Friday uncertain

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

• Friday uncertain.
  
• ES pivot 1614.50.  Holding above is bullish.
• Next week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Wow - after an ugly start that was beginning to look like deja vu all over again, Mr. Market reversed course and finished Thursday up 80 Dow points with a roller coaster of a rally that began right after lunch and climbed straight into the close.  The ES pivot lay didn't quite work out but we'll take the gain anyway.  Now let's figure out where Friday is headed.

The technicals (daily)

The Dow: Thursday's gain kept alive the Dow's streak of no more than two down in a row so far this year.  We tested support at the lower BB for the second day and once again it held.  This also had the effect of moving the indicators back up off oversold and forming a bullish stochastic crossover.  So technically this chart is in lots better shape tonight than 24 hours ago.

The VIX:  At last!  I'd been waiting to the VIX to come down for two days now and it finally obliged on Thursday, dropping 4.97% on a big bearish engulfing candle closing under its upper BB.  The indicators remain overbought even after this move but they have begun coming down a bit so this chart looks ready for more downside on Friday.

Market index futures: Tonight all three futures are basically flat at 1:48 AM EDT with ES down by just 0.02% or one tick.  Like the Dow, ES tested its support at the lower BB on Thursday and it held, finishing with a bullish green hammer.  We're still in a descending RTC but we now have a bullish stochastic crossover.  The action of the past two weeks has taken some froth out of the market and I believe the stage is now set for at least a couple of days of advances.

ES daily pivot: Tonight the ticks down from 1615.25  to 1614.50.  We broke above the pivot at 3:25 PM Thursday and remain above the new number by a decent six points, so that remains a positive sign.

Dollar index: The dollar took a major hit on Thursday, diving a whopping 1.30% on the $USDUPX, its biggest daily loss since, well a long time.  I scrolled back a year on my chart and couldn't find anything near this big.  This dump was stopped only by the 200 day MA which was breached intraday but ultimately held.  With the dollar now this extended form its pivot I'd expect a reversal soon, though it might not be on Friday - there's still a bit of room to run lower..

Euro: And of course the euro posted outsized gains on Thursday to complement the dollar's drop, busting right through its upper BB and negating Wednesday's doji.  After a gain this size while the indicators are already overbought, I'd expect at least a bit of retracing on Friday.  This increases my confidence that the dollar will turn on Friday too.

Transportation:After underperforming the Dow yesterday, on Thursday the trans handily outperformed, gaining nearly a percent on increased volume to the Dow's half a percent.  The indicators have also bottomed at oversold and the stochastic looks to be finishing off a scalloped bottom if not a classic bullish crossover.  So although we remain in a descending RTC, the technicals favor more upside here on Friday.

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. Actually, due to my being away last week, we're missing a week so we'll have to make do without it until I can find the missing data.

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   10/17   9/17

 18  4/29       33         58        -      -   1582   10/18   9/18

 19  5/6        50         31        +      +   1614   11/19  10/19

 20  5/13       37         37        +      x   1634

 21  5/20       50         25        +      +   1667 

 22  5/28       ??         ??        +      ?   1650

 23  6/3        29         38        -      -   1631

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 both the majority and I voted bullish four weeks ago, so we were both right.   Therefore we  continue the year with an accuracy of 11  for 19, or 58%.   The poll as a whole meanwhile  rises to 10  for 19 or 53%.

This week I and the majority of participants switched our votes to bearish.  I can't speak for the others but I did so based on some bearish looking 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        3      4      6           4        0.636     85
June       1      2      1           0        0.333     62

     And the winner is...

The technicals tonight look poised for further gains, but I'm afraid that some weaker than expected jobs numbers on Friday may put a damper on the party.  Without a way to know for sure how that's going to shake out, I have no choice but to call Friday uncertain, though again, I believe there's a modest positive bias at work now.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside on the "uncertain" call.

Thursday higher if ES pivot passed

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

• Thursday higher only if ES pivot passed, else lower.
  
• ES pivot 1615.25.  Breaking above is bullish.
• Next week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Ugh - another dismal day on Wall St. as the Dow posted its second triple digit loss in four days.  Was today's 217 point dump a washout or is there more in store?  Let's sift through the wreckage in search of clues for a direction on Thursday as this miserable week grinds on.

The technicals (daily)

The Dow: Wednesday's close of 14,961 was actually under the lower BB at 14,999.  I note that the last four times this has happened, all the way back to November 2012, the Dow bounced within two days.  This was true even when the Dow was not very oversold, just like now.  On the downside, this tall red marubozu is no reversal candle.  However, as I noted last Thursday night, every time the Dow has had a big dump, it retraced about 50% the next day.  That happened Friday as well as the other four times we saw that this year.  So I think there's at least some expectation the bears might take a rest on Thursday.

