Friday lower

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

• Friday lower, low confidence.
  
• ES pivot 1552.67.  Holding below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well I had the right idea in changing my initial negative call for Thursday to a conditional one, but unfortunately ES did not behave very well Thursday morning.  It basically just meandered all over the place, crossing its pivot more than a dozen times before ending the day up 6.29 points.  It is perhaps a testament to its ongoing strength that the market managed to post the gains it did in the face of some rather mediocre charts last night.  But will that extend into Friday?  Let's take a look.

The technicals (daily)

The Dow: On Thursday the Dow managed to retrace half of Wednesday's losses in a move that was considerably better than a DCB.  And while Wednesday's big dump provided a bearish RTC setup, Thursday's recovery canceled it, bringing us just barely back inside the channel.  However, after touching its upper BB for the past two days, today's failed attempt to regain the 14,650 level has something of a bearish feel to it.  Nevertheless, there's some support around 14,544 so I suspect any downside from here might be limited.

The VIX:  The VIX did move higher intraday on Thursday, notably touching its upper BB for the second day in a row before retreating to close down 2.25%,  The upward move did not surprise me - the subsequent retreat did.  But now that it's done, I repeat my mantra that the VIX rarely stays at its upper BB more than two days running.  Now that we've seen that, more downside is possible on Friday.  Note too that we remain near the top of the VIX's recent trading range, so there's some magnetic attraction lower here too.

Market index futures:Tonight all three futures are lower at 1:11 AM EDT with ES down by 0.24%.  Thursday's retracement of Wednesday's losses was less than convincing and also not quite enough to avoid a bearish RTC trigger.  The decline in the overnight seems to be confirming that.  So with indicators continuing their march down towards oversold this chart goes back to bearish.

ES daily pivot: Tonight the pivot dips from 1553.42  to 1552.67.After playing tag with the pivot all day long, ES is now just two points below the new number and trending lower, a bearish sign.

Dollar index: The dollar dropped a slight 0.08% on Thursday but that belies the size of the red candle, which opened with a big gap up and eventually broke above the upper BB before falling back to close lower.  This sort of failed rally attempt in the face of indicators that continue to decline makes it looks like once again more downside is still possible Friday..

Euro: I nailed this one, writing last night "the euro just may mount a test of the MA (at 1.2879) on Thursday."   The test arrived and the euro passed with flying colors, busting straight through the MA to close at 1.2944.  The overnight is now meandering about the top of Thursday's close, slightly lower.  Considering that most big one day gains in the euro lately have been followed by givebacks, I wouldn't be too surprised to see either a star or a small decline on Friday.

Transportation: And on Thursday the trans put in a hammer, albeit a fairly small one.  Nevertheless, the fact that the impressive downward momentum of the past three days was arrested speaks to the bull case.  So while we remain inside a descending RTC, it is so steep it won't take much to generate a bullish setup, specifically a close above 6028 on Friday.  With indicators now officially oversold and the stochastic beginning to form the hook preceding a bullish crossover, a move higher from here is not out of the question.


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      7      5           2        0.500    121 
April      0      1      1           0        0.000      0

     And the winner is...

Friday is the one historically weak  day in an otherwise bullish first week of April.  And with a bearish cast to most of the charts tonight, I'm not feeling the love.  Oh and that one-day up/down thing just keeps right on going, so since Thursday was up, Friday should be down.  And don't forget that we got some less than stellar jobs numbers on Thursday and with more of that coming out on Friday, a weak showing is likely to put a damper on the market.  So all in all, I think I'm just going to have to call Friday lower.

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 just because I hesitate to put on a short in the face of the sort of upward momentum we've seen all year long so far.

Thursday higher if ES pivot passed

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

• Thursday higher if ES breaks above pivot, else lower.. <- i="">revised at 1:51 AM EDT

ES pivot 1557.83.  Holding below is bearish.

Rest of week bias uncertain technically.

Monthly outlook: bias higher.

ES Fantasy Trader standing aside.

Recap

Hey North Korea,

Wow - you take one day off and all heck breaks loose.  On Wednesday the Dow dove 112 points on a combination of worse than expected economic numbers and to hear tell, the demented ravings of some baby-faced pipsqueak from North Korea by the name of Kim "Mentally" Ill Jong Long Dong or whatever he calls himself.  Hey Kim, you've got no idea whom you're playing with.  The US might have trouble dealing with cowards who blend into civilian populations for defense, but when it comes to dropping nukes on rogue nation-states, we've got no equal - literally.  Ask Tojo how all that belligerent talk worked out for him.  And with that word to the wise, we're back to casting an eagle eye (or owl-eye) on what's in store for Thursday.

The technicals (daily)

The Dow: Ahem, the Dow, as we noted, took a big dump on Wednesday, one that broke us out of an admittedly shallow rising RTC while continuing this crazy up-down-up-down pattern.  It's now been  fourteen straight sessions, nearly three weeks, that we've had alternating up and down days.  The last time we had two consecutive up days was March 11th!  But Wednesday was the biggest move since February 25th and that is not to be dismissed lightly.  And this loss didn't even bring us close to oversold on the indicators so more downside is not out of the question.

