Friday higher if ES breaks above pivot

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

• Friday higher if ES break out above pivot, else lower.
  
• ES pivot 1542.08.  Breaking above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I called for the ES pivot to rule the day and it did.  ES tested the pivot twice before dawn and then dove under convincingly at 9:10 AM.  By 11 AM it was all over.  There was one brief vain attempt to break out again at 11:35 but it came to naught.  The markets all moved down after that and the Dow finished the day with a 90 point loss.  So now let's see where Friday may take us.

The technicals (daily)

The Dow: Thursday's red candle was almost a bearish engulfing pattern.  It demonstrated the Dow's continued inability to break out above 14,515.  It also drove the indicators lower, but we're still only halfway from overbought to oversold.  Right now, this chart's looking rather punky.

The VIX:  After looking pretty tired itself on Wednesday, the VIX made a remarkable recovery Thursday to close 10.42% higher.  But oddly enough, this green candle also prompted a bearish stochastic crossover.  The stochastic has been oscillating nicely since mid-January and these crossovers are usually a good indication of a top.  So I'm still looking for a move lower here.

ES daily

Market index futures: Tonight all three futures are higher at 1:00 AM EDT with ES up by 0.10%.  Technically, ES gave us a bearish engulfing pattern on Thursday.  But there's something bigger going on here.  This is now looking to me like a megaphone pattern.  You don't see these very often.  It's not perfect, but see if you don't think the basic idea is there - look at the alternating green-red-green-red, each larger than the one before.  (Click the chart to enlarge).  And since this one was entered from above, that's where we'd expect the exit to be eventually.

That little stub at the end there is the new candle developing in the overnight - and it's green.  The indicators have certainly come down far enough to support a move higher soon.  And note how close the new candle is to the edge of the descending RTC.  We just need to close above 1542 on Friday for a bullish setup.  1542, oddly enough, is also the new ES pivot.

ES daily pivot: Tonight the pivot drops from 1547.08  to 1542.08.  After spending most of the day below the pivot, ES now seems interested in testing it, being now just 1.25 points below.  Any break above would be bullish.  A rejection would be continued bearish.

Dollar index: I got this one wrong - the dollar did not move higher on Thursday, instead posting a small 0.05% loss..  This chart is now too disjointed to figure out - I pass.

Euro: The euro seems to be forming a symmetrical triangle just above its 200 day MA.  Being as it was entered from above, I'd look for an eventual break lower, though not necessarily Friday.  The euro has in fact been drifting higher all evening.  I'm not looking for much action here on Friday - unless all hell breaks out in Cyprus that is.

Transportation: Last night I wrote I wrote that Thursday would be "make or break day" for the trans.  Well it was break. I said that "the indicators, still overbought and declining, seem to favor more downside".  And we got it in spades Thursday as the trans tanked 1.62%. That's a bearish RTC trigger.  And with indicators continuing to fall steadily from overbought to oversold, it looks like more downside is possible.


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      4      4           1        0.600    270

     And the winner is...

We're at an interesting juncture here.    There seems to be a lot of (not unjustified) short-term negativity over all the new brouhaha out of Europe.  But that's already driven many charts lower.  I'm also looking at that curious megaphone business in ES right now.  Tonight is almost like an inverse of Wednesday night so I'm going to make the same conditional call, only from the other side.  If ES can break out above its pivot of 1542.08 by mid-morning on Friday (and by that I mean 10 to 11 AM-ish Eastern) then we'll close higher.  Otherwise, look for another leg lower.  Of course if the market gets spooked by some new lunacy from Cyprus on Friday, then all bets are off.

ES Fantasy Trader

 Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13.  Tonight we stand aside because of the conditional call..

Thursday higher if ES pivot holds

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

• Thursday higher if ES pivot holds, else lower.
  
• ES pivot 1547.08.  Holding above is bullish.
• Rest of the week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night IO wrote, "My unofficial guess though is that unless the Fed makes some pronouncement the market hates, we just might close higher.".  I guess I should have made that official, as the Dow ended the day higher by 56 points.  With the Fed's announcement of nothing new, they bought the (lack of) news.  But that, as they say, is that.  Now let's look at this, being the forecast for Friday.