The VIX:  The VIX greatly surprised me on Wednesday by not falling back after spending three days on its upper BB.  In fact, almost the entire candle traded above the upper BB on Wednesday.  This is starting to feel like last December when we had a seven day run above the BB that didn't end until an exponential blow-off.  We're not quite there yet but the indicators are now quite overbought and while it's been  a nice run, I wouldn't be going long the VIX here.

Market index futures: Tonight all three futures are higher at 1:35 AM EDT with ES up by 0.31%.  After a tall red marubozu on Wednesday that closed way under its lower BB, ES seems to be looking for some sort of bounce in the overnight.    With the indicators now fairly oversold and momentum turning higher for the first time since May 13th, this chart looks ready for a relief rally.

ES daily pivot: Tonight the pivot dives from 1632.83   to 1615.25.   After spending Wednesday in the Marianas Trench, ES has been drifting higher since the close and is now in striking distance of the pivot, by just two points.  A break above would be the first bullish sign here in several days.

Dollar index: The dollar remains stuck in a downtrend and Wednesday's 0.23% loss negated Tuesday's inverted hammer.  Instead, we got a long-legged doji, so once again there's a reversal suggestion for Thursday but one that requires confirmation.  The indicators are certainly sufficiently oversold to support this notion.

Euro: After a spinning top of indecision on Tuesday, the euro proceeded to give us a pure doji of indecision on Wednesday sitting just barely above the previous candle.  So far at least, it doesn't seem to be getting confirmed as the euro continues to rise in the overnight.  Inf act at 1.3101 we are now near the upper BB at 1.3124.  With indicators now fairly overbought, my expectation is for the euro to touch its upper BB on Thursday and then reverse course.  That would sync with my call for a higher dollar.

Transportation: Once again the trans underperformed the Dow, putting in a very weak performance with a 1.90% loss on Wednesday that closed a good 50 points below their lower BB.  This also drove the indicators very oversold and caused the stochastic to begin moving higher, albeit not with a bullish crossover.  And while we remain solidly in a descending RTC, there's at least some sign that we could see a pause in the selling or a DCB 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      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       1      1      1           0        0.500     62

     And the winner is...

Technically, it's looking like we're about due for some sort of bounce, relief rally or whatever on Thursday.  However, there are a bunch of jobs numbers coming out and I think that's what's going to drive the market rather than the technicals.  So I'm going to delegate some of the work of prediction to the ES pivot and make a conditional call.  I claim that if ES can retake its pivot and stay there by mid-morning, then we close Thursday higher.  But if we bounce back off the pivot, then it's game over, Thursday lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside on the conditional  call.

Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1632.83 .  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well we were on track for some modest gains early Monday until yet another Fed Head opened their mouth and torpedoed the Dow which ended the day with a 76 point loss.  Sometimes you just can't win for losing.  Oh well - on we go to Wednesday.

The technicals (daily)

The Dow: After retracing last Friday's dump on Monday, the Dow proceeded to retrace the retracement on Tuesday, giving back 50% of those gains if you know what I mean and I'm not even sure I do.  The net effect was to keep us in a descending RTC that has a surprisingly high Pearson's of 0.905 despite looking more like a staircase than a slope.  But it drove us closer to the bullish breakout side and drove the stochastic further oversold.  Still, the candle was a spinning top and that's about what this action is leaving my head - spinning.  This one's too tough to call.

The VIX:  The VIX OTOH sent a clearer message on Tuesday, putting in a second tall bearish inverted hammer that peaked above the upper BB intraday but finally closed below it.  With the indicators remaining quite overbought, I still think the VIX is due to move lower on Wednesday.

Market index futures: Tonight all three futures are lower at 1:31 AM EDT with ES down by 0.11%.  Like the Dow, ES gave us a spinning top on Tuesday spanning the range of Monday's candle.  It also brought the indicators closed, but not quite to oversold.  Given this indecision, I moved to the weekly chart and surprisingly, there's not much help there either.   While the last two candles are rather bearish, we remain in a long-running rising weekly RTC (back to last November) so despite all the recent losses, we still can't call the current trend over.

ES daily pivot: Tonight the pivot inches up from 1632.00 to 1632.83. But with listless overnight action we remain below the new pivot so that's bearish.

Dollar index: The dollar remains in a descending RTC despite posting a small advance with a bullish inverted hammer that made the indicators bottom out and just managed a bullish stochastic crossover.  So I think we could see a move higher here on Wednesday..

