three white soldiers pattern and keeping us in the rising RTC.  Indicators remain overbought-broken, so this chart is just as bullish tonight as last night.  With one exception - volume fell dramatically on Tuesday compared to Friday.  I don't know if this is just some post-holiday effect or if we're running out of buyers. at these levels.  Word to the wise...

The VIXThe VIX once again lost ground on Tuesday but this time by just 0.24%.  And it did it on a very interesting candlestick pattern called matching lows.  We have two red candles both closing at nearly the same price with the second one smaller than the first.  This is a bullish pattern which suggests support around 12.5.  We still remain in a fairly wide descending RTC and the indicators continue to be of little use, so this one requires confirmation, but if I had to guess I'd say the VIX will be moving higher very soon.

Market index futures: Tonight the index futures are mixed at 12:54 AM EST with ES down by 0.18 %. and YM down 0.15% but NQ higher by just 0.05%.   Tuesday's impressive gain in ES keeps us in the latest rising RTC.  However, tonight's decline, the first we've seen at this hour of the night is a while now, is forming a dark cloud cover.  It's also moving the indicators off their overbought pegged levels.  RSI and OBV are .actually declining  This is not the look this chart has had lately and it's feeling a bit on the bearish side if you ask me.  Even if you don't ask me.

ES daily pivot: Tonight the pivot rises once again from 1476.83  to 1485.33.  We were above the old number all day Tuesday but with this gain and ES drifting lower in the overnight, we're now just barely over one point above the new pivot.  This puts the pivot in play.  ES appears interested in testing the new number.  If we break under, that will be a bearish sign.

Dollar index:The bearish evening star I pointed out yesterday was completed today as the dollar gapped down for a 0.18% loss. .  But wit indicators rising off oversold and a somewhat chaotic rising RTC established, it would be premature to call the dollar lower again on Wednesday.  This one could go anywhere.

Euro: Last night I didn't have much direction for the euro and I guess it didn't either, as it finished today with a perfect doji right in the middle of its recent range.  With more aimless wandering in the overnight, there continues to be little guidance here.  In the absence of any reversal signs, I'd say we're in for some more sideways movement.

Transportation:I'm just about running out of superlatives to describe the trans lately.  Yesterday's green hanging man was demolished on Tuesday as the trans gained another 1.09% on a green marubozu.  We're in record territory, we're still inside the rising RTC and the indicators are all still pegged at overbought.   So all I can do at this point ansd shrug and saywith no bearish signs on the horizon yet, we've got more upside to go here.  N.B. - the upper BB isn't til 5804.

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  30/52
  1  12/31      40         48        - -   1402 
  2  1/7        47         30        + +   1466
  3  1/14       52         15        + +   1472
  4  1/22       50         21        + +   1486
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 bullish four weeks ago, so that was correct.  Therefore, as we fill in the last call for 2012, I ended the year with a score of 30 for 52 or 58%. Beginning next week, we'll just be running the 2013 numbers.  And recall that starting with 2013, I'm splitting the vote into two columns - the first is how I voted, the other is how the majority of the poll voted.

This week we see that I once again voted with the majority, and the majority remains quite bullish, though bearwish sentiment is beginning to creep up.  This bears watching.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      4      5           1       0.556     -26

     And the winner is...

I really think that ES is headed for 1500 and the Dow for 14,000, but not in a straight line.  My feeling is that Wednesday may be a small pullback day to provide the wind-up for the final assault on the next round numbers.  Meanwhile, I can't help looking at the SPX Hi-Lo indicator which is still pegged on 100.  That can't go on forever.  I'll also note that the great and awesome J-Trader is going short so who am I to argue.  So it's Wednesday lower for me.

And I'll bet anything that there are great big bunches of sell orders and short limit orders set to go off at 1500 and 14,000.  It will be interesting to see what happens when (or if) we get there.

ES Fantasy Trader

Portfolio stats: the account now drops to $93,125 after 2 trades (1 for 2 total, zero for zero longs, 1 for 2 short).  Call me crazy, but tonight we try going short again at 1486.50.

