Friday uncertain

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

• Friday uncertain.
  
• ES pivot 1516.42.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well Thursday ended up being a "noise" day.  You can draw whatever conclusions you want from a Dow lower by 9.5 points and SPX up all of one point, and they don't amount to a hill 'o beans.  I guess technically my conditional call for Thursday was wrong, because ES didn't regain its pivot until just after noon, though once it did we did finish higher on the day (right, by 0.07%).  So, bottom line, the market remains in some strange sort of limbo, with neither side able to pull it their way.  And with options expiration coming right up, it's not clear that the charts will have any answers either but we'll run them down anyway, just in case.

The technicals (daily)

The Dow: I'll admit I'm not sure what to make of today's action.We did trade outside the rising line defining the ascending triangle, so that could be viewed as bearish.  But with this doji-type candle, it indicates that the bulls just seem to keep coming back despite the best effort of the bears to knock 'em lower.  With the indicators all middling, the stochastic threaded out, and no RTC channel, there is really no guidance at all on this chart.  However, if you move out to the weekly chart, it's looking fairly bearish, with last week's hanging man trading outside a rising RTC for a bearish setup and this week forming a spinning top so far.

The VIX:  The VIX situation is just as confused.  We took a big pop out the gate and then gave it all back by the end of the day to finish down 2.47% leaving the VIX just above its support line at 12.50 and still in a descending RTC.  About the only take-away here is that you can't look for a big move lower in the market with the VIX at these levels.

Market index futures:Tonight all three futures are lower at 1:00 AM EST with ES down by 0.20%.  Although ES put in a green candle on Thursday and remains inside it rising RTC, it has been having trouble making headway past 1518 the past three days and the overnight candle is forming up as a bearish engulfing pattern.  Overall, this is the weakest looking chart of the bunch.

ES daily pivot: Tonight the pivot dips from 1517.42  to 1516.42. We broke under the old number at 10:45 PM but ES now seems to be interested in revisiting its pivot.  When ES is rising and just half a point below the pivot, it merits watching.  You know the drill - break-through, bullish, rejection, bearish.

Dollar index:The dollar remains in a declining RTC despite today's 0.46% advance, and with indicators still overbought, I have to think it has more downside on Friday. .

Euro: Last night I wrote "This makes me cautious about calling the euro higher Thursday" and that caution proved justified as the euro put in a big red marubozu on Thursday to return to its descending RTC, thus canceling the bullish setup.  It's trying to perk up a bit in the overnight but who really knows.  This chart is not looking very bullish to me.

Transportation:In an interesting divergence, the trans finished up 0.31% on Thursday to remain in their rising RTC.  It did form a hanging man, but five of the last 11 candle shave been reversal signs and none of them has panned out.  So until I see the trans exit the rising RTC, I'm not calling them lower.


Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   2      2      2           3        0.714    140

     And the winner is...

With options expiration coming up and such lackluster action lately, there's no point in making a call for Friday.  I'll simply note that Friday is historically fairly weak.  However, I'll also note that if ES breaks above its pivot, we could close higher, but anything beyond that is just pure speculation.  So I'm just going to call Friday uncertain.

ES Fantasy Trader


Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we just continue to stand aside. 

Thursday lower unless ES pivot regained

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

• Thursday lower unless ES pivot regained.
  
• ES pivot 1517.42.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

After dribbling lower most of the day, the bulls staged a furious last minute rally but it wasn't quite enough to save my call for a higher Wednesday, with the Dow ending down 36 points.  I did mention the risks of Mr. Market not liking Comrade Stalibama's State of the Soviet address last night and it turns out he got all dyspeptic over El Supremo's call for a big hike in the minimum wage.  That sent Mickey-D's down and we were done.  Now the S&P and the Nasdaq did both finish positive, but my call is for the Dow, so it's a miss.  Still, I think the fundamental thesis held - there was no major breakdown on Wednesday.  Now let's see whither might Thursday go.

The technicals (daily)

The Dow: Today's action marked the second day in a row we were stopped by resistance at the 14,012 level (the top of the ascending triangle).  However, we once again put in a higher low, so the triangle remains intact.  This is still not a bearish-looking chart.

The VIX:  I'll admit I was surprised by the VIX's 2.69% pop today, even if the resulting spinning top is less than convincing.  We're officially oversold and the stochastic seems to be on the verge of setting up a bullish crossover, but we also remain well inside the descending RTC, so it's too early to call this downtrend over.  And the spinning top does admit the possibility of continued lower on Thursday.  This one is too tough  to call - we'll need confirmation.

