Thursday lower

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

• Thursday lower, low confidence.
  
• ES pivot 1554.33.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well that's what happens when you go out on a limb sometimes - you end up on the floor.  But I wasn't far wrong, with the Dow dropping  just 33 points on Wednesday.  And at least the Nasdaq did finish with a slight gain.  But enough of that, it's time to figure out Thursday - bring back my charts!

The technicals (daily)

The Dow: The Dow took a big dump out the gate on Wednesday only to quickly recover and spend the rest of the day threading about its pivot.  The result was a hanging man around the top of Tuesday's range.  So we now seem to have some support around 14,522, the line that was resistance until two days ago.  Beyond that, it's hard to say.  The only real pattern I can see here is that we're still in this alternating red-green business, now into its eighth day in a row.

The VIX:  The VIX gained 2.98% but did it on a red candle, remaining stuck in the 13 1/3 area, a number we've visited for eight days in a row now.  Resistance at 13.75 is proving tough for the VIX to crack.  With indicators continuing to fall there's no sign it's going to be any easier on Thursday.

Market index futures: Tonight all three futures are lower at 12:42 AM EDT with ES down by 0.39%.  Wednesday's red candle in ES makes Tuesday's hanging man look like a top.  This chart  has gone from looking bullish to bearish in one day.

ES daily pivot: Tonight the pivot barely nudges from 1554.25  to 1554.33. With ES drifting lower in the overnight, we broke under at 9:30 PM, a bearish sign.

Dollar index: The dollar made its move on Wednesday, gapping up 0.44% to close right on its upper BB with a little spinning top.  This kind of move generally pulls back in short order.  Look how far we are from the pivot too.

Euro: At least I got this right when I wrote last night "I see no reason why [the euro] can't go lower again".  It completed it break under the 200 day MA on Wednesday to remain struck in it s descending RTC.  We're pretty oversold at this point and the stochastic looks like it's trying to set up a bullish crossover, but nothing yet.  So I'd say the slide's still not done.

Transportation: And finally, some divergence here with the trans gaining 0.16% even as the Dow fell 0.23%.  This hanging man closed just outside the descending RTC so that's a bullish setup.  Add in a nascent bullish stochastic crossover and I'd say we have a shot at more upside on Thursday.


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      6      5           2        0.538    173

     And the winner is...

Well we've got the week, the month, and the quarter all ending on the same day.  Often that's cause for window dressing but in this case, the end of March is historically quite weak.  And the charts, which looked fairly promising just last night, now seem to be reflecting that weakness  It's a difficult call and I probably should say we're going higher just because the Dow fell on Wednesday, but honestly I'm not feeling the love tonight, baby.  I'll be happy to be proven wrong because I'm always net long, but I'm going to call Thursday lower.  See you all next Sunday night!

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 I'm not seeing a real trend developing.

Wednesday higher

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

• Wednesday higher, low confidence.
  
• ES pivot 1554.25.  Holding above is bullish.
• Thursday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

After a night of remarkably opaque charts, the Dow surprisingly pulled together a 112 point advance.  Actually, I would have been surprised no matter which way we went but I'm always glad to see a move to the up side.  So with that now out of the way, let's see if this move provided any new clarity to the charts for Wednesday.

The technicals (daily)

The Dow: Well the Dow contiued its recent string, now seven long of alternating up and down days.  Seems like you could make money just by changing course every day.  What was different on Tuesday was that we got another record close, finally cracking that stubborn resistance line around 14,522.  And all this recent sideways action has pulled the indicators way down from overbought.  Can the Dow now make it two in a row?  I'll admit to being a bit skeptical but it's not out of the question, as long as we don't get any more nasty surprises from Cyprus on Wednesday.

The VIX:  Despite three days of solid gains over the course of the last week, the VIX was unable to capitalize and has now pulled back below 13, losing 7.06% on Tuesday.  We're now back to the point where support has been coming in recently, but we're also looking at a stochastic that seems to be cycling lower.  The question now is will this support kick in again as it has the past week, or will the VIX try to fill the big upside gap it formed on the 18th.  I'm going to go out on a limb and vote for the latter.

