Friday lower

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

• Friday lower, low confidence.
  
• ES pivot 1580.25.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

A mid-afternoon swoon was not enough to keep my call for a higher close from coming true as the Dow finished Thursday with a modest 25 point advance.  We even made it through an entire day without any machine-induced panics, unlike yesterday's bad case of bot-ulism.  Well the CBOE seemed to be having some trouble getting in gear but that was apparently just run of the mill system bugs.  So let's move right on to Friday and see what new surprises the charts have in store for us.

The technicals (daily)

The Dow: Although the Dow finished in the green it did it with a bearish looking inverted hammer.  It still keeps us in the rising RTC but RSI turned lower and the stochastic climbed some more on Thursday.  This isn't yet a convincing bearish reversal sign, but it is at least a flashing caution light.

The VIX:  And adding to the general malaise, the VIX on Thursday produced a perfect long-legged doji, closing up just 0.01 points on the day.  And this star traded outside the steep descending RTC for a bullish setup.  The stochastic here is also getting into position for a bullish setup so I'd expect a higher VIX soon, and quite possibly as early as Friday.

Market index futures: Tonight all three futures are lower at 1:01 AM EDT with ES down by 0.21%.  Solid gains on Thursday kept ES in it rising RTC and we nearly hit the upper BB at 1591 intraday.  But the overnight is moving lower, RSI is now overbought, OBV has turned lower, and the stochastic is just about to form a bearish crossover.  This chart is definitely looking toppy to me tonight.

ES daily pivot: Tonight the pivot rises from 1574.58  to 1580.25..It wasn't a big gain, but combined with ES's move lower in the overnight so far, we are now below the new pivot - not by much but still a bearish sign.

Dollar index: Last night the dollar was looking a bit confused and Thursday bore that out.  We lost 0.22% but did it on a tall gap-down green candle.  That was enough to exit the rising RTC in a convincing fashion for a bearish setup and drive RSI officially overbought..  It also gave us a newly completed bearish stochastic crossover, so I'd say things are looking lower for the buck on Friday..

Euro: And another long-legged doji on Thursday, this time with the euro closing virtually unchanged.  This kept it inside a descending RTC, however the overnight is trading higher and has now exited the RTC for a bullish setup.  RSI has also bottomed at oversold.  The stochastic remains lying on the floor in a heap but the other signs seem to suggest more upside for the euro on Friday.

Transportation: The trans seemed to run out of gas a bit on Thursday, managing to eke out just a 0.08% gain with an odd half-spinning top, half inverted hammer thingie.  It remains in the rising RTC but it also caused RSI to peak at overbought ad moved the stochastic closer to forming a bearish crossover, possibly in a day or two.


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      7      3      5           2        0.750    446

     And the winner is...

It's not a screaming bear alarm tonight, but rather an army of dojis all popping out at once and that's enough to give one pause.  I'll also note that the market has begun oscillating again in swing trader-friendly fashion after spending most of the year so far in overextended trends that refused to break.  And we are right now at the peak of one of those cycles.  The last two were on 4/2 and 4/12, so we're about due.  I'm really sort of on the fence tonight about this but the preponderance of evidence seems to suggest we're about ready to roll over, so I'm going to vote for a lower close Friday.

ES Fantasy Trader

Portfolio stats: the account now rises to $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside again - I'm just not feeling the love.

Thursday higher

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

• Thursday higher, low confidence.
  
• ES pivot 1574.58.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

After a long period earlier this year where the oscillators weren't it seems that the market is getting back into the swing of things.  On Wednesday the SPX gained a whopping 0.0 points while the Dow lost 43, so there goes my call for the day.  What is the meaning of this sudden onset of dojiosity?  The charts will surely explain it, so let's take a peek.

The technicals (daily)

The Dow: Wednesday's loss was almost but not quite a dark cloud cover.  And the close still keeps us well inside a rising RTC.  And with indicators continuing to rise off oversold it's too early to call this the start of a downtrend.  The chart doesn't really look as bad as a 43 point down day might seem.

The VIX:  On Wednesday the VIX put in a baby star, up just 0.96%.  That keeps it in a descending RTC and keeps the indicators falling towards oversold.  The stochastic is also still several days away from being in position to form a bullish crossover so I'd say the reversal indication is weak and requires confirmation.  I'm guessing the VIX will not be able to capitalize on this star on Thursday.

Market index futures:Tonight all three futures are higher at 12:42 AM EDT with ES up by 0.11%.  ES put in a tiny little star on Wednesday which keeps it well inside its rising RTC.  And the modest gains in the overnight are non-confirming that doji.  And while RSI has now turned lower before ever reaching overbought, the stochastic continues to rise but is still not in position to begin a bearish crossover.  So with no resistance until the 1584 area it looks like there's still a bit of gas left in the particular tank for Thursday.