Market index futures:Tonight all three futures are ever so slightly lower at 1:20 AM EST with ES down by just one tick, or 0.02%.  Wednesday's candle was yet another doji, bur these have been coming regularly all year so far and mostly meant nothing.  So we remain in the rising RTC and the overnight is providing little guidance so far.  True, we're quite overbought, but we've been even more overbought this year and kept going higher.  I'll need to see some confirmation on Thursday before calling ES lower from here.

ES daily pivot: Tonight the pivot rises from 1514.58  to 1517.42.   After spending most of Wednesday comfortably above the pivot, we broke under as I write this, just as the Asian markets closed.  It's only half a point so far, but it's still a bearish sign and will have to be watched Thursday morning.

Dollar index:While the dollar did open lower on Wednesday, as I figured, it eventually recovered all its losses, ending up just 0.01% .on a stubby spinning top.  But it was enough to drive the indicators off  overbought and cause a bearish stochastic crossover.  So despite the green candle on Wednesday, I've got to go with a lower dollar on Thursday.

Euro: On Wednesday the euro put in a spindly long-legged doji sitting just outside its descending RTC for a bullish setup.  However, it's losing ground in the overnight, down 0.10% so far.  This makes me cautious about calling the euro higher Thursday, though that's what I'd expect if the dollar does move lower.

Transportation:The trans on Wednesday provided the most bullish chart, gaining 0.38% in a move that was significant mainly because it negated the two preceding dojis and kept us right in the middle of a rising RTC back to January 31st.  It did drive the indicators to overbought, but the indicators haven't been very useful lately as the trans continue to do nothing but go up.  So in the absence of a bearish candle about all that leaves is more upside.


Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   2      2      2           3        0.714    140

     And the winner is...

With ES having just fallen below its pivot, but with few bearish signs on the rest of the charts, I think the logical course tonight is another conditional call.  If, by mid-morning Thursday (say 10:30 - 11-ish), ES has not broken back over 1517.42, then we close lower,  If it does, we close higher.  This has been a frustrating rally as every time we get some sort of bearish technical sign, nothing comes of it.  So I'm reluctant to go all-out bearish, particularly in an op-ex week until I see clear evidence of a top, and I haven't seen it yet.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we just continue to stand aside.  I really want to go long here, but with those nagging overbought indicators, I'm just a bit reluctant.

Wednesday higher

• Wednesday higher, low confidence.
  
• ES pivot 1514.58.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I was tempted to call Tuesday higher but finally decided not to partly because I had called Monday higher and was wrong.  I guess I was just a day early as the Dow gained 47 points to recapture the 14K level.  To quote Gen. Burkhalter, "What is the meaning of this?"  We now interrogate the charts for answers.

The technicals (daily)

The Dow: Yesterday I posted my vision of an ascending triangle and observed it was within a day or two of breaking.  We got the break Tuesday with a close of 14,019 just above the top horizontal line I drew at 14,010.  Some may scoff at this as not being too significant, but if you draw a smaller triangle, one going only back five days instead of eight, the breakout line is at 13,990.  Either way, today's 47 point move isn't bad, considering the range narrowing we've seen recently.  And oddly enough, we're still not overbought.  RSI in fact went down today, now at 51.  If this is indeed the breakout, and I'm going to guess it is, then we're going to take a look at the 2007 highs in short order - we're not that far away now.

The VIX:  Last night I wrote "I'm not really seeing any bullish impulse here" and indeed there weren't as the VIX dropped another 2.32% Tuesday, breaking its short-term support.  Next support is at 12.41 and being as we remain in a descending RTC with indicators still not oversold, I see no reason we can't revisit that level.  If that falls, then we're going to the lower BB, now down to 12.03.  This, of course, is all good for stocks.

Market index futures: Tonight all three futures are higher at 1:16 AM EST with ES up by 0.07%.  With another green candle on Tuesday, ES remains solidly inside a rising RTC that now goes back to January 8th.  We're getting quite overbought, but the indicators have been none too reliable all year so far here.  We're been overbought more often than not but continue to go higher.  Fed money, sector rotation, PPT, whatever the reason, I'm still not seeing a top here.

ES daily pivot: Tonight the pivot inches up from 1513.25  to 1514.58.  We were higher before and remain higher now, so that's bullish.  And, at least at the moment, ES is showing no particular interest in checking out the new level, so that's all bullish.