Euro: We didn't get the euro decline I was expecting on Tuesday, but the small spinning top does indicate some indecision here.  However, the overnight continues to drift higher and we do remain in a rising RTC so I'm not going to fall for that one twice in a row - I'll say the euro goes higher on Wednesday.  But that means either that's wrong or my dollar call is wrong - they won't both go up.  At the moment, I'm a bit more confident in the dollar than the euro.  We'll see.

Transportation: If there are any trends right now, they're in the trans which remain stuck in a descending RTC.  Tuesday's 0.49% loss canceled Monday's doji and while touching the lower BB before closing just a bit higher than it.   This also drove the indicators further into oversold.  Still, there's no immediate sign of a reversal here now, though I think one is possible by 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        3      4      6           4        0.636     85
June       1      1      0           0        0.500     62

     And the winner is...

I have to confess I'm not getting a good read on these charts tonight.  My overall bias is tending more towards the bearish and the first week in June is historically quite weak.  OTOH, we've got the VIX that is clearly looking ready to move lower and that one is usually a high probability play.  So bottom line, maybe I've been getting too much of that Florida sun so with all this herky-jerky action lately I'm just going to throw my hands up and call Wednesday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside on the "uncertain" call.

Tuesday higher

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

• Tuesday higher, low confidence.
  
• ES pivot 1632.00 .  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I noted that recently "big one day drops have been followed by something like a 50% retracement."  And that's just what we saw on Monday with the Dow regaining just a bit more than half of Friday's losses in a 138 point rebound.  So now let's move on to Tuesday.

The technicals (daily)

The Dow: Monday's retracement caused the indicators to begin rising from oversold and also set up the stochastic for a bullish crossover.  The Dow also regained its pivot in the closing hour so I am cautiously optimistic about this chart for Tuesday.

The VIX:  On Monday the VIX gave us a big bearish inverted hammer, very nearly a gravestone doji with a close above the upper BB.  That marks the second day in a row for a close there which means we're about due to see the VIX fall.  The VIX's last three excursions above the 200 MA have been fairly brief and I expect this time to follow suit.

Market index futures: Tonight the futures are mixed at 1:33 AM EDT with both ES and YM down by 0.03% but NQ up 0.03%. ES gave us a bullish hammer on Monday.  Combined with oversold indicators and no negative follow-through in the overnight so far means we have a shot at moving higher on Tuesday.

ES daily pivot: Tonight the pivot drops from 1637.75 to 1632.00 even.  This move, plus the slow upward drift of ES since 6 PM has put it back above the new pivot, so this now becomes a bullish sign.

Dollar index: On Monday the dollar gave us a classic hammer that along with oversold indicators and a new bullish stochastic crossover makes me think that we could see more upside on Tuesday..

Euro: As fast as the euro fell through its 200 day MA on Friday, it zoomed right back above on Monday, closing at 1.3073, its highest level since May 9th.  This move drove the indicators overbought and left the stochastic right on the cusp of a bearish crossover.  With a 0.11% decline in the overnight, I wouldn't be surprised to see the euro move lower on Tuesday.  That also syncs with my higher dollar theory.

Transportation: On Monday the trans formed a perfect doji that tested the lower BB before bouncing.  It also left the indicators quite oversold and just managed to squeak out a bullish stochastic crossover.  While we remain in a descending RTC here, there is at least some suggestion of a reversal on Tuesday.


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        3      4      6           4        0.636     85
June       1      0      0           0        1.000    138

     And the winner is...

We've been seeing a lot of choppy action in the past week so this is a tricky one.  The safe move would be to simply call Tuesday uncertain, but I'm seeing enough bullish signs in the charts tonight to warrant a call instead of Tuesday higher.  And that's my final answer.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside in view of all the choppiness.  I'd rather watch this from the sidelines than get my head chopped off.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1637.75.  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

OK, the Night Owl has been travelling and I took a week off, so there's not much point in doing a recap.  I will simply point out that I was right about last Tuesday going higher and we all know the rest of the week was stinkola.   You know the drill so without further ado, let's move on to another week.  We're back, baby!

The Night Owl Gets Taken

But first - yes, the Night Owl fell victim to a scam last week, so I thought I'd share the experience with you.  Now normally I pride myself on being pretty world-wise and savvy.  When I get emails from the Chief of Police of Nigeria promising me $10,000,000, I just click Delete.  But last week I got scammed and I'm still steaming.  How did this happen?

Well, I always flew between New York and Florida in Business Class on Airtran.  Last year Airtran was acquired by Southwest Airlines.  I went to the Airtran website last week and was redirected to Southwest.  I looked up my favorite flight there and found a range of fares, from $198, which presumably entitled you to travel in the hold, to $463 which was advertised as "Business Select".  So naturally, that's what I chose.  The price was about $20 higher that my last trip on Airtran but I figured, it's inflation.