The technicals (daily)

The Dow: On Wednesday the Dow confirmed Tuesday's big doji with a 56 point  gain to recover its losses back to last Friday.  This move also caused the indicators to arrest their descent from overbought less than halfway to oversold.  In fact the stochastic looks like it's getting ready to make a bullish crossover from a high level.  Those are usually good for one or two days of continued gains.  With no RTC currently running, that's about all the guidance we get here.

The VIX:  Meanwhile the VIX opened with a big gap down to lose nearly 12%.  Remember how last night I wrote "the VIX is now quite extended from its pivot at 13.19.  Whenever this happens, very often it will try to revert towards the pivot the next day".  QED.  This move caused the indicators to peak just short of overbought.  The stochastic has now climbed to a level from which a bearish crossover could be in place in the next few days.  At this point, it looks like the wind is out of the sails of the VIX.

Market index futures:  Tonight all three futures are just barely higher at 12:43 AM EDT with ES up by 0.03%.  This chart is perhaps the clearest of the lot.  On Wednesday ES put in a bullish engulfing candle that took it right to the edge of its descending RTC.  The overnight is trading outside that.  If we close above 1547 on Thursday, that will be a bullish setup.  In addition, the stochastic has just completed a bullish crossover.  With RSI and money flow now moving higher, this chart is looking bullish.

ES daily pivot: Tonight the pivot rises from 1541.75  to 1547.08.  We're back in the mode form last week where we were above the old number and remain above the new pivot, though by less.  Still, that's a positive sign.

Dollar index: The dollar gave back nearly all of Monday's gains on Tuesday, falling 0.32%with a long-legged doji.  But with a freshly minted bullish stochastic crossover now in place, more upside could be in the cards here on Thursday.

Euro: And the euro soundly rejected its 200 day MA on Wednesday, retracing nearly all of Monday's losses and form a bullish stochastic crossover in the process.  With the overnight candle hanging around the top of Wednesday's range, it looks like the euro could go higher Thursday.  And yes that leaves us in the odd position of both the dollar and euro charts looking bullish, so one of those is probably wrong.  At this point, the dollar is looking more likely to move higher than the euro.

Transportation: A bit of divergence here today as the trans dropped 0.35% even as the Dow rose 0.39%.  With four losing days in a row now, the trans have reached the edge of their rising RTC.  Thursday is make or break day for the trans.  One more losing day and the current uptrend will be over.  And the indicators, still overbought and declining, seem to favor more downside at this point.


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      4      4           0        0.556    270

     And the winner is...

With the sole exception of the trans, I'm having trouble finding anything technically bearish tonight.  So unless there are some bad misses in the economic data coming out Thursday on housing and jobs numbers, I'd say we have a good shot of seeing Thursday higher.  However, I am concerned with the proximity of ES to its pivot, so I'm going to make a conditional call.  If ES can manage to stay above its pivot of 1547.08 by mid-morning, we're going higher Thursday.  On the other hand, if we break below, then watch for a lower close.  Watch for a bounce off that number in the wee hours of the morning.

ES Fantasy Trader

 Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13.  Tonight we stand aside because of the conditional call..

Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1541.75.  Breaking above is bullish.
• Rest of the week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Interesting day, Tuesday was.  First it looked like we were going higher, then we spent most of the afternoon underwater, and by the time the bell rang and all the shouting was over, the Dow finished  all of 3.75 points higher than it opened.  Pre-Fed jitters I suppose.  So with the understanding that Wednesday is Fed day, let's see what sort of backdrop the charts might provide.

The technicals (daily)

The Dow: Technically, the Dow gave us a textbook doji on Tuesday,  Coming after two days of losses, and remembering what I said the other day about the Dow not having had more than two consecutive down days since December, this one is worth paying some attention to.  On the other hand, today's action provided a bearish RTC trigger, meaning the long-running uptrend that began on February 26th is now over.  And the indicators continue to look bearish, so there's no clear path here.

The VIX:  Instead of filling Monday's big gap up, on Tuesday the VIX took an even bigger jump (intraday at least) to end 7,71% higher.  This provided a bullish RTC trigger.  So along with rising indicators, there's no reason why the VIX could not continue higher on Wednesday.  Well, there is one reason - the VIX is now quite extended from its pivot at 13.19.  Whenever this happens, very often it will try to revert towards the pivot the next day.  So another chart with contradictory messages.