The VIX:  The VIX spiked 11.19% on Wednesday, traveling from the bottom of its recent range to the top in one day.  After touching its upper BB, it retreated a bit to close at 14.21.  That still leaves a bit of room to run higher as the indicators are only halfway form oversold to overbought.

Market index futures:Tonight all three futures are barely higher at 12:34 AM EDT with ES up by just a tick, or 0.02%.   Wednesday saw the biggest drop in ES since February 25th, one big enough to exit the rising RTC for a bearish setup, and to form a bearish engulfing pattern.  Only thing is, is that ES has got this red/green thing going on too, having now put in alternating up/down closes for fourteen straight sessions.  On that basis alone, one would be tempted to call ES higher on Thursday even though the overnight is showing little enthusiasm for that so far.  However, the indicators are still falling and technically this chart looks bearish.

ES daily pivot: Tonight the pivot tumbles from 1562.25  to 1553.42.  And even that wasn't enough to bring ES back above the new pivot, so that remains a bearish sign.

Dollar index: After a nicely executed evening star last week, the dollar continued moving lower on Thursday even as the Dow dropped too.  This leaves the dollar in a clear descending RTC with indicators moving lower.  More downside possible here.

Euro: The euro posted a small gain Wednesday but continues to encounter resistance just below its 200 day MA, around 1.2855.  The overnight is just about flat but having just exited a short descending RTC for a bullish setup with rising indicators and now being back above its pivot, the euro just may mount a test of the MA (at 1.2879) on Thursday.

Transportation: And finally the trans continued lower for the third day in a row, dropping 1.33% to close just above their lower BB and forming a perfect bearish three black crows pattern.  They also broke support at 6027 so this chart is looking rather weak for 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      7      5           2        0.500    121 
April      0      0      1           0        0.000      0

     And the winner is...

With copper in free-fall, the TLT in a month-long uptrend, an ugly-looking trans chart, a VIX that doesn't appear to have topped yet, that lunatic on the loose in North Korea, and some iffy jobs number coming out in the morning, the logical call is Thursday lower.  That said, I'm mindful of the possibility of a DCB the continuatrion of this one day up/one day down business,and the seasonality of the first week of April.  So in light of ES's recent reversal higher since I first published this an hour ago, I'm revising my call and now making it conditional: if ES breaks above its pivot of 1553.42 by mid-morning Thursday, we close higher.  If it bounces off or otherwise fails to pass the pivot, we close lower.

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 given the current continuing tricky environment.

No publication Tuesday night

I'm sorry to report that the Night Owl is canceled for Tuesday night.  I had an opthalmologist appointment on Tuesday (yes, even sharp-eyed owls need to go to the eye doctor once in a while)  and she put some drops in my eyes that had the result that I can't see jack, much less an array of tiny numbers on my charts.  So all the best and we'll be back Wednesday night ready to rock as usual.

Tuesday uncertain

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

• Tuesday higher if ES pivot holds, else lower.
  
• ES pivot 1557.83.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Once again, the pivot proved crucial as ES dove under right at 10:30 AM and never resurfaced.  Net result - a lower close.  And the market did provide me with a pleasant surprise that wasn't an April Fool's as my holdings in BGCP (Bug Sip) suddenly took off for a 32% one-day gain.  Of course, I've had my share of one-day downers so it's nice to be on the other side for a change.  Now let's see which side Tuesday will land on.

The technicals (daily)

The Dow: The see-saw continues.  The Dow has alternated one day gains and losses for ten straight days now.  Monday's long-legged doji took a bit of wind out of the sails of the technicals which turned downward as the stochastic inched closer to a bearish crossover.  But not being overbought makes it hard to call a top here, and don't forget the historical strength of this week.  On the other hand, there's a rather ominous rising wedge developing on the daily chart and that definitely bears watching.

The VIX:  Sometimes simple ideas, some might say simplistic, actually work.  Last night I suggested the VIX could go higher just because it was sitting at the bottom of its recent sideways channel.  And sure enough, on Monday the VIX gapped up 6.93, right to the top of that range with a green spinning top.  And that was enough to complete a bullish stochastic crossover.  But with the indicators in conflict with the candles, I'm not going to call this one either way.

Market index futures:Tonight all three futures are just a bit higher at 1:00 AM EDT with ES up by 0.03%.  I was calling ES a bit bearish last night and tonight it's looking a bit more so after a bearish engulfing pattern and a completed bearish stochastic crossover on Monday. However, we clearly remain in an uptrend.  And ES has not put in more than one consecutive down day since January 31st.  So I'm still a bit cautious about calling this chart lower for Tuesday, especially since ES isn't showing much desire to head that way in the overnight, at least so far.

ES daily pivot: Tonight the pivot inches up from 1559.00 even to 1557.83. We were below before and remain below the new pivot, so that's bearish.  But we're definitely within striking distance, so that merits watching.

Dollar index: Last night this chart was iffy, but Monday's big 0.33% drop gave the dollar its third consecutive loss, established a new downtrend, and formed a bearish stochastic crossover.  That spells lower again for Tuesday in my book.

