Friday, May 3, 2013

Friday higher if ES stays above pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher if ES stays above pivot, else lower.
  • ES pivot 1588.42 Holding above is bullish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Once again, ES broke over its daily pivot right at the open and that was that - we finished Thursday higher with the Dow gaining another 131 points thanks in good measure to the ECB.  Hey, we'll take 'em any way we gets 'em.  And with that, we march on to yet another Friday, chartwise that is.

The technicals (daily)

The Dow: On Thursday the Dow very nearly erased all of Wednesday's losses.  Resistance at 14,840 remains an issue though RSI has now come off overbought.  The stochastic is all threaded out and there's no RTC going, so I've got no guidance on this chart for Friday.

The VIXAnd the VIX fell right back into the center last week's consolidation range.  The indicators have come off oversold but appear to be stuck halfway to overbought.  And there's not RTC here either, so I'm drawing a blank on this chart tonight.

Market index futures: Tonight the futures are little changed at 1: 00 AM EDT with both ES and YM absolutely dead flat but NQ up 0.06%.  Like the Dow, ES retraced nearly all of Wednesday's losses on Thursday.  But we traded outside the rising RTC for a second day so that's a bearish trigger.  Still, ES doesn't seem to be in a hurry to move any lower just yet.  In fact, money flow is actually continuing to rise.

ES daily pivot: Tonight the pivot inches up from 1582.92  to 1588.42.  .Even this gain was not enough to put ES below the new pivot, so this sign remains bullish.

Dollar index: Last night I wrote "I wouldn't be surprised to see the dollar bounce off the 200 MA on Thursday.".  Well on Thursday it took an ECB-fueled rocket ride with a 0.93% gap up to pop right out of its descending RTC for a bullish setup.  This move also formed a bullish stochastic crossover and caused RSI to bottom at oversold.  This  all points to continued higher, though we may take a brief pause on Friday after such a big move on Thursday.

Euro: Last night I had a whole list of factors that made me think "the euro is headed lower on Thursday".  And sure enough, the euro took a big dump on Thursday, falling clear out of its rising RTC for a bearish setup, completing a bearish stochastic crossover and driving the indicators off overbought.  This all points to more downside, though as with the dollar case, we could see a pause or even a small gain on Friday.  The overnight is in fact currently up 0.12%.

Transportation: Unlike the Dow, the trans only managed to retrace half of their previous losses on Thursday.  A second day of trading outside the rising RTC is a bearish trigger and that is supported by declining indicators.  This seems to favor the downside for Friday, though not very convincingly.


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      5      5           3        0.667    328

May        0      0      0           2        1.000      0


     And the winner is...

Thursday was definitely news-driven, though some of the technicals worked anyway particularly in the currencies.  Friday promises more of the same, with a slew employment numbers coming out.  The general buzz seems to be that these may actually be BTE.  That alone could push the market higher again, though a miss would be sure to drive it lower.  Given the paucity of guidance in the charts tonight (possibly a reflection of this uncertainty), I'm going to make a third conditional call in a row: if ES remains above its pivot of 1588.42 by mid-morning Friday, we'll close Friday higher.  If on the other hand, ES dives under the pivot it the wee hours and is unable to regain it by mid-morning, we're closing lower.  That's all she wrote.

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 in view of the conditional  call.

Thursday, May 2, 2013

Thursday higher if ES breaks over pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher if ES breaks above pivot, else lower.
  • ES pivot 1582.92 Breaking above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Once again, the ES pivot held the key to the market.  It fell through just before the open ad never looked back.  The result was a 139 point tumble for the Dow and a equally bad 15 down for the SPX on Wednesday.  Tonight we face a tricky situation and I'm not sure the charts will be of much use for Thursday, but let's do a quick run-down anyway. 
 
The technicals (daily)

The Dow: The technicals worked great for the Dow on Wednesday.  A bearish hanging man and RTC exit both on Tuesday plus a highly overbought RSI, and bada bing, down we went, right back into last week's consolidation area.  RSI has now clearly peaked and the stochastic has executed its bearish crossover.  With a chart like this, more downside seems to be coming.

The VIXInterestingly though, while the market was off nearly a whole percent, the reaction of the VIX was fairly muted, as it gained only 7.17% on Wednesday.  I'd normally expect a bigger move than that.  In any event, this move was enough to break the VIX out of its week-long trading range, form a bottom in the indicators at oversold, and form a bullish stochastic crossover.  SO this chart looks ready to move higher again on Thursday.

