Friday uncertain

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

• Friday uncertain.
  
• ES pivot 1650.92.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside..

Recap

Thursday was a perfect example of the limits of technical analysis.  I had called Thursday higher and the Dow was indeed putting in some modest gains - until some byg wyg at the SF Fed opened his mouth.  Obviously last night I neglected to take the John Williams factor into account.  So with this red ink baked into the close, let's now see how that might change the picture for Friday.

The technicals (daily)

The Dow: The Dow's Thursday afternoon sell-off caused the candle to end up as a bearish harami.  Intraday, the Dow was also stymied at a high of 15,300, the same place it stopped on Wednesday.  The indicators have come down a bit, but remain overbought.  And we remain very much inside a rising RTC.  One should also remember that the Dow has not had more than one consecutive down day since April 18th, when it had two.  And there was only one other instance of two down days in a row all year.  There have been no runs greater than two.  Given this, I am hesitant to call for more downside on Friday.

The VIX:  Meanwhile the VIX did gain 2.03% on Thursday but did it with a doji and that was only enough to hit 13, the top of its latest trading range.  The indicators have risen considerably towards overbought on what amounts to very little real movement here.  Based on the recent pattern, I'd have to guess the VIX is going lower on Friday.

Market index futures:  Unlike recent nights where the futures were little changed at this hour, tonight all three futures are higher at 1:06 AM EDT with ES up by 0.14%.  Like the trans, Thursday's candle was just barely a dark cloud cover.  However, ES remains well inside its rising RTC and the overnight seems to be suggesting some retracement of Thursday's losses may be in the offing.  I would not be surprised to see Friday finish with a green candle.

ES daily pivot: Tonight the pivot dips from 1652.25  to 1650.92.  Amazingly, ES, which had been trending higher all evening to just below the old pivot took an abrupt turn south just before midnight to remain below the new pivot.  After one quick failed attempt at 12:30 AM to break above, it is now simmering just below.  It's bearish on the face of it, but ES does seem to have some interest in mounting another attack.  A successful breach would be a positive sign.

Dollar index: Last night I said that "I'll claim that the dollar may be headed lower on Thursday" and the evening star played out well, with the dollar dropping 0.28%.  Even at that it remains overbought and the stochastic is just forming a bearish crossover, so I'd expect continued lower on Friday.

Euro: On Thursday the euro exited its descending RTC for a bullish setup.  The overnight candle is also outside this channel so that's a bullish trigger.  That may be for naught though since the euro gave up all of the day's gains and is now down 0.33% as it continues to dribble down its lower BB.  At this stage, I'd expect to see it hit support at 1.2783 sometime next week.  I  really see no strength here.

Transportation: After two strong days, the trans gave up 0.80% on Thursday.  The candle is a dark cloud cover, just barely, but again given the strong momentum so far this year, I need confirmation of this reversal warning before calling an end to the uptrend.

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 Poll

  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   10/16   9/16

 17  4/22       19         63        -      -   1555

 18  4/29       33         58        -      -   1582 

 19  5/6        50         31        +      +   1614 

 20  5/13       37         37        +      x   1634

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 voted bearish, so I was right and they were wrong (nyah nyah).  We  continue the year with an accuracy of 10  for 16, or 63%.   The poll as a whole drops to 9  for 16 or 56%.

This week, amazingly we have yet another tie, the second of the year with bulls and bears both at exactly 37.04%.  My own vote remains bullish.  I see no end in sight to the rising RTC on both the weekly and monthly 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        1      3      4           4        0.625    -16

     And the winner is...

Friday is op-ex and historically this one is pretty weak.  We also have some candlestick reversal signs on a few charts that weren't there last night.  But we have yet to see the two bearish indicators I consider the most important - a stochastic crossover and an RTC exit.  Also, the VIX is showing very little interest in moving higher, suggesting that Thursday's Fed noises may not be spooking Mr. Market all that much.  I'm not really seeing much incentive for a move lower.  On the other hand, we seem to be having some difficulties advancing from here.  So what I really think will happen is simply more sideways action, possibly a doji on Friday.  Accordingly, the call is uncertain.

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 with another "uncertain" call.

Thursday higher

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

• Thursday higher, low confidence
  
• ES pivot 1652.25.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

The parade just keeps on rolling along as the Dow showed more strength than I 'd been expecting on Wednesday to finish up yet another 60 points after breaking out of its trading range on Tuesday.  So is there more on the way?  Let's consult Dr. Charts for a quick checkup on Mr. Market as op-ex week marches on.  Say ahhh!