Market index futures:Tonight the futures are mixed at 1:00 AM EDT with ES down by 0.08%, YM down 0.03% but NQ up 0.02%..  ES formed a bearish engulfing pattern on Tuesday and gave us a new descending RTC beginning from 3/14.  That said, the indicators have now traveled most of the way from overbought to oversold so it's not clear how much downside is left here.

ES daily pivot: Tonight the pivot inches down from 1542.92  to 1541.75.   ES has been drifting higher all evening long, and although we remain below the new pivot, it's only by one point.  ES has already investigated the pivot shortly after midnight and I'd expect a few more tries to break above before dawn.

Dollar index: The dollar posted some strong gains on Tuesday, up 0.38% in a move that seems to have negated the recent bearish RTC trigger.  Indeed, we instead got a bullish stochastic crossover and with three rising candles in a row, the dollar could move higher again on Wednesday..

Euro: Last night I proposed that the euro wanted to take a look at its 200 day MA.  Well on Tuesday it did just that, breaking below intraday before recovering to close just above it at 1.2884.  It continues to flirt with it in the overnight, and with a lack of any serious bullish indications, it just might punch through the 200 MA on Wednesday.

Transportation: The trans continued drifting ever so slightly lower on Tuesday, down 0.19% on another doji.  The indicators remain overbought but are now moving lower.  However, we are still inside a rising RTC, so it's still too eaerly to call this uptrend over.  But a close below 6220 on Wednesday could do it.

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   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

 10  3/4        29         39        -      -   1518

 11  3/11       41         26        +      +   1551  

 12  3/18       41         37        +      +   1561

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 bearish four weeks ago, so both I and the majority were wrong.   We therefore continue the year with an accuracy of 6  for 8, or 75%. 

This week we see that bullish sentiment remained exactly unchanged while bearish sentiment rose 11 points.  No doubt some people are seeing signs of a top   But despite a lackluster performance the past few days, it's still not registering on the monthly SPX chart, so I'm going to have to continue to vote on the positive side.
 
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      4      3           0        0.556    270

     And the winner is...

Tonight, the technicals are painting a fairly confusing picture full of mixed messages.  This no doubt reflects market uncertainty ahead of the Fed and renewed worries about Europe.  Because of this, I am simply going to declare Wednesday uncertain.  One can only do so much crystal ball gazing before one's eyeball begin to glaze over.  My unofficial guess though is that unless the Fed makes some pronouncement the market hates, we just might close higher.

ES Fantasy Trader

Last night's short trade worked out OK to the tune of 2.75 points.  Not a home run perhaps, and I did get out a tad too soon, but I'll take it nonetheless.
 Portfolio stats: the account rises to $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13.  Tonight westand aside.  We never trade ahead of Fed days.

BOT    10    false    ES    JUN13 Futures     1544.75    USD    GLOBEX    10:51:09   
SLD    10    false    ES    JUN13 Futures     1547.50    USD    GLOBEX    02:13:26     

Tuesday lower

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

• Tuesday lower, medium confidence.
  
• ES pivot 1542.92.  Holding above is bullish.
• Rest of the week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1547.50.

Recap

That's right - that's about what I figured.  A big dump out the gate followed by a retracement.  I'll admit I was surprised that we retraced the entire loss by mid-afternoon, but the sellers came back in by the end of the day to save my call for a lower close Monday.  Now that we've got the Great Cyprus Bank Catastrophe out of the way, let's get back to reality and see what's on deck for Tuesday.  Batter up!

The technicals (daily)

The Dow: If you blinked, you missed it.  The Dow cratered in the opening minute and then spent most of the rest of the day retracing before giving back some of those gains for a 62 point loss on Monday.  A great day to day trade, swing trade, not so much.  But the net result, was a second hanging man in a row,this one falling outside the rising RTC (finally) for a bearish setup.  The failure of the Dow to hang on to its intraday recovery is a bit concerning.

The VIX:  As you might expect on the weekend news, the VIX shot up 18.23% Monday to form a great big gap-up evening star doji.  But it also exited its latest descending RTC for a bullish setup and the indicators are all now rising off oversold.  With the evening star only 2/3 complete, we need to see if the VIX is going to fill the gap or continue higher on Tuesday.  Unfortunately, there's no call here tonight.