Market index futures:Tonight all three futures are higher, by non-trivial amounts for a change, at 1:20 AM EDT with ES up by 0.24%.  The big drop in ES on Wednesday took it decisively out of its rising RTC for a bearish setup.  I'd say odds are good that this trend (from April 18th) is over.  We also have indicators now descending from overbought and a newly completed bearish stochastic crossover.  So on a daily basis, this chart would appear to have more room to run lower on Thursday.

ES daily pivot: Tonight the pivot drops from 1589.25  to 1582.92.  Unfortunately, even with ES drifting higher in the overnight, this drop in the pivot was not enough to bring us above it, so this remains a bearish sign.

Dollar index: On Wednesday the dollar took another big gap down, losing 0.35% on an inverted hammer that stopped right at the 200 day MA.  The last two times this happened (both last year), it provided support once, and the dollar fell right through the other time.  But this time we're more oversold than then so I wouldn't be surprised to see the dollar bounce off the 200 MA on Thursday.  I note too that the dollar exited its descending RTC on the left side, an unusual move that often signals a bottom.

Euro: I really thought the euro was looking lower for Wednesday.  Instead, it continued on up to actually close above its upper BB at 1.3200.  That helped drive RSI more overbought.  But a sell off that began mid-afternoon Wednesday is continuing in the overnight, now down 0.31%.  A combination of upper BB hit, overbought indicators, a stochastic about to form a bearish crossover, OBV turning lower, and a break under its pivot all make me think the euro is headed lower on Thursday.  This would sync with my call for a higher dollar.

Transportation: I needn't have hesitated in calling the trans lower last night as they more than doubled the Dow's losses, falling 2.32% on Wednesday.  This provided a bearish RTC setup, a bearish stochastic crossover, ad drove RSI halfway back to oversold from Tuesday's reading of 100.  With this chart cycling again, it looks like it could move lower again on Thursday.

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
 13/18       41         37        +      +   1561   8/12
 13  3/25       31         38        +      -   1557   8/13
 14  4/1        38         38        +      x   1569   9/14
 15  4/8        32         50        -      -   1553 
 16  4/15       33         50        +      -   1589
 17  4/22       19         63        -      -   1555
 18  4/29       33         58        -      -   1582 

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 correct.  However, the poll as a whole was exactly tied, so there's no winner there.   We therefore continue the year with an accuracy of 9  for 14, or 64%.   The poll as a whole remains at 8  for 13 or 62%.

This week we see a small retreat in bearish sentiment from last week's two year record highs, and a larger bump in bullish sentiment as more people come off the sidelines.  But the majority remains bearish, and I'm with them, based on my reading of the weekly and monthly SPX charts.

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      5      5           3        0.667    328

May        0      0      0           1        1.000      0

     And the winner is...

Everything's still looking pretty bearish tonight, with the one exception of the futures.  I've learned to be very cautious when the futures start moving contrary to the general technical direction in the overnight.  It usually means something's up.  And what's up in this case, I believe, is the expectation of ECB rate cuts, plus who knows what else Super Mario might say Thursday morning.  With this wild card on the table, it would be imprudent of me to make a flat-out call lower (which is what I would otherwise do), so we're going conditional again: if ES breaks above its pivot by mid-morning Thursday, we'll close higher, else lower.

ES Fantasy Trade

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 in view of the conditional  call.

Wednesday, May 1, 2013

Wednesday higher if ES stays above pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher if ES stays above pivot, else lower.
  • ES pivot 1589.25 Breaking below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Last night we called for a higher close if ES could stay above its pivot by mid-morning.  Well after a brief failed test below that level off the open, ES broke right back above at 10:40 AM and the market did indeed finish higher, with the Dow gaining 21 points.  QED.  Now on to Wednesday, where we seek out the logic in the charts to arrive at an indisputable conclusion.

The technicals (daily)

The Dow: The Dow's small advance on Tuesday gave us a classic hanging man and also exited the rising RTC for bearish setup.  RSI and the stochastic are both quite high right now, though the later still isn't in position for a bearish crossover.  So let's just say the current trend is in jeopardy but it's still too soon to call it done.

The VIXThe VIX lost 1.39% on Tuesday and is now clearly channeling between 13.5 and 13.9.  Being as we're now at the bottom end of that range with quite oversold indicators and an RSI that seemed to have now bottomed, Wednesday would seem to favor a move higher here.

Market index futures:Tonight the futures are mixed again at 1:05 AM EDT with ES down by 0.03% but NQ up 0.05% and YM up 0.02%.  Call it basically unchanged, so no guidance here.

ES daily pivot: Tonight the pivot rises from 1584.75  to 1589.25.  Like last night, ES remains above the new pivot even after that jump, so this predictor remains bullish.  Tuesday's daily ES candle though formed a hanging man but remained inside the rising RTC.  Indicators are now quite overbought, but we've seen this year that they can stay that way for a long time before the market goes lower.  So there's really not that much in the way of bearishness on this chart.