The technicals (daily)

The Dow: Wednesday's gains kept the Dow squarely inside its rising RTC.  Even more impressive is the weekly chart which shows a strong three white soldiers pattern, now apparently being joined by a fourth.  So despite the record levels and overbought indicators, technically I see nothing but higher here.

The VIX:  While the VIX has moved higher, sort of, in the past three days, it's hardly a convincing trend - more of some bouncing around a new range of 12.50 to 13.20.  In fact, the past five days have featured candles with tall upper shadows suggesting that every time the VIX tries to get moving, something drags it back down again.  Clearly the VIX has lost its mojo and so I'll just expect some more sideways action until we get a breakout - whenever that might be.

Market index futures: Tonight the futures are mixed once again at 12:51 AM EDT with ES down by 0.08%, YM down 0.05% but NQ up 0.07%.  ES's mostly sideways movement in the overnight isn't exactly bearish and the overall trend in fact remains quite bullish.  We're still in a solid rising RTC and the upper BB is now at 1666.  I see no real signs of a reversal here.

ES daily pivot: Tonight the pivot jumps from 1641.08  to 1652.25.   Even with this gain, ES remains above the new pivot, though now it's only by one point so we need to watch for any signs of breaking under, which would be bearish.

Dollar index: Last night I predicted 57.80 for the $USDUPX by the end of the week.  That may have been a bit premature, for while the dollar did post yet another gap up gain, this time 0.30% on Wednesday, it was a red evening star sitting just above the upper BB.  This is the first real reversal sign I've seen on this chart since the current run began a week ago, so I'll claim that the dollar may be headed lower on Thursday.

Euro: Last night I wrote "I wouldn't be surprised to see the euro continue lower on Wednesday" and on Wednesday the euro indeed continued its march down the lower BB, sinking further below the 200 day MA to close at 1.2877 and staying firmly in its descending RTC.  And the fall continues in the overnight, drifting slightly lower and holding below the pivot.  So despite oversold indicators, there's really no sign of a reversal here and no support until 1.2783.

Transportation: The trans continue to outperform the Dow, up another 0.84% on Wednesday to the Dow's 0.40%.  So after a brief respite last week, we're back to climbing the upper BB.  And once again, nothing bearish at all to speak of on this chart.


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      2      4           4        0.714     26

     And the winner is...

Last night I reviewed a bunch of positive technical signs but chickened out because of some economic news coming out on Wednesday and settled for an "uncertain" call.  Tonight all of the same factors remain in play so this time I am going to assert my convictions and call Thursday higher, given the lack of bearish signs.

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 just because I don't want to get caught in one of these infrequent but nasty bolts from the blue.

Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1641.08.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night while musing about all this sideways action I wrote "I'm expecting a resolution before too long.".  Turns out we didn't have long to wait at all, as the Dow rocketed up 124 points on Tuesday to blast right through the upper limit of its recent trading range of 15,125.  Now the question becomes, was this a one-off or are we back to the races?  We handicap the winners right here with candlestick charts for racing forms.

The technicals (daily)

The Dow: The Dow's decisive breakout on Tuesday puts it back near the top of its rising RTC but did not hit the upper BB, now at 15,266.  So the uptrend remains intact and there's even a bit more free room to run.  And of course there are no more resistance levels since we're back in record territory.

The VIX:  Last night I wrote that "the VIX should be ready to begin a new uptrend any day now."  And we did move higher on Tuesday by 1.75% on a second inverted hammer in a row.  This was one of those unusual days when both the VIX and the markets rose together.  This also had the effect of reinforcing support at 12.50.  However, it extended the recent consolidation to eight straight sessions.  If the VIX is in fact going to begin a new uptrend rather than just bounce around in a trading range, it's going to have to do it pretty soon.  In any case, I think it's still looking more like it wants to go higher than lower on Wednesday.

Market index futures: Tonight all three futures mixed at 1: 18 AM EDT with ES down by all of one tick, or 0.02% but YM up 0.03% and NQ up 0.06%.  So it's pretty much flat.  That in itself is bullish considering the pop ES took on Tuesday.   The big green marubozu was enough to propel ES right back into its rising RTC even after four days of consolidation.  The indicators remain broken, so the RTC is the main predictor here and that is looking bullish.

ES daily pivot: Tonight the pivot zooms from 1628.50 to 1641.08   But amazingly, we're still above the new pivot, and by a good seven points.  This is clearly a bullish sign.

