Friday higher if ES stays above pivot

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

• Friday higher only if ES breaks above pivot and stays there, else lower..
  
• ES pivot 1625.58   Breaking above is bullish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well, it looks like my trusty ES pivot predictor finally failed me on Thursday.  ES stayed above its pivot until well after noon, but the market finished lower anyway, so that's a miss.  Still, the Dow was down less than 23, so it wasn't too bad.  Now let's see where we might end the week.

The technicals (daily)

The Dow: Last night I talked about how there were no reversal signs on this chart.  Tonight there are, in the form of Thursday's red spinning top and a stochastic that's just about the form a bearish crossover.  Thursday was also the first day in five that we didn't close on or above the upper BB.  We're still in a rising RTC though, so the uptrend remains intact.  Burt there's now at least a chance of a move lower on Friday here.

The VIX:  Last night I also wrote that "the VIX has a good shot at moving higher on Thursday", and it cooperated, gaining 3.71% on an asymmetrical spinning top.  So with the highest close in four days taking us out of the recent trading range and a completed bullish stochastic crossover, I'd say the VIX could add on to its gains on Friday.

Market index futures: Tonight all three futures are slightly higher at 1:28 AM EDT with ES up by 0.05%. The drop in ES on Thursday served to complete a shallow bearish stochastic crossover and drove RSI to highly overbought (92.47). But it wasn't enough to drop us out of the rising RTC, so the trend remains intact.  The overnight is hovering right on the edge, but it's still too early to call.  However, ES does appear to have peeled off its upper BB finally, so the overall tenor of this chart has now turned bearish.

ES daily pivot: Tonight the pivot inches up from 1625.08  to 1625.58 in an unusual move considering the SPX closed lower on Thursday.  But after breaking above the pivot right at Thursday's close, we just broke back under as I write this.  Unless ES can get back above the new pivot, that will be a bearish sign for Friday.

Dollar index: The dollar was the big winner on Thursday, with a major 1.13% jump.  This jolly green marubozu confirmed Wednesday's hammer in a big way and drove the indicators into overbought territory.  But there's no resistance until 57 on the $USDUPX and the upper BB is at 57.15, so there's still a bit of room to run higher from 56.85 on Friday.

Euro: And of course the euro mirrored the dollar's gain by tanking on Thursday, falling all the way back to 1.3019 on a tall red marubozu.  It's retracing a bit of that, up 0.22% in the overnight but we remain below the pivot and the indicators are not yet down to oversold.  Still, the euro's tendency lately has been to do the DCB thing or at least pause after one big down day, so that's what I'm expecting Friday.

Transportation: Wednesday's hanging man was confirmed on Thursday with a 1.13% fall on a red marubozu.  This move also took us out of the rising RTC for a bearish setup, turned RSI downward from overbought, and completed a bearish stochastic crossover.  So all signs now point to continued lower on Friday.


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        1      1      1           4        0.833     26

     And the winner is... 

Although the overall mood of the charts seems to be more bearish tonight than last, I am concerned with the attempt ES is making to break back above its pivot indicating a lack of interest on the part of the bears to knock 'em any lower.  Although it doesn't always work, as Thursday showed, it's a fairly consistent play, and I'm four for five with it this month so far.  So we go back to the well one more time and make another conditional call: if ES can break above its pivot and stay there by mid-morning Friday, we'll close higher.  If not, we close lower.

1:41 AM Update: ES has now in fact broken back above its pivot.  This is an encouraging sign for Friday.

ES Fantasy Trader

Portfolio stats: the account remains at $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 of the conditional call.

Thursday higher if ES stays above pivot

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

• Thursday higher only if ES remains above pivot, else lower..
  
• ES pivot 1625.08   Holding above is bullish.
• Friday bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night's call was for "one more day of small gains in store" and that's just what we got Dow up 49 and SPX up 9.  So now the game of nerves goes on.  Which party-goer will be the first to subtly edge themselves out the nearest exit door leaving the rest of the crowd to their fate?  The charts will reveal all, so read on.

The technicals (daily)

The Dow: Tonight's Dow chart is virtually identical to last night's and all the same factors are in play - overbought pegged indicators, a rising RTC, and green candles that continue to climb the upper BB.  So until I see something change, this chart remains bullish.

The VIX:  Once again, the VIX refused to fill in last week's gap as it fell 1.33% on Wednesday to establish a new trading range around 12.64 - 12.96.  With a close at the bottom of that range and a stochastic that's in very close to forming a bullish crossover, I'd say that the VIX has a good shot at moving higher on Thursday.