Dollar index:On Tuesday the dollar confirmed Monday's evening star with a 0.28% drop that caused the indicators to peak at overbought and just gave us a bearish stochastic crossover. It also left us on the edge of the rising RTC for a bearish setup.  I'd say the dollar's moving lower again on Wednesday.

Euro: And the euro chart seems to confirm that with a decent gain on Tuesday that took it almost to the edge of its descending RTC, causing its indicators to bottom on oversold and gave us a bullish stochastic crossover.  That all looks good for more euro upside on Wednesday.

Transportation:I was hesitating on the trans last night because of yesterday's doji, but instead of confirmation Tuesday, they gave us - another doji and another tiny loss of 0.04%.  But that has the effect of nudging us closer to the edge of the rising RTC and bringing the indicators off overbought.  With resistance at 5912 proving to be tough, the trans may be headed lower soon, but once again, it's still too early to call a top here.

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

  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

  5  1/28       44         26        +      +   1503

  6  2/5        40         36        +      +   1513

  7  2/11       43         25        +      +   1518

  

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, so both I and the majority were correct.   We therefore continue the year with an accuracy of 2 for 3, or 67%. 

Interestingly, bearish sentiment took a big drop this week while bullish only gained three points as a number of participants apparently moved to the sidelines.  One might be tempted to view this as contrarian bearish, but note that bearish sentiment dropped to 15% in week 3, and yet here we are in week 7,  46 SPX points higher.


Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   2      1      2           3        0.833    176

     And the winner is...

The picture isn't totally clarified tonight, but the weight of evidence seems to be in the bulls' favor - the futures, the pivot, the currencies, the VIX - all looking positive.  The Dow in particular is looking especially strong right here.  The worst thing I can see is that the trans may be taking a break, but that's hardly conclusive evidence of an imminent top.  So unless Mr. Market finds something in Comrade Stalibama's State of the Soviet address tonight he doesn't like come morning, I see no real reason why we can't go higher Wednesday.  Traders of the world, unite!  Forward!

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we just continue to stand aside.  I really want to go long here, but with those nagging overbought indicators, I'm just a bit reluctant.

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1513.25.  Holding below is bearish .
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Ho hum.  Same old same old.  With just a 22 point loss (which I'll admit I wasn't expecting), the Dow remains stuck in a narrow range that just seems to drone on and on.  Ho hum.  What's it going to take to get this market off of top dead center?  Let's set the choke and see if we can't get these charts to turn over.

The technicals (daily)

Dow daily

The Dow: At first glance a yawner, I think today's small range is instead really bringing into focus an ascending triangle pattern here.  Take a look and see if you don't agree.  I know, there's that one tail sticking down from three days ago, but if you go by opening and closing prices, this looks really good.   And since these are generally bullish patterns, I'd say that we very well may be looking at some higher prices soon.  This triangle is just about finished, like within a day or two.  Meanwhile the indicators have still yet to reach overbought, so there's potentially still some gas in the tank.  Despite today's 22 point loss, this chart's not looking bearish to me right now.

The VIX:  And as if to underscore that, on a day when the Dow fell, the VIX did too, losing 0.61% to close back below 13 and remain in a descending RTC.  Indicators still not oversold yet.  At least I got this one right.  The VIX is now right at support though, so we're going to have to wait and see if it sinks through that on Tuesday.  No reason why it can't, as I'm not really seeing any bullish impulse here.

Market index futures:Tonight all three futures are lower at 1:42 AM EST with ES down by 0.20%.  On Monday, ES gave us a doji star just above last Friday's green marubozu.  Not quite an evening star though and we remain in the rising RTC.  That said, the overnight action seems to be confirming the doji so far, so this chart is now looking a bit on the bearish side.

ES daily pivot: Tonight the pivot rises from 1510.42  to 1513.25.  This, combined with the overnight sag we're seeing now puts ES below the new pivot, a bearish sign.

Dollar index:I was hesitating on calling the dollar lower for Monday and I'm glad I did, since it gained 0.09% on a bearish evening star.  Coupled with now quite overbought indicators and touching its upper BB for the third straight day, it now looks like we have a better shot at moving lower on Tuesday.

Euro: I always like to check the euro chart independently to see if it agrees with my dollar call.  After a small gain on Monday, the euro opened its new candle higher but has been losing ground ever since, now at 1.3389.  It also remains in a descending RTC.  However, it's now oversold and its stochastic is in prime position to form a bullish crossover.  I think it's due to move higher any day now - if not Tuesday then even more likely on Wednesday.