Dollar index: The dollar is back in its normal inverse correlation with the market, dropping a big 0.48% following Monday's big losses.  This has now driven the indicators oversold and brought us back to support from earlier in April at 56.12 on the $USDUPX.  Given that the dollar also touched its lower BB on Tuesday, I'd say it's due for a reversal soon - either Wednesday or Thursday..

Euro: Last night I wrote "I'd look for continued upside on Tuesday." and that's exactly what happened with the euro accelerating its gains to close now at 1.3166 and just touching its upper BB intraday.  In fact this chart is looking like an exponential run-up and we know how those always end.  Indeed, the overnight is now forming a bearish shooting star..  With overbought indicators, I'd say the euro is looking ready to roll over.

Transportation: The trans on Tuesday advanced nicely, up 0.45%.  While this formed a hanging man, it also kept us right in the middle of the RTC.  Meanwhile RSI is pegged at 100 for the second day in a row.  But recall that RSI spent four days in a row on 100 back in January while the trans continued higher, and that all ended with only a single day decline.  So like the Dow, it's too soon to call   top 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      7      5           2        0.500    121 

April      7      5      5           3        0.667    328


     And the winner is...

Technically, I'm seeing a number of dojis warning of reversals and a number of charts sitting on BB extremes.  On the other hand, there are no good clear reversal warnings out there right now.  Add to the mix the fact that Wednesday is the first day of May, and that's historically very strong.  And it's also a Fed day.  Because there's no clear-cut direction, I'm going to make another conditional call.  If ES can stay above its pivot of 1589.25 by mid-morning, then we'll get a higher close Wednesday.  If on the other hand, we break below the pivot in convincing fashion by the 10:45 AM'ish area, we close lower Wednesday.

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 in view of the conditional  call.

Tuesday, April 30, 2013

Tuesday lower if ES pivot broken

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower if ES breaks under its pivot, else higher.
  • ES pivot 1584.75 Breaking below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Recap

Sigh - I called the market lower for Friday and ti went higher, but I was just a little wrong.  Then on Monday I did the same thing, but this time I was very wrong, to the tune of a 106 point pop in the Dow.  But this is the kind of mistake I don't mind since I'm always net long, so I ended up making money anyway.  And at least I had the sense to avoid going short in the ESFT.  Now let's see how Monday's action changes the map for Tuesday.

The technicals (daily)

The Dow: What a difference a day makes.  Sunday night the Dow was looking ready to roll over.  But Monday's tall green marubozu was enough to bring us all the way back into the rising RTC and thereby canceling the bearish setup.  It also canceled the incipient bearish stochastic crossover.  The indicators now seem to be headed back to the state they were in for much of the last quarter - completely pegged on overbought and therefore meaningless.  With the upper BB now at 14,879 and resistance at the same level, it looks like the Dow may be on its way to check it out.

The VIXMonday was another odd day for the VIX.  On a day when the Dow gained 0.72%, the VIX was also up, and also by almost the same amount, 0.73%.  But the candle was a star, the third in four days.  RSI is now very low and the stochastic just squeaked out a bullish crossover, so there's a chance for more upside on Tuesday.

Market index futures:Tonight the futures are mixed at 1:08 AM EDT with ES down by 0.05% but both NQ and YM up by 0.04%.  There's little guidance from this sort of flat-lining in the overnight, but Monday's decent green marubozu put ES back into the center of its rising RTC with a decent bullish engulfing pattern.  It also canceled what looked like a new bearish stochastic crossover.  My only concern is that we're sitting right at resistance from April 11th/12th.  Tuesday is make or break for ES.  Pass Go and we're headed for the upper BB at 1599.  But a loss would exit the rising RTC and put an end to the uptrend.  At the moment I have no way to tell which one it will be.

ES daily pivot: Tonight the pivot jumps from 1577.17  to 1584.75.  And even with that pop, ES is still above the new pivot, though only by a few points.  Still, it's bullish as long as we don't break below.

Dollar index: Wow - I sure didn't see this one coming.  The bottom fell out of the dollar on Monday as it gapped down 0.45% to end with a small inverted hammer.  But even this drop leaves it not yet oversold and still above its lower BB.  Still, the tendency for the dollar after big gap-down days has been to refill the gap immediately and that's what I'm expecting here on Tuesday.

Euro: I was at least right about the euro moving higher as it gapped up to close at 1.3101 to exit a descending RTC for a bullish trigger.  The indicators continue to rise off oversold and the overnight is just wandering aimlessly, so I'd look for continued upside on Tuesday.