Market index futures: Tonight the futures are mixed again, like last night at 1:00 AM EDT with ES down by 0.05% but both YM and NQ up 0.03%.  Call it basically flat.  But there was nothing flat about ES's recent run which saw the three white soldiers joined by two more.  We now have a whole squad of white soldiers marching ever higher.  And like the Dow chart, it's deja vu all over again here.  Until I see a reversal sign, any reversal sign, I logically cannot call this chart lower.

ES daily pivot: Tonight the pivot rises again from 1617.17  to 1625.08 and once again ES remains above the new pivot by about three points just like last night.  So once again, this indicator remains bullish.

Dollar index: On Wednesday the dollar surprised me by staging a 0.47% gap-down drop to end with a hammer.  However, its stochastic is about to form a bearish crossover and I'd weight that higher than the candle at this point.  But with a conflict like this, I'm taking a pass on this chart tonight..

Euro: I did get this one right when I mentioned last night that "a breakout may be coming soon" because of a symmetrical triangle.  This one often works very well and the euro gained big on Wednesday, hitting its upper BB intraday before falling back a bit to close at 1.3162.  That was good for a bullish stochastic crossover.  We're pretty much flat in the new overnight but with a newly completed bullish stochastic crossover, I'd say more upside is possible on Thursday, possibly muted by the size of Wednesday's advance.

Transportation:The trans made it five in a row on Wednesday though the 0.22% gain was the smallest of the series.  Also, this candle was a hanging man.  So with overbought indicators and a stochastic starting to curve around for a bearish crossover, we now at least have the suggestion of a move lower on Thursday.  However, with such strong momentum this pattern requires confirmation.


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        1      0      1           4        1.000     49

     And the winner is...

Although things look pretty much tonight like they did last night, I hesitate to make an outright bullish call.  First I note that the VIX looks ready to move higher, and the same goes for the TLT.  We also have a reversal warning from the trans.  But with ES remaining above its pivot and seemingly showing no interest in moving lower, I also hesitate to make an outright bearish call.

Therefore I'm going to punt once again with a conditional call: if ES can stay above its pivot by mid-morning Thursday we will close higher.  If it falls down and can't get up, we press the red button and close lower.  Things are subtly starting to feel toppy, but I'm not convinced the end is at hand just yet.  That's all, she wrote.

ES Fantasy Trader

Portfolio stats: the account remains at $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 of the conditional call.  I'll admit I'm getting impatient to put on a trade here because it's been a while, but in this game patience is a virtue, and a big one.

Wednesday higher

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

• Wednesday higher, low confidence.
  
• ES pivot 1617.17.  Holding above is bullish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

After noodling about the pivot for two more hours after I called it quits late last night, ES finally decided to take off, and despite one valiant effort to pierce below at 10:20 AM, it was not to be.  The end result was a nice 87 point gain for the Dow and an historic close above the 15K level.  The SPX also closed at record highs.  So we continue out journey into the unknown.  The phrase "irrational exuberence" is starting to gnaw at me, but we'll let that pass for the time being and trust that the charts will let us know when it's time to pull the ripcord as we wend our way towards Wednesday.

The technicals (daily)

The Dow: Monday's doji was decidedly non-confirmed with Wednesday's decent advance further into record territory as the Dow resumed its climb up the upper BB as it has done a lot all year long so far.  And just like earlier this year, the stochastic is flattened out at overbought so there's no reversal warnings there.  We remain in a rising RTC so this chart continues to look bullish.

The VIX:  Interesting divergence here, and one that I missed.  As the market rose on Tuesday so did the VIX, gaining 1.34%.  But the VIX is really searching for some direction at these levels and so far shows no interest in closing last week's big gap down.  I do think the VIX is due to move higher by the end of this week, but not necessarily on Wednesday.

Market index futures: Tonight the futures are mixed again at 1:52 AM EDT with ES down by 0.03% but YM up 0.07% and NQ up 0.06%.  ES continues in a strong uptrend with only two down days in the last 13.  And there are still no bearish signs here.  Oh sure the indicators are all overbought but we've seen repeatedly this year how they could remain that way for days on end while the market just continued to grind higher.

ES daily pivot: Tonight the pivot rises again from 1612.00  to 1617.17. And Tuesday's gain in ES was enough to keep it above the new pivot, though admittedly by less than three points right now.  Still, remaining above would be bullish.

Dollar index: I missed this one too, with the dollar's advance stalling out and dropping 0.05% on Tuesday..  Still, the candle was green and the indicators have a ways to go til overbought so it's not clear that the dollar can't continue pushing higher on Wednesday.