Tuesday, January 22, 2013

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence.
  • ES pivot 1472.25.  Holding above is bullish..
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well here we are again, on the eve of yet another holiday shortened week.  Last Friday the Dow simply continued marching higher, and volume continued to rise too.  At this point we have handily cleared last year's highs, we have totally erased the losses of the Great Recession, and we're fast closing in on the Dow's all-time highs of 2007.  Time to get nervous?  Let's ask the charts.

The technicals (daily)

The Dow The Dow continues to defy all the indicators and remains entrenched in a rising RTC that now goes back to January 8. All that hanging man action of last week was for naught and we've now closed above last year's highs.  And we still haven't touched the upper BB, which is now at 13,726.  The weekly upper BB is even higher, 13,800.  So I'm not going to fight this tape - this chart looks ready to more upside.

The VIXAnd would you look at that VIX!  After consolidating for seven days around the 13.65 area, on Friday it just took a massive 8.18% dump down to 12.46.  The last time we were here was the beginning of June 2007 just as the VIX was starting to ratchet up before hitting 90 a year latter.  Not that that's going to happen again, but with the VIX now down around 12, you have to wonder how much lower it can go.  On the other hand, it seems in no particular hurry to move higher.  The monthly indicators are nowhere near oversold and even the daily indicators, already oversold seem to be trying to move lower.  After trying to call the VIX higher last week, I'm giving up on this idea now.  I see nothing but lower, or at least consolidation ahead here.

Market index futures:Tonight all three futures are higher at 12:42 AM EST with ES up by 0.24%.  This is already more than all of last Friday's gains and keeps us solidly inside the rising RTC.  I see nothing bearish on this chart right now.

ES daily pivot: Tonight the pivot continues to rise from 1472.25  to 1476.83.  We were above before and remain so now, ergo bullish.

Dollar index:On Friday the dollar gave us a nice gap up evening star suggesting the possibility of a move lower Tuesday.  This worked the last time, and if I had to guess, I'd say the dollar's going lower Tuesday, but it's by no means a sure thing.

Euro: And the euro which moved lower on Friday, is now on the rebound in the Monday overnight, up 0.17% so far from last week's close.  This keeps it in its recent consolidation range.  There is a suggestion of a developing symmetrical triangle but we'll have to see how Tuesday's candle plays out.  In the meantime, there's no real good guidance tonight for this currency.

Transportation:Ho hum. nothing new here either as the trans continued their seemingly endless march higher last Friday, tacking on another 0.25% to close at 5695.  What was different this time is that we got a classic hanging man.  Of course, reversal candles have counted for bupkiss lately, so we definitely require confirmation of this one before clling a top in the trans.  In the meantime, we remain solidly inside the rising RTC and it's up, up & away!

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    3      4      5           1       0.571     -89

     And the winner is...

I'll be the first to admit it - I don't get it.  The indicators are totally pegged at overbought, the SPX Hi-Lo index has been stuck on 100 longer than I've ever seen it, we're at multi-year highs all over the place, and yet still no pullback. What's fueling all this?  Is it the retail crowd that has finally realized that bonds are not going to make them any money so they all suddenly want stocks?

Beats me.   It's almost looking like irrational exuberance to me.  But hey, you can't fight the tape, right?  And right now the tape is moving higher, so I'm just going to call Tuesday higher.

ES Fantasy Trader

OK, OK, Uncle!  I give up, I'm throwing in the towel, the washcloth, and the bathmat too.  As Major Hochstetter says, BAHHH!  There's such a thing as taking heat and there's such as thing as being just plain pig-headed.  So with that we take a hideous 21.25 point pounding.  I always seem to make at least one really stupid trade every year.  Hopefully, we've now got that one out of the way for 2013.
 Portfolio stats: the account now drops to $93,125 after 2 trades (1 for 2 total, zero for zero longs, 1 for 2 short).  Tonight we stand aside, having just exited a trade.

BOT    10    false    ES    MAR13 Futures     1482.50    USD    GLOBEX    00:43:00