Market index futures:Tonight all three futures are higher at 1: 12 AM EDT with ES up by 0.10%.  Hey, maybe there was something to that megaphone after all.  After a fakeout breakout on Monday that collapsed back into the cone of the phone, ES on Tuesday managed a green marubozu that managed to close above its rising upper trend line.  And we do seem to be getting some follow-through at the moment.  With indicators rising but still not yet overbought, resistance at 1556 finally broken, and the upper BB hanging tantalizingly nearby at 1570, I wouldn't be surprised to see ES head up that way over the course of the week.

ES daily pivot: Tonight the pivot rises from 1548.83   to 1554.25.  After spending all of the regular session on Tuesday above the pivot, even this gain still leaves us above the new number, and further away from it than we've been in a few days at this hour, so that's bullish sign.

Dollar index: The dollar continued its random Brownian motion across the chart on Tuesday, this time gaining all of 0.06% in a meaningless star.  There's really still nothing terribly informative here tonight..

Euro: The euro on the other hand continues to fall in a wide descending RTC, closing below its 200 day MA for the first time since last November.  Back then it signaled another week and a half of declines  I see no reason why it can't go lower again this time, particularly given all the latest trouble brewing in Europe.

Transportation: And here's a true bullish sign.  Last night I was thinking that the trans didn't have much downside left and on Tuesday they gave us a 0.78% pop after hitting oversold on the RSI.  This move also formed a bullish stochastic crossover.  We're also on the verge of exiting the descending RTC for a bullish crossover.  So a move higher again on Thursday now looks likely.

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   6/9

 10  3/4        29         39        -      -   1518

 11  3/11       41         26        +      +   1551  

 12  3/18       41         37        +      +   1561

 13  3/25       31         38        +      -   1557  

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 again.   We therefore continue the year with an accuracy of 6  for 9, or 67%. 

This week we see that bearish sentiment remained about the same while bullish sentiment declined 10 points. It's also getting interesting as this marks the first time this year I have disagreed with the majority, as I voted bullish again for the third week running while 10 points worth of my fellow bulls have deserted me. I don't feel very bullish, but that's what the charts are telling me. Come back in four weeks and we'll see if I was right or not.
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      5      5           2        0.583    206

     And the winner is...

The very end of March is historically not all that hot, and since we've been changing direction on a daily basis for seven straight sessions, I ought to call Thursday lower, but with an absence of any really bearish signs tonight and having gotten a few broken resistance lines, I would not be surprised at all to see Wednesday higher.  All assuming of course that  no bank officials from Transylvania announce that their euro deposits will be converted into sno-cones.  Or something.

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 I'm not seeing a real trend developing.

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1548.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well it seemed like a reasonable idea at the time and things did get off to a good start Monday morning, but then some Dutch official threw cold water on the Cyprus deal and that was that.  I thought we'd go higher after the strong showing of the futures Sunday night but the Dow instead finished down 64.  So we move on to Tuesday in search of technical redemption.

The technicals (daily)

The Dow: What started off as a decent rally ended up as just another sideways day on Monday, leaving the Dow now stuck in a six day range of alternating up and down days bouncing between 12,422 and 14,510.  With no trend in sight, last night's bullish stochastic crossover unraveled, and the indicators flattening out, it looks like more of the same in store for Tuesday.  Being as we're now near the lower end of the range, I'd say a move higher would be as logical an expectation as anything.

The VIX:  I missed this one too, as the VIX rose 1.25% on Monday.  But like the Dow, there isn't much in the way of a trend here so I'm taking a pass on this chart tonight.

Market index futures:Tonight all three futures are higher at 1:26 AM EDT with ES up by 0.15%.  What a difference a day makes. The megaphone pattern I'd been talking about the past few days pretty much collapsed on Monday.  That's what news will do to technicals.  All this leaves us with is a descending RTC exit two day ago which is now a bullish trigger.  But it's not supported very well by the indicators which remain rather wishy-washy between overbought and oversold.

ES daily pivot: Tonight the pivot inches up from 1547.00  to 1548.83..  Although ES broke back above the old pivot right at the close on Monday, the gain in the new pivot now leaves us just barely above it - not enough to be considered bullish.  But in the absence of a break under, it's not bearish either.