Transportation:The trans put in a doji on Monday, losing just 0.04%.  So we now have a reversal warning  and overbought indicators but remain in a rising RTC.  Thing is the trans have been so powerful lately, I really want confirmation of this doji before calling them lower.  So we need to see how this one goes on Tuesday.  For the time being, it's not bearish yet.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow                                                                      average  points

January    5      7      6           3       0.533    -101
February   2      1      1           3       0.833     176

     And the winner is...

The charts are not looking particularly bearish to me tonight as op-ex week grinds on.  Kind of like last night.  But my bullish call then didn't work out so hot tonight and I always hate to go against what the futures are telling me in the overnight.  On the other hand, we have that Dow triangle and a VIX in the toilet.  The overall picture seems to be a reflection of the general wayward movement of the market recently, so with no real handle to grab on to, I'm just going to punt and call Tuesday uncertain.  I know J-Trader's going all-in short here, and I admire and respect that, but personally I'm not seeing it.  I could be wrong.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again and will continue to do so until I see a trend developing one way or the other.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1510.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

There were a few reversal signs last Thursday night but most of the technicals seemed at least mildly bullish so I called Friday higher and that's what we got - a 49 point advance in the Dow.  That was the good news.  The bad news is that we remain stuck in what is now a 10 day trading range.  When will it all end?  Or more to the point, how will it all end?  Read on...

The technicals (daily)

The Dow: The Dow continues its down-up-down-up yo-yo-ing.  The only discernible trend, if you can call ti that is that its been making higher lows for the last three days.  But we remain stalled in the face of strong resistance just above 14K.  The indicators have actually come off overbought in the past week so there might be some room to run - if Mr. Market can ever find first gear.  Bottom line, there's still no direction on this chart.  But if we don't get moving soon, it's beginning to look more like a topping process than simple consolidation.

The VIX:  The VIX gapped down on Friday to finish just above 13, breaking six month support and remaining in a descending RTC.  With no further support til 12.50, a lower BB at 12.14, and indicators still not yet oversold, I'd guess that we might move lower again on Monday.

Market index futures:Tonight all three futures are barely up at 1:03 AM EST with YM and NQ both up just 0.04% and ES dead flat.  This follows the recent pattern.and feels more like the dog days of August than the middle of winter.  We did however put in a strong showing on Friday to keep ES at the upper end of its rising RTC.  And with indicators still not yet overbought and the upper BB continuing to run away, now at 1522.46, logic would seem to indicate that there's still more upside possible here on Monday.  ES (and SPX) seems to be gearing up for a run at the all-time ES high of 1576 from October 2007.

ES daily pivot: Tonight the pivot rises from 1503.58  to 1510.42. Despite this, we remain above the new number, though just by two points.  But as long as we don't break under, it's bullish.

Dollar index:After a big gain last Thursday, the dollar tacked on another 0.07% to touch its upper BB and move to overbought levels. .The dollar hasn't really been respecting its upper BB too well lately, so while the caution flag is out, it's still to early to call a move lower.  I'll be looking to Monday for some clarification.

Euro: The euro continued its recent plunge on Friday, contrary to my expectations.  But I might have been just a day early as it is up 0.11% in the Sunday overnight trade.  Still, there's no definitive sign yet that the euro slump is over - the indicators still aren't even oversold yet.

Transportation:The trans have now retraced all of their losses and then some from that one big down day January 30th, establishing a new rising RTC.  However, Friday's 0.41% gain drove them into overbought territory.  There's still no reversal sign in the candles though so it's too early to call a top here - more upside possible Monday.


Accuracy (daily calls):
Month    right  wrong  no call  conditional  batting   Dow                                                                      average  points

January    5      7      6           3       0.533    -101
February   2      0      1           3       1.000     198

     And the winner is...

Tonight the technicals are looking a lot like they were last Thursday night - some reversal warnings but no strong pull either up or down.  It's also an op-ex week and a pre-holiday one at that, with all the usual brou-ha that implies.  But I guess the logical course is the same as last Thursday - in the absence of clear bearish signs, the thing to do is keep following the trend and call Monday higher.  I'd be more comfortable if I had a better reason for saying that, but you gotta play the hand you're dealt.


ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again and will continue to do so until I see a trend developing one way or the other.