ES daily pivot: Tonight the pivot rises again from 1566.42  to 1574.58.  But even with this jump ES remains above the new pivot for a continuing bullish indication.

Dollar index: After Tuesday's hanging man the dollar gave us an inverted hanging man on Wednesday, losing 0l19% in the process.  But it wasn't enough to exit the rising RTC.  The indicators are now in overbought-broken mode so no help there.  With two days of vacillation and limited guidance, it's too tough to determine where this chart is going on Thursday..

Euro: On Wednesday the euro gave us a nice green hammer that drove RSI oversold.  The overnight seems to be confirming that and is now up 0.15% to just barely exit the descending RTC for a bullish setup.  So this chart looks ready to move higher on Thursday.  If so, that would imply a lower dollar, which is certainly plausible given the two dojis there.

Transportation: Once again, we have a divergence between the Dow, down 0.29% on Wednesday, and the trans which advanced 0.62%.  This keeps them in a rising RTC and while RSI has just gone overbought, the stochastic is still a ways from forming a bearish crossover.  So I'd say more upside is possible here 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      7      5           2        0.500    121 
April      6      3      5           2        0.727    421

     And the winner is...

I know my call last night didn't worm out too well but I'm still seeing the same forces at work tonight.  Rather than shifting my view because of Wednesday's failure, I'm going to stick to my guns.  I note the trans on a roll, the VIX in no hurry to rise, the TLT stuck in consolidation mode, a rising euro, and futures holding onto gains.  So I may regret this, but I'm going to call Thursday higher.

ES Fantasy Trader

Portfolio stats: the account now rises to $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside again, for the same reasons as last night.

Wednesday higher

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

• Wednesday higher, medium confidence.
  
• ES pivot 1566.42.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

ES, 5 minute bars

And this, folks is why I never use stop orders on either my ESFT ES fantasy trading account or in my real trading account.  I'll bet there's a lot of people kicking themselves tonight who got stopped out of trades or investments they should have hung onto.  And this is just the disgraceful sort of thing that makes people think the market is rigged.  I think the SEC should investigate and that Twitter should reimburse people for their losses.  Of course, one might argue that anyone who makes their trading decisions from a Twitter news stream deserves what they get.  I wonder if any trades are going to be busted as a result of this hack.  And I really wish that they catch whoever was behind this and put them away for a long long time.

I find it interesting though that this mini-crash stopped at the 200 period MA on the dot (the dashed orange line).  Don't tell me this number isn't heavily programmed into all the bots.

So aside from some more market shenanigans, overall Tuesday played out quite nicely.  The technicals played out well and the housing news that I'd been afraid of last night didn't hinder another positive day that saw the Dow close up 152.  So is this the end or is there a rally in store?  We head right back to the table and figure out where to plunk down out hard-earned cash on Wednesday.

The technicals (daily)

The Dow: Today's big green marubozu provided a descending RTC exit for a bullish setup, though I'd just about call this one a trigger in its own right.  Add in an RSI that has now bottomed at oversold and a newly completed bullish stochastic crossover and it looks like there's definitely more room to run here on Wednesday.

The VIX:  Last night I wrote "it's certainly possible we might see another [red candle] on Tuesday."  And sure enough, the VIX went down again, this time losing another 6.32%.  The candle is a tall inverted hammer, but that's only due to that Twitter nonsense, so I completely discount that.  Removing that spike leaves just an ordinary red candle.  And with no nearby support, indicators continuing to decline, and a steep descending RTC now established, it looks like the VIX could go lower still on Wednesday.

Market index futures: Tonight all three futures are higher at 12:27 AM EDT with ES up by 0.11%.  This chart now has a lot going for it.  On Tuesday we got a bullish three white soldiers pattern, a descending RTC exit for a bullish trigger, a new rising RTC, all the indicators rising smoothly off oversold, an upper BB still 13 points away, and positive follow-through in the overnight.  What's not to like?

ES daily pivot: Tonight the pivot jumps from 1553.25  to 1566.42.  But even with that, ES remains above the new pivot by nearly 10 points, so that's a bullish sign.

Dollar index: The dollar gapped up 0.44% on Tuesday for a stubby hanging man and a stochastic that's flattening out for a bearish crossover.  But we remain solidly in a rising RTC and are still under the upper BB so it's premature to call the dollar lower just yet.  Maybe by the end of the week though.