Dollar index: I was wrong about the dollar too last night.  Instead of declining, it jumped 0.56% and instead of a bearish stochastic crossover we're suddenly looking at a bullish one.  But since exiting its February rising RTC, the dollar has been all over the map, no doubt reflecting the resurgence of news from Europe as a market mover.  So not much to say here tonight..

Euro: The euro reversed course on Monday completely erasing Sunday night's gains and stopping right on its 200 day MA at 1.2871.  What looked like a bounce is now canceled.  And the overnight is pretty much just hugging the MA.  So there's no good direction from this chart either.

Transportation: The trans lost 0.72% Monday and that was enough to drive them oversold and keep us in a weak downtrend.  But with support of a sort around 6115m further downside seems limited at this point, though there's no immediate sign of a move higher on Tuesday here.


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      5      4           2        0.583    206

     And the winner is...

It's rare that I get so little guidance from the charts but tonight is one of those nights.  I'm seeing just a lot of sideways action here.  And with no way to tell if the next move will be up or down, I'm left as having to simply declare Tuesday uncertain.  Maybe I ought to just take the rest of the week 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 in light of the "uncertain" call.

Monday higher

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

• Monday higher medium confidence.
  
• ES pivot 1547.00.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last Friday proved to be the perfect mirror image of Thursday as the Dow regained all the ground it had lost the day before.  So is this sideways action a sign of a top or are we just consolidating before another leg higher?  Well to be honest, the ECB and IMF just made my job a lot easier tonight, but there's a few interesting things in the charts I wanted to go over anyway, so let's do the run-down.

The technicals (daily)

The Dow: Notable here is a freshly completed bullish stochastic crossover.  A week of sideways action seems to have pumped some gas back into the Dow's tank to enable some more upside.

The VIX:  And mirroring the Dow, on Friday the VIX gave us a bearish stochastic crossover.  With a 3% fall on Friday and putting in lower highs for three of the last four, I'm looking for lower on Monday.

ES daily

Market index futures: Tonight all three futures are higher at 12:55 AM EDT with ES up by an impressive  0.43%.  Remember the megaphone I mentioned on the daily ES chart I put up last Thursday night?  We had successively longer red, green, and red candles.  Thursday night we were starting a new green candle at the bottom of Thursday's close.  Well on Friday that turned into a perfect continuation of the pattern, closing above Thursday's close.

And now, thanks to the ECB, here's the breakout and it's to the upside, just the way it's supposed to work.  The last candle on the right there is Monday's as it looks at 1 AM Monday morning.  Note also the bullish stochastic crossover now completed (second to last subchart).  Overall, this chart is now looking pretty positive.

ES daily pivot: Tonight the pivot rises from 1542.08  to 1547.00.  ES broke above its pivot at 7 AM Friday and never looked back, thus validating my conditional call for a higher close if we stayed above the pivot by mid-morning.  And even with tonight's gain in the pivot, we remain comfortably above, so that's a bullish sign.

Dollar index: The dollar gapped down on Friday in a move that formed a bearish stochastic crossover.  With the other indicators falling too and no RTC to guide us, this is as good a reason as any to look for a lower dollar on Monday..

Euro: The euro of course took a big spike when the Cyprus news came out Sunday evening.  It is interesting to note that once things settled down, it has pretty much maintained those gains, currently up a generous 0.42%.  Having now bounced off the 200 day MA and with a just completed bullish stochastic crossover here too more upside looks likely on Monday.

Transportation: On Friday the trans put a convincing end to their week-long slump, gaining just over a percent as the indicators continue to move closer to oversold.  Nevertheless, this chart technically remains the weakest of the bunch.


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           2        0.636    270

     And the winner is...

Well looks like we can thank the Russian mafia tonight for their generous support in bailing out Cyprus' rotten banks by donating their hard-earned drug money to cause.  Spasebo, comrades!  And that's providing enough pin action in the futures and currencies at this late hour that I think it will carry through, and therefore I'm calling Monday higher.

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 for the second time in a week, we had a big move early in the evening and once again I think we missed this boat.  Right here's not the time to get in - five hours ago was.  Oh well.  I can't spend all my time watching the charts.