Dollar index: As I suspected last night, the dollar did advance again on Tuesday, though with a 0.42% gain it was more than just "a bit".  It was in fact enough to close just above the upper BB..The dollar has now cleared all resistance back to last July and still isn't even overbought on the weekly chart.  I wouldn't be surprised to see the $USDUPX hit 57.80 by the end of the week.

Euro: Well scratch my theory about the euro bouncing off its 200 day MA.  That pretty much collapsed on Tuesday as the euro sank back below again to close at 1.2939 and remain in its descending RTC.  The last time we had a 200 day MA crossing, we got several more days of lower prices and it looks like the same thing may happen this time too.  We're seeing mainly sideways action i the overnight but with the strength of the dollar, I wouldn't be surprised to see the euro continue lower on Wednesday.

Transportation: Pretty much the same story here as the Dow, only more so as the trans popped for 1.92% on Tuesday to the Dow's 0.82%.  But again, that still leaves us shy of the upper BB.  It also gives us a bullish stochastic crossover from a high level, and that's usually good for another day or two of gains.

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      2      3           4        0.714     26

     And the winner is...

With the trans on a tear and the TLT in the toilet, plus a vacillating VIX, a powerful pivot, and a dazzling Dow, things seem to be looking up tonight, alliteratively speaking.  My only concern here is the natural tendency to pause after a day of big gains.  And also note that there are no fewer than nine different pieces of economic news coming out on Wednesday morning and that's a lot of headline risk, even if the numbers seem to be coming in BTE lately.  Also, it's still op-ex week and that makes me cautious.  So my best guess is that we might be in for another doji day on Wednesday but the official call is simply Wednesday uncertain.

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 with another "uncertain" call..

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1628.50.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I just wasn't able to get a good read on the market so I called it uncertain.  I think Monday's finish pretty much bears that out as Mr. Market couldn't figure out which way he wanted to go with the Dow down 0.18%, the Nasdaq up 0.06% and the SPX flat.  So now let's see if we can help the poor old guy find his way on Tuesday

The technicals (daily)

The Dow: Last night I mentioned the possibility that we might be headed for some sideways action and it looks like that's what's happening.  For four days now, we've gotten small range dojis where the bears try to knock 'em down but the bull just gets right back up again.  That leaves us with four days of up/down/up/down bouncing between around 15,060 and 15,120.  With none of these dojis panning out and the Dow still in a rising RTC the only bearish sign remains the overbought indicators and that hasn't worked too well this year so far.  So looks like just more of the same until something breaks.

The VIX:  On Monday the VIX pretty much went nowhere, remaining stuck at the bottom of its latest trading range with a long inverted hammer.  That's a potential reversal warning but here's an interesting observation - the VIX has put in four cyclic bottoms this year so far, on January 18th, February 19th, March 14th, and April 12th.  Tuesday will be May 14th and we are once again at lows for the month.  These have been coming like clockwork right around the middle of every month.  On that basis alone, I'd say the VIX should be ready to begin a new uptrend any day now.

Market index futures: Tonight all three futures are mildly higher at 1:12 AM EDT with ES down by 0.06%.  ES definitely has that sideways motion thing going now and Monday's action was enough to bump it out of its rising RTC for a bearish setup despite the green candle.  The overnight action is meandering and providing little guidance.  If we assume the sideways action will continue, then the next move will be lower as we're now sitting at the top of the range.  Monday's high was 1633.25 and ES made exactly one attempt to breach that at 10:45 PM where it was rejected.  If this market is to continue higher, we'll need to break above that number.  SO far at least, it doesn't seem to be happening.

ES daily pivot: Tonight the pivot bumps up from 1626.92  to 1628.50.  After spending most of Monday above the pivot, we remain above the new number, though by a bit less.  As long as we don't break under, it's still bullish though.

Dollar index: Well you can forget the evening star.  On Monday the dollar continued higher, tacking on another 0.16% to just hit its resistance line for the year so far.  With the outsized move of the past three days, I'd expect theFed/QE kick to be about digested by now.  The technicals will have to reassert themselves eventually.but with two dojis in a row now, I have to wonder if we're not going to try to advance a bit more here.  We have a reversal warning, but no confirmation at this point.

Euro: Last night I wrote that on Monday "we could see the euro remain in the general vicinity of the 200 MA."  And that is exactly what happened, with the euro putting in a long-legged doji that closed at 1.2973.  The 200 day MA was, yes, 1.2973.  The overnight is a different story though, with the euro taking off right at 8:15 PM and already up 0.31% as traders look to some good European economic news coming out Tuesday.  SO technically, we have a bounce off the 200 MA, a stochastic that just squeaked out a bullish crossover and a descending RTC exit for a bullish setup - a triple play.  I'd say the euro's going higher on Tuesday.