Euro: After a few complicated days, the euro took a decided drop on Tuesday to close at 1.2995, its lowest level since April 8th.  But this move wasn't enough to call a new trend and the indicators continue to lack direction, so I'm taking a second pass in a row on this chart.  We might see a small move higher on Wednesday, but that's just idle speculation.

Transportation: Monday was the bullish RTC trigger and Tuesday was the payoff, with a 0.28% gain for the trans.  This gives us a new rising RTC rising indicators, and no nearby resistance so I'd say we could move higher again on Wednesday.


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      6      2      5           2        0.800    464

     And the winner is...

Things are still looking reasonably bullish tonight and I'm still not seeing any bearish reversal signs.  And it doesn't look like we're really all that over-extended yet, so I'm just going to vote for another close higher Wednesday.

ES Fantasy Trader
 
Today we booked a decent profit on Sunday night's long.  In this case, patience definitely paid off.  I was briefly considering bailing out around mid-day Monday when I had a few thousand in profit, and then began to doubt myself when that all evaporated and the trade went in the hole.  But we bounced nicely on Tuesday  for a handy 19 point gain.

Portfolio stats: the account now rises to $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside, because while I am expecting more upside, I think we've already caught the majority of this move which makes the risk/reward of going for the rest of it unacceptable in my book.

SLD    10    false    ES    JUN13 Futures     1572.75    USD    GLOBEX    11:28:34    
BOT    10    false    ES    JUN13 Futures     1553.75    USD    GLOBEX    APR 22 01:14:18   

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1553.25.  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader remains long at 1553.75.

Recap

It wasn't looking good early on when the Dow headed south right out the gate on Monday, but then Mr. Market must have read the Night Owl and realized that I called the close higher, so at 10:35 AM we reversed course and finished the day up 20 points.  Sometimes you just have to stick with your convictions.  Now let's see if logic will prevail on Tuesday as we scour the charts in search of truth.

The technicals (daily)

The Dow: On Monday the Dow gave us another tall doji, very nearly a hammer.  This closed just short of a descending RTC exit, so no bullish setup here just yet.  However, RSI went oversold and the stochastic is now just about to form a bullish crossover.  So overall, this chart is looking fairly bullish now.

The VIX:  Last night I wrote "this chart looks ready to move lower again" and so it did, dropping another 3.87% on Monday.  That move was enough to complete a bearish stochastic crossover and keep the VIX below its 200 day MA.  So with two red candles in a row, it's certainly possible we might see another one on Tuesday.

Market index futures:Tonight all three futures are lower at 1:08 AM EDT with ES down by 0.22%.  Monday's green candle provided a bullish RTC setup and a completed bullish stochastic crossover.  So technically that looks positive, but we've been drifting lower all evening so far.

ES daily pivot: Tonight the pivot rises from 1544.50  to 1553.25.  This gain combined with ES drifting lower now puts ES below the new pivot.  However, it just took a stab at moving back above, right at 1 AM, but that was rejected.  Failing to break above would be a bearish sign.

Dollar index: I thought the dollar might move higher Monday but instead it lost all of 0.03%.  But the resulting candle was a dark cloud cover and we got a stochastic just about to form a bearish crossover.  So now I'm thinking the dollar goes lower on Tuesday.

Euro: The euro seems to have lost its mojo and has been noodling about aimlessly for three days now.  The indicators suggest the next move should be higher, but who knows.  I'm taking a pass on this chart tonight.

Transportation: On Monday the trans gained 0.29%, outperforming the Dow again with a spinning top that also provided a descending RTC bullish trigger.  We also now have a completed bullish stochastic crossover so this chart continues to look positive for Tuesday.

Sentiment: Once again it's time (actually it was time two nights ago) 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   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13

 14  4/1        38         38        +      x   1569

 15  4/8        32         50        -      -   1553 

 16  4/15       33         50        +      -   1589

 17  4/22       19         63        -      -   1555

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 that was a miss for me (though only by two points), but the majority of the poll which voted bearish was correct..   We therefore continue the year with an accuracy of 8  for 13, or 62%.   The poll as a whole though improves to 9 for 13, or 69%.

This week we see something quite extraordinary.  Bullish sentiment was chopped nearly in half from a week ago to its lowest level of the year  while bearish sentiment jumped to its highest level in two years.  I'll admit I switched my vote back to bearish this week but this makes me nervous.  The TickerSense poll participants are admittedly better than average, but when readings hit these sorts of extremes I have to wonder if that isn't a contrarian bullish indicator.  I guess we'll see in a month.

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      6      2      4           2        0.800    464
 
     And the winner is...