Euro: The euro put in an interesting inverted hammer on Tuesday but more significantly appears to be making a symmetrical triangle.  This would indicate a breakout may be coming soon.  This idea is supported by a stochastic that appears to be getting into position for a bullish crossover.  I'd look for a higher euro if not Wednesday then even more likely on Thursday.  Indeed, the overnight is already moving higher, up 0.07% right now.

Transportation: And again the trans outperformed on Tuesday, gaining an impressive 1.58% to the Dow's0.58%.  That was enough to drive RSI overbought but the pattern is a bullish three white soldiers, we remain solidly in a strong rising RTC and the stochastic is nowhere near cycling into a bearish crossover.  So despite the record levels here there's still no sign of an immediate pullback.


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      1           4        1.000      0

     And the winner is...

I think we're going to see a down day at some point this week but I don't think it will be Wednesday.  I'm just not seeing the patterns for that just yet and indeed the charts continue to look short-term bullish tonight.  I believe we still have at least one more day of small gains in store, so I'm going to call Wednesday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $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 although I think Wednesday is closing higher, I also think we're getting ready to pull back again..

Tuesday higher only if ES pivot passed

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

• Tuesday higher if ES pivot passed, else lower.
  
• ES pivot 1612.00.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

My closing comment in my "uncertain" call last night was that "a doji day is not out of the question."  And that is exactly what the Dow delivered, closing down just five points while the SPX gained all of three points.  So after two days of big gains, is this reversal sign the one that counts?  I love a mystery, so let's jump right in - and no fair skipping straight to the end.

The technicals (daily)

The Dow: The Dow gave us a tidy little star on Monday sitting at the top of the previous day's tall green marubozu.  We hit the upper BB again but closed off it.  Indicators remain overbought but not extremely so.  Still we remain very much in a rising RTC so it's important to avoid getting mesmerized by that star.  This one absolutely requires confirmation.  So let's just say I wouldn't be adding any longs at this point but I'm not going short yet either.

The VIX:  More telling than the Dow's star is the 1.48% decline Monday on a bearish engulfing pattern.  The bearish stochastic crossover I mentioned last night did in fact play out and the VIX has no support now until 12, with a lower BB way down at 10.92.  So I'd say we've got more room to run lower again here on Tuesday.

Market index futures: Tonight all three futures are lower at 2:39 AM EDT with ES down by 0.12%.  Recall that last night I was unwilling to call ES out because of its bullish stochastic crossover, and we were in fact rewarded with some additional gains on Monday, closing on the upper BB for the second day in a row.  For the moment, things are looking a bit less optimistic and some of the gas seems to be escaping this balloon.  We remain overbought and I note that OBV has now hit 16.4M, its highest reading of the year.  We're due for at least one day lower soon.

ES daily pivot: Tonight the pivot rises from 1604.08  to 1612.00 even.  This time the gain was enough to put the pivot back above ES, which after a brief attempt to surface around 1 AM, ultimately gave up and dropped right back below at 2 AM - a bearish sign.

Dollar index: The dollar extended its gains Monday, rising 0.22% even as the SPX rose too breaking its usual inverse correlation.  The bullish stochastic crossover worked to perfection here, the indicators are rising (it isn't surprising) and there's no sign of a reversal here yet..

Euro: Meanwhile, all's quiet in euroland after trading back down to 1.3081 on Monday for a dark cloud cover.  The overnight seems to be confirming that, having just bounced off its daily pivot - always a bearish sign.  And a lower euro would sync with my call for a higher dollar on Tuesday.

Transportation: Here's a divergence as the trans continue to outpace the Dow, up a significant 1.277% on Monday while the Dow went nowhere.  The bullish stochastic crossover played out exactly on cue here too and with a new rising RTC defined along with indicators not yet overbought, I'd say this chart continues to look bullish.

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   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   9/14

 15  4/8        32         50        -      -   1553   9/15

 16  4/15       33         50        +      -   1589

 17  4/22       19         63        -      -   1555

 18  4/29       33         58        -      -   1582 

 19  5/6        50         31        +      +   1614  

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 that was wrong.  However, the poll as a whole also voted bearish, so we continue the year with an accuracy of 9  for 15, or 60%.   The poll as a whole remains at 8  for 14 or 57%.

This week gave us an almost predictable big drop in bearish sentiment, falling from 58 all the way back to 31% while bullish rose from 33 to 50%.  In this case, I joined the majority in switching my vote.  I can't speak to why everyone else made their decisions, but when I look at the SPX weekly and monthly charts, all of the bearish chart patterns I had been seeing have now been erased.