So you probably already know what's coming.  I get to the gate, I get on the plane. I look around the corner, and I'm like "Uh, where's Business Class?"  There isn't any.  It's simply Steerage Class from row 1 to infinity.  And of course by this point it's too late to do anything about it.  I wasn't going to get back off the plane after getting up extra early to catch this flight.

So after spending 2 1/2 hours with my knees up against my chin seated next to a disturbing assortment of Twelfth Night characters, I'm done.  I called Southwest "Customer Relations" and their attitude was basically "tough luck pal, we delivered everything we advertised".  Well I beg to differ - offering a fare called "Business Select" sure sounds like Business Class to me.  Last I looked, the word "select" meant "choose" or "choice", not "non-existent".  So realizing that it was a lost cause arguing with someone who obviously couldn't care less, I hung up and proceeded to file a dispute with Visa.  We'll see where that leads.

In the meantime, I am apparently the last person on the planet who did not know that Southwest operates nothing but Steerage Class on all their flights.  Given that, it strikes me as fraudulent advertising to promote something called "Business Select" when all it does it give you a free drink coupon and the same tiny cramped seating everyone else gets.  That was the most expensive drink I ever had in my life, and it's not sitting well.  Needless to say, my first flight on Southwest was also my last.  Stay tuned for updates.

The technicals (daily)

The Dow: Uh OK so anyway back to the markets.  Last Friday's ugly 209 point rout in the Dow on high volume drove the indicators oversold for the first time since April 22nd.  (And that day proved to be a bottom).  OTOH, the weekly chart is looking just plain ugly.  It' still quite overbought and features an inverted hammer for a bearish RTC trigger.  Ugh.  So with that, no daily reversal candle, and no support til the lower BB at 14,946 I have to say this ain't looking good for Monday.  The only thing that might help is the recent pattern where big one day drops have been followed by something like a 50% retracement.

The VIX:  On the other hand, the VIX on Friday took a giant leap, not for mankind but for the bulls, by blasting right through its 200 day MA and its upper BB in one fell swoop to close at 16.30, the highest level since April.  And once again, as I always say, the VIX rarely spends more than a day or two above its upper BB before falling back.  So with that number at 15.38, I'm looking for a lower VIX on Monday.  Especially given how overbought its indicators are now.

Market index futures: Tonight all three futures are higher at 1:29 AM EDT with ES up by 0.18%.  Big one-day drops in ES have tended to be followed by gains, cf. April 15/16. And along those lines we note that Friday's close of 1629 left ES quite extended below the pivot.  Whenever that happens, look for a retracement of some sort.  The failure of any negative pin action to appear at this late hour of the night is encouraging.

ES daily pivot: Tonight the pivot crashes from 1651.75  to 1637.75.  . We were way below the old number, and even with this big drop we remain below, so that's a bearish sign.

Dollar index: The dollar has been zig-zagging its way lower for a week now until Friday's bullish harami, also in thte form of a spinning top.  Momentum and RSI have now turned higher and the stochastic is fairly oversold, so I'd say there's a chance (though not a certainty) of the dollar moving higher Monday.

Euro: Late last week the euro tried and failed to cross its 200 day MA.  It's trying again as I write but with the indicators now overbought it's not clear how much gas is left in the tank, particularly given Friday's dark cloud cover-ish candle.  If the euro cannot crack the 200 MA, it's going lower on Monday.  I realize that's not a prediction, but this chart isn't crystal clear tonight

Transportation: Friday saw a 0.82% drop in the trans, notably less than the Dow's 1.36%.  This drove them quite oversold (RSI=9.67) on a bullish inverted hammer.  That said, we fell through the pivot on Friday afternoon and remain well inside a descending RTC.  And with the lower BB still not until 6231, I think there may be a bit more downside left here before moving higher.


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        3      4      6           4        0.636     85

     And the winner is...

There are some signs, though not a lot, of a reversal coming over the next few days.  But one thing I think is that the late-day sell-off on Friday made the charts look worse technically than they would otherwise be, and this was complicated by the fact that Friday was the end of the month.  So for all the triple digit loss on the Dow, the SPX Hi-Lo index hasn't budged and remains on 100 - check it out at stockcharts.com here.  And of course, Monday is the first trading day of June, and that's historically pretty good.  So call me crazy, or maybe I've been out in the roasting Florida sun too much, but I'm going to call Monday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside because after being away for four days I want to take a day or two to get back into the swing of things before putting on any new trades.