Transportation: On Monday the trans, which had been very close to the edge of their rising RTC, scored a 0.56% gain to get right back into the middle of the channel.  Like the Dow, the indicators are now pegged at overbought and so provide no guidance.  Resistance is close by at 6184. The trans have been making lower highs for two months now.  If we can get through this level, we have a good shot at visiting the upper BB is at 6209.  Either way, there's no immediate reversal signs on this chart right now.


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      5      5           2        0.643    328


     And the winner is...

The last day of the month is often historically bullish, but not for April.  However, the charts are looking less bearish than last night, not more so.  But a lot of them also finished Monday right at key resistance levels with overextended indicators so it's not clear if they have enough gas in the tank to punch through without a rest first.  Because of this uncertainty, I'm going to make a conditional call: if ES breaks below its pivot of 1684.75 by mid-morning, we close Tuesday lower.  If ES stays above, then it's Tuesday 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 in view of the conditional  call.

Monday, April 29, 2013

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1577.17 Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.
Photo analogy of the week
Hey porcupine!
Why you numbskull!











You've seen it, you can't unsee it.  OK, this is very unsettling.  Apparently, a slim majority of Americans elected the ghost of Moe Howard, leader of The Three Stooges,  to run the greatest country on earth.  Not once, but twice.  Nyuk nyuk nyuk.  Listen you mugs - it is left as an exercise to the reader to decide if Joe Biden looks more like Larry or Curley.  Loser gets Harry Reid.  Woo woo woo!

Recap

OK, all silliness aside, I know I called for the Dow to close lower on Friday and that was wrong, but only by 12 points.  In any case, both the SPX and Nasdaq did close lower, so it wasn't a bad miss.  On small-range days, it's always possible for that sort of thing to happen.  Now let's see where Monday may be headed.

The technicals (daily)

The Dow: Friday's small gains were just not quite enough to prevent a bearish setup on a rising RTC exit.  However, the indicators are still rising and the stochastic is still a ways from even starting a bearish crossover, so it's too early to call the Dow lower, especially considering the green candle on Friday.

The VIXThe VIX fell on Friday but only lost 0.07% on a red candle hanging above Thursday's perfect doji.  Frustratingly, that sort of action neither confirms nor disproves the doji.  We're simply left with the indicators  which are now officially oversold and a stochastic very near to forming a bullish crossover.  I'd \say the VIX is due for a bounce here, if not Monday then even more likely on Tuesday.

Market index futures:Tonight the futures are mixed at 12:56 AM EDT with NQ up 0.07%, YM just barely down 0.01% and ES down by just 0.05 %.  On Friday, ES lost almost enough to exit its rising RTC.  In the Sunday overnight, it has done that, so that becomes a bearish setup - unless ES can manage a gain up to 1582.50 on Monday.  The indicators are now rather overbought and the stochastic has now just completed a bearish crossover.  Thursday night I said this chart looked toppy.  Friday's losses confirmed that.  On Sunday night, I see no signs of a move higher so things continue to look bearish.

ES daily pivot: Tonight the pivot inches up from 1580.25  to 1577.17.  The lackluster overnight action leaves us below the new pivot, though only by a point and a half.  This is one of these cases where ES is going to have to break through the resistance offered by the pivot if it hopes to move higher on Monday.  As it stands, it's a negative sign.

Dollar index: Th3 dollar dropped 0.32% on Friday on a small harami cross.  This is a bullish reversal sign.  However, the indicators are a bit out of sync here, being as they're still descending off overbought.  So let's just say there's a possibility of a higher dollar on Monday, but not a certainty.

Euro: Last Thursday night I wrote "other signs seem to suggest more upside for the euro on Friday".  And that's just what we got, with the euro closing at 1.3033 to break out of its descending RTC for a bullish setup.  The Sunday overnight is trading higher, up 0.18% already after a gap-up open.  With indicators just coming off oversold and a freshly completed bullish stochastic crossover, I'm looking for more gains here on Monday.  Note once again that this conflicts with my guess for a higher dollar - if I had to bet, I'd bet on the euro moving higher.

Transportation: On Friday the trans gained a puny 0.08% on a spinning top.  This keeps us in a rising RTC but also drove RSI to very overbought (97.03).  And the stochastic is starting to flatten out in preparation for a bearish crossover, possibly by mid-week.  But this isn't immediately bearish so we'll need to watch Monday for confirmation of Friday's doji.


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      4      5           2        0.692    434


     And the winner is...

Tonight I'm not getting a real good read from the charts either way.  The overall feeling is more bearish than bullish though and there's no major economic news coming out to prop things up so I'm going to go out on a limb and call Monday lower.

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  because I'm not quite ready to pull the trigger.  I think tomorrow will be a more reliable entry point.