Transportation: On Monday the trans gave up most of Friday's gains to return to their support around 6340.  With the indicators finally starting to come off overbought, this chart is looking a bit on the bearish side.  Note too the .49% loss leading the Dow's smaller 0.18% fall.


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      2      2           4        0.714     26

     And the winner is...

We seem to have become wedged in a new crab market (only moves sideways).  We've had a few of these so far this year, averaging about a week in length.  Tuesday will make five days, so I'm expecting a resolution before too long.  Which way though is hard to say.  The VIX and the trans seem to be guiding lower, as well as the indicators for the Dow.  But once this sideways business gets going, there's no way to tell just when the break will come, so unfortunately, I'm going to have to call Tuesday uncertain again.  I guess I'll just go plant some marigolds or read a book until we get Mr. Market off top dead center.

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 "uncertain" call.

Monday uncertain

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

• Monday uncertain.
  
• ES pivot 1626.92.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well chalk up another miss for the ES pivot theory.  By mid-morning Friday ES looked more interested in holding below its pivot than above.  But a late-afternoon rally helped propel it, along with the rest of the market to modest gains, so that's a miss for us.  Whatever - we leave that behind and look ahead to what the charts may tell us about the upcoming week.

The technicals (daily)

The Dow: Rather than confirming last Thursday's spinning top warning, Friday's small hanging man merely prolonged the indecision.  We remain inside a strong rising RTC while the indicators are all very overbought, much like the stretches we saw back in January and March.  The most bearish thing I can see here is that we've peeled away from the upper BB.  But if you look back YTD, every time that's happened, we've only moved sideways for a while, not down.  So for the time being, I'm still not bearish on the Dow for Monday.

The VIX:  After seemingly breaking out of its latest trading range on Thursday, the VIX dropped right back into in, closing in fact a bit below it at 12.59.  This gave us a bearish stochastic crossover from a low level, and those are usually good for a day or two of lower prices.  With the break below 12.65, next support is in the 12.25 - 12.00 area.  I think we have a shot at that on Monday.

Market index futures: Tonight all three futures are lower at 1:13 AM EDT with ES down by 0.28%.  After looking like it was ready to turn on Thursday, ES surprised by rising Friday to remain in its ascending RTC.  The gap down in the overnight, however, drops us out of that channel for a bearish setup.  What's not clear though is if ES is actually planning a move lower or just some sideways consolidation between 1620 and 1630.  This pattern isn't at all clear so I'm going to wait for some confirmation on Monday.

ES daily pivot: Tonight the pivot inches up from 1625.58  to 1626.92.  After a gap-down at the open on Sunday evening, ES has been slowly drifting back up.  This is an encouraging sign, but we're still below new the pivot.  We'll need to break above or this indicator will remain bearish.

Dollar index: Last Thursday I wrote "there's still a bit of room to run higher from 56.85 on Friday."  And run it did, as the dollar touched its upper BB before pulling back a bit for a gap-up evening star.  With overbought indicators, this pattern usually means lower is ahead, so that's what I'm expecting on Monday.


Euro: On the other hand, I wasn't expecting the euro to drop back below its 200 day MA and on down to its lower BB on Friday, which it did before recovering to close just above at 1.2853, giving up support at 1.3000.  Still, the euro seems to want to try again, as it is now down 0.06% in the Sunday overnight, just barely above the 200 MA at 1.2973.  I'm not looking for a big crash on Monday, but we could see the euro remain in the general vicinity of the 200 MA.

Transportation: The trans really surprised me on Friday.  I was sure they were going lower but instead they scored a 0.58% gain, handily beating the Dow's 0.24%.  This sort of outperformance indicates a resilience I'm reluctant to stand in front of, so despite all the negative factors I cited last Thursday night, I'm now not convinced the trans will move lower 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        1      2      1           4        0.714     26

     And the winner is...

Things aren't really looking all that bad tonight - with the lone exception of the futures.  Now the Monday after Mother's Day is historically pretty strong, but this is also op-ex week with all that implies.  So while I'd like to call the market higher on Monday, I keep coming back to those futures.  But with nothing else seeming to lend much support to the bears, I'm going to simply have to call Monday uncertain.

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 "uncertain" call.