Market index futures:Tonight all three futures are just barely higher at 2:05 AM EDT with ES up by 0.02% or a single tick.  Monday's ES candle was a spindly spinning top that fell outside its rising RTC for a bearish setup.  The overnight so far isn't showing much enthusiasm for moving higher and with the indicators having now exited overbought and continuing to move lower, the momentum seems to be turning bearish here.

ES daily pivot: Tonight the pivot falls from 1553.75  to 1542.92. .Mostly because of this, we're now above the new pivot, so that's bullish, and by a reasonable six points.

Dollar index: On Monday the dollar gave us a completed morning doji star.  But that is at odds with the recent rising RTC exit.  So those two cancel each other and there's no call for this chart.  Maybe the euro will be a bit more clear..

Euro: Hmmm, not really.  On Monday the euro slipped a bit, not nearly as much as you might have expected after the Cyprus news.  It continues to trade mostly sideways though something of a shallow downtrend is forming after two consecutive closes below support at 1.3000.  The euro may be getting ready to test its 200 day MA at 1.2862.

Transportation: Like the Dow, the trans gave us a second hanging man on Monday for a 0.33% loss.  Unlike the Dow, it wasn't enough to bounce it out of its rising RTC.  It's also important to note that the trans have not put together a string of more than two losing sessions in a row since last December 28th.  So it's still premature to call this uptrend over.


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      3      3           0        0.625    274

     And the winner is...

There's a lot of uncertainty out there tonight with dojis galore all over the place.  But we've also gotten a few significant RTC exits indicating that various trends may now be over.  So far they're just setups.  For a trigger, they'd need to continue outside the channel one more day.  But the overall feel is shifting from bullish to bearish.  So with Dr. Copper taking a dump, TLT moving higher, the currencies dropping, and the ES stochastic falling, I'm going to go way out on a limb and call Tuesday lower.  I might be a day early, but this looks more logical than a move higher at this point.

ES Fantasy Trader

Portfolio stats: the account remains at $92,625 after 8 trades (6 for 8 total, 3 for 3 longs, 3 for 5 short) starting from $100,000 on 1/1/13.  Tonight we go short at 1547.50.  I may live to regret it, because I've not been doing well on the short side lately, but perhaps this one will do the trick.

Monday lower

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

• Monday lower, medium confidence.
  
• ES pivot 1553.75.  Holding below is bearish
• Rest of the week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Hah - so much for my intuition of a "technically higher" Friday  I'm glad I called it uncertain, as the Dow ended the day down 25 points.  Such are the vagaries of triple-witching day, I guess.  Well the past is done - let's move straight on to Monday now.

The technicals (daily)

Tonight, there's absolutely no point in doing my usual chart run-down because it seems that Atlas shrugged over in Cyprus over the weekend.  This whole bank deposit tax business is a perfect example of two things: first, the limits of technical analysis and second, that when bad things happen, they're usually unexpected.  I mean, Cyprus??  Really?

So right now at 12:50 AM EDT and with ES down a whopping 12 points in just a few hours and continuing lower as I write, I think it's pretty safe to say we're going to see a big gap down at the open Monday morning while everyone runs around like chickens with their heads cut off.  Then when the dust settles and everyone sees that the world is in fact not coming to an end (not just yet anyway) we'll get the inevitable bounce.  The only question is how fast that happens.

Recall the similar hand-wringing over the Italian elections a few weeks ago - more European antics.  That lasted all of what, two days?  But the market's just been looking for an excuse to pull back for a while now and this pseudo-calamity looks like it should fit the bill nicely.  So it could possibly take a few days to bring the indicators back down to oversold.  Should be an interesting week anyway.

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      4      3      3           0        0.571    212

     And the winner is...

Well tonight, it's pretty clearly the bears.  I'm looking for a big gap-down opening, then some retracement but overall lower Monday anyway.

ES Fantasy Trader

Portfolio stats: the account remains at $92,625 after 8 trades (6 for 8 total, 3 for 3 longs, 3 for 5 short) starting from $100,000 on 1/1/13.  Tonight we stand aside mainly because I think most of the damage has already been done.  Timing is, as they say, everything, and this boat sailed at 6 PM on the open.  By 1 AM it's just too late to hop aboard.  I'd not want to go short here and then discover that the market has retraced by the time I get up on Monday.