Technically, the charts continue to look bullish tonight but there's some more housing news coming out on Tuesday.  And judging by the effect that Monday's news had on the market, I'm not sure I want to stand in front of that particular bus.  I think the bias remains positive, but tonight the Night Owl is going to do the Chicken Dance and call Tuesday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains at $98,250 after 10 trades (8 for 10 total, 3 for 3 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we remain long at 1553.75.  I don't think this upward move is quite played out yet.

Monday higher

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

• Monday higher, medium confidence.
  
• ES pivot 1544.50.  Holding above is bullish..
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader going long at 1553.75.

Recap

If you recall last Thursday night I said we'd go higher Friday if the ES pivot held.  Well ES made one half-hearted attempt to bust below it at 9:45 AM but that didn't last long and after that it was just up, up and away.  The Dow finished up just 0.07% mostly because IBM was the lead anchor in the room.  The SPX ended with a nice 0.88% gain.  So once again, the pivot prevails.  But that was then, what about Monday?  We now challenge the charts to stand and deliver.

The technicals (daily)

The Dow: So the Dow was up just a little but in so doing it formed a nice almost-dragonfly doji.  We saw one of these  to the downside last week and it worked out nicely.  With the indicators now very nearly oversold and the stochastic closing in a a bullish crossover, there's at least a suggestion of a reversal here.  It might be stronger once we exit the descending RTC though, possibly in a day or two.

The VIX:  Thursday night I wrote "the VIX rarely spends this long above its upper BB before falling back.  It's now definitely due. "  And sure enough, bada-bing, on Friday it came right back down, losing 14.75% and falling right back through its 200 day MA for the second time in four days.  That also provided a rising RTC exit for a bearish setup and left the stochastic on the brink of a bearish crossover.  Barring any sudden news on Monday that the Bank of Cyprus is going to issue new bonds denominated in Greek yogurt cups, this chart looks ready to move lower again.

Market index futures: Tonight all three futures are non-trivially higher at 1: 00 AM EDT with ES up by 0.47%.  ES on Friday gave us a very solid gain on a something that looks like a bullish piercing pattern, only offset with the green candle higher than the red one.  The name of this escapes me at the moment, but I believe it's bullish too.  We're also getting some nice follow-through in the overnight which so far is well outside the descending RTC for a bullish setup.  And the stochastic has now just completed a bullish crossover.  So this chart is looking to be in pretty decent shape for Monday.

ES daily pivot: Tonight the pivot rises from 1539.42  to 1544.50.  That still leaves us a good 10 points above the new pivot so that's a good bullish sign for Monday.

Dollar index: Last Thursday night I wrote "with indicators continuing to rise, I have to vote again for the dollar to move higher on Friday".  And after some hesitation Thursday, the dollar posted a 0.20% gain on Friday to confirm the descending RTC bullish trigger.  With that plus indicators now rising sharply, the dollar looks poised for more upside again on Monday..

Euro: It was an unusual day on Friday - both the dollar and the euro rose.  And while I called them both higher, I was sure one of those calls would be wrong.  But I was wrong, because I was right (if you follow me).  It was a small gain on a tall inverted hammer, but a gain nonetheless.  And the upside has resumed in the Sunday overnight, now up 0.07%.  With the stochastic ever so close to a bullish crossover and a three-day winning streak in progress, I'm again calling both the dollar and the euro higher on Monday.  And like I said on Thursday, one of those calls is probably wrong - unless the two currencies move in sync again.

Transportation: Once again, the trans greatly outperformed the Dow on Friday, even after accounting for IBM's big flop.  Their 1.51% gain brought them right back to where they were three days earlier.  Of course, that now established 6042 as some fair resistance but with the indicators now way off overbought and the stochastic about to form a bullish crossover, there's clearly some gas available in the tank to attempt a breakout on Monday.  Friday's pop also provided a descending RTC exit for a bullish setup.


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      5      2      4           2        0.778    444

     And the winner is...

With Dr. Copper giving us a descending RTC breakout on Friday, plus some guy on CNBC telling us copper no longer matters (that's always a sure sign, isn't it?) the TLT looking toppy, the trans looking ready to rise, the pivot on the upside, the SPX Hi-Low indicator only up to 90 and continuing to rise, and both the futures and currencies guiding higher, the only logical course is to call Monday higher.

I'll readily admit I'm not feeling particularly bullish after the lousy week I had last week (down 3.16%, my worst week in over a year) but I'm not here to push my feelings, only to analyze charts and make observations.  And right now I'm observing a lot of positive signs on the daily charts.  QED.

ES Fantasy Trader

Portfolio stats: the account remains at $98,250 after 10 trades (8 for 10 total, 3 for 3 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we go long at 1553.75.  Reminder - you can follow these trades live on Twitter @nightowltrader.  I won't flood your feed with chatter - just the entries and exits as I make them.