Euro: On Monday the euro posted a second day of solid gains, exactly touching the 200 day MA before closing a bit lower.  But the overnight is continuing higher again, up 0.11% at the moment.  It looks like the euro is getting ready to challenge the MA.  Unfortunately, Esignal is not giving me my 5-minute chart for the euro tonight.  I don't know if that's a glitch or if it's yet another service they're yanking in the hopes of making me pay even more for their already overpriced service.  If it is the latter, I may just dump the euro and start following the Swiss franc instead.  At least that's still showing intraday charts.

Transportation: After outperforming on Friday, the trans gave it all back on Monday, ad then some, dropping 1.49% on a bearish engulfing marubozu.  I missed this one badly.  We're now right back in the middle of last week's consolidation area around 6160 and this chart has turned ugly in just one day.  Now I'm thinking more downside is possible here on Tuesday.

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   6/10

 11  3/11       41         26        +      +   1551  

 12  3/18       41         37        +      +   1561

 13  3/25       31         38        +      -   1557 

 14  4/1        38         38        +      x   1569

  

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 for the fourth week in a row.   We therefore continue the year with an accuracy of 6  for 10, or 60%.   This is a good example of how everyone's been waiting for a pullback that just hasn't materialized.

This week we find a dead heat with the bulls and bears tied at 38%, and that holds right down to two decimal places - 38.46%.  I had to come up with a new symbol for this.  The "x" in the +/- column means a tie score.  Overall this means a few other people have joined me in being bullish but it's all as uncertain as ever as evidenced by the long string of up/down closes we've been seeing.


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      7      5           2        0.500    121
April      0      0      0           0        0.000      0

     And the winner is...

Despite this week's historical strength, I'm starting to see some flashing yellow caution lights in the charts.  I'd like to call Tuesday lower on the basis of the VIX, the trans, and the doji in the Dow, but with the futures hanging in there and the euro continuing to rise, that's a limb I'm not willing to go out on.  So in the face of such contradictory signals, I'm just going to call Tuesday uncertain.  Sometimes that's all you can do.

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 given the "uncertain" call.

Monday higher if ES pivot holds

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

• Monday higher if ES pivot holds, else lower.
  
• ES pivot 1559.00 .  Breaking below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well doesn't it just figure - I said the market would go higher on Wednesday, so it went lower.  Then I said it would go lower on Thursday, so naturally it went higher.  Bottom line, the up/down/up/down pattern continues, now nine in a row of alternating higher and lower closes.  So let's figure out if this is going to hold on Monday.

The technicals (daily)

The Dow: The Dow admittedly caught me by surprise Thursday with a 52 point gain for another record close.   We are now well out of the 14,522 resistance area and now to 14,560 too.  Thursday's candle was bullish engulfing and it also negated Wednesday's hanging man.  Also, the indicators are rising again but not yet overbought.  And the upper BB is now at 14,682.  Looks like more room to run here.

The VIX:  The VIX continues to be range bound, trading down 3.42% on Thursday to close at 12.70, right at the bottom of the range.  This alone would suggest a move higher on Monday even though the indicators continue to fall and are not yet oversold.

Market index futures:Tonight all three futures are lower at 1:55 AM EDT with ES down by 0.16%.  On Thursday ES traded above the upper megaphone line I talked about last week and remains in a rising RTC.  We're also now near the upper BB at 1567.  The overnight slippage is looking a bit bearish and the stochastic is looking like it wants to form a bearish crossover.  But with so much continuing upward momentum, I hesitate to call this chart lower on Monday.

ES daily pivot: Tonight the pivot rises from 1554.33  to 1559.00 even.   We were above all day Thursday and remain above the new pivot, though only by a point, so that puts the pivot in play.  A break below would be bearish.

Dollar index: Last Wednesday night I wrote of the dollar's big pop, "This kind of move generally pulls back in short order".  And the $ did not disappoint, falling back 0.28% on Thursday with a spinning top.  That leaves Monday uncertain, particularly with the greenback's recent herky-jerky movement..

Euro: The euro equivocated a bit on Thursday with a small gain but overall remains in a descending RTC.  It does seem to be trying to rally in the Sunday overnight but we'll need to see it break through its pivot at 1.2812 to seal the deal.  Not clear if that's going to happen on Monday.

Transportation: On Thursday the trans outperformed, handily beating the Dow with a 1% pop that cleared the descending RTC for a bullish trigger on increased volume.  With rising indicators nowhere near overbought and an upper BB at 6320, looks like more upside in store on Monday.


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      7      5           2        0.500    121

     And the winner is...

We have something of a mixed picture tonight.  The Dow and the trans are looking pretty bullish while the futures and the VIX are looking a tad bearish.  However Monday is the first day of a new month and those are generally bullish.  The first week of April is in fact historically quite strong.  So given all that I'm going to make a conditional call: if ES manages to stay above its pivot by mid-morning, we'll close higher on Monday.  If ES breaks below the pivot in a convincing manner (not just a quick dip that pops back up), then we go lower.

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 given the conditional call.