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      1           3        1.000      0

     And the winner is...

Tonight we've got some mixed charts - the trans and VIX looking bullish, the futures not so much, and the Dow on the fence.  As I write though, ES seems to be playing footsie with the pivot (not to be confused with FTSE).  So in view of all of this, I've got to go back to the conditional call: if ES can break above its pivot and stay there by mid-morning Tuesday, we close higher.  If ES bounces off the pivot or simply holds below, we close lower.

ES Fantasy Trader

Portfolio stats: the account remains at $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 uncertain

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

• Monday uncertain.
  
• ES pivot 1588.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last Thursday night, ES never even once challenged its pivot and the rest is history - a 142 point gain for the Dow, including a brief intraday foray over the 15K mark, and another new record for the SPX, closing at 1614.  I'll admit I'm unaccustomed to trading at such lofty levels and it makes my job harder since there are no resistance levels left above us.  But the charts will guide us as they always do so let's see what's cooking for Monday.

The technicals (daily)

The Dow: Friday's strong performance for the Dow totally canceled all the bearish signals we were seeing earlier last week - the RTC exit, the overbought indicators and the stochastic.  However, in their place we have two new bearish signs - first, the Dow closed above its upper BB at 14,957 and second, it is now rather highly extended from its daily pivot, at 14,789.  But neither of these is an immediate reversal sign and the Dow has amply demonstrated it mountaineering talent all year so far with its amazing ability to keep climbing the upper BB for days on end.  So we still can't call a top here.

Oh, and Friday's gain was notable also for breaking through resistance at 14,370 that stopped the market cold twice last month.  That also leaves the weekly chart looking rather bullish.

The VIX:  And meanwhile the VIX on Friday posted a 5.45% gap-down loss to form a nice bullish morning star.  But that won't be complete until Monday and this drop was enough to just barely form a bearish stochastic crossover from a low level.  And just as the bullish crossovers from a high level are often good for a day or twoof higher action, so the bearish crossover from a low level often means lower to come in the short term.  My best guess is that we won't see much movement in the VIX on Monday.

Market index futures:Tonight the futures are mixed at 1:01  AM EDT with ES dead flat, YM up 0.07% and NQ up by 0.18%.  Like the Dow, ES closed above its upper BB on Friday but like the Dow it's too soon to call ES lower just because of that.  Note too that ES has the same stochastic crossover thing going like the VIX - this one bullish from a high level.  Whenever you see this, very often it takes precedence over other bearish signs.

ES daily pivot: Tonight the pivot pops from 1588.42  to 1604.08, crossing the 1600 mark I believe for the first time ever.  It is a tribute to the strength exhibited by ES on Friday that even after this big jump, we're still above the new pivot by a good four points, so this metric remains bullish.

Dollar index: On Friday the dollar posted a 0.11% loss on an inverted hammer.  But we still have a newly completed bullish stochastic crossover and indicators just coming off oversold.  Friday also gave us a bullish RTC trigger so I'm going to guess the dollar goes higher on Monday..

Euro: And the euro managed to retrace some of its Thursday losses on Friday to close at 1.3113.  That just missed getting us back into the rising RTC so technically that counts as a bearish trigger.  The Sunday overnight however is trading a bit higher, up 0.09% as I write, so this chart is sort of caught in the middle and just too tough to call.

Transportation: As it has often recently, the trans outperformed the Dow again on Friday, posting a 2.05% gain to the Dow's 0.96%l  This impressive jump arrested the decline of the indicators and canceled all the bearish signs (see the Dow above).  We did hit the upper BB intraday but pulled back a bit into the close.  This all makes me think there's still enough gas in the trans tank to motor at least a bit higher 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 
April      7      5      5           3        0.667    328
May        0      0      0           3        1.000      0

     And the winner is...

I am encouraged by the failure of ES this evening to show any interest in retracing last week's big gains.  Beyond that we have a strong showing from the trans, copper exiting a downtrend, and the TLT tanking - right through its 200 day MA,  So while last Friday's big moves left some charts bumping up against possible resistance points, I think there's enough mojo left to squeeze out at least one more day of gains.  However, because Thursday and Friday were so strong, it may be time for a pause so I'm just going to play it safe and call Monday uncertain.  If I had to hazard a wild guess, I'd say maybe we'll go higher a bit in view of the lack of any scheduled economic news that might torpedo the market.  A doji day is not out of the question.

ES Fantasy Trader

Portfolio stats: the account now remains at $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 uncertain call.