Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1618.92.  Holding above is bullish.
• Next week bias lower technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside..

Recap

Well that sure didn't take long.  Tuesday night I pointed out that the former leader of Egypt got booted exactly one day after he refused to leave and that the current leader had just made the same promise.  And this time it was deja vu all over again.  One day after Der Morsi swore he'd die before being kicked out, out the door he went.  OK, so much for Ringling Bros. Egypt & Bailey, let's move on to the serious stuff, like where Friday, that oddball session sandwiched between fireworks and the weekend might be headed.

The technicals (daily)

The Dow: The Dow is back in consolidation mode with the past week centered about the 15K level.  The last candle we have, from Wednesday's rump session was bullish engulfing, so taken at face value this is positive, although the stochastic is inching its way toward a bearish crossover.

The VIX:  Perhaps the most interesting chart tonight is the VIX which put in a big red marubozu on Tuesday belying it's relatively small 1.46% drop.  That broke support at 16.2 and left us hanging perilously above a big gap between there and 16.0.  And that's where I think the VIX is headed next, despite its oversold condition on the indicators.  And I'll note that VVIX has broken under its 200 day MA and has room to run lower itself before hitting either support or its lower BB.

Market index futures: Tonight all three futures are significantly higher at 1:19 AM EDT with ES up by an impressive 0.99%, courtesy of the ECB and their talk on interest rates.  Thursday's big green marubozu put a clear end to a week of indecision for ES and broke above resistance around 1612.  And although RSI is now pretty overbought, the stochastic is nowhere near forming a bearish crossover, so this chart looks positive for Friday.

ES daily pivot: Tonight the pivot rises from 1605.33  to 1618.92. After skyrocketing in trade on the Fourth, we remain well above the new pivot so that's clearly a bullish sign.

Dollar index: In shortened trade on Wednesday the dollar dropped 0.38% with a stubby spinning top putting the bearish RTC exit back on the table.  And with indicators now having clearly peaked at overbought and turning lower it looks like the dollar is ready to follow suit on Friday..

Euro: Meanwhile, the euro, which did trade on both Wednesday and Thursday continued to be stymied by resistance at 1.3028.  And it's now down big-time in overnight trading, off 0.86% so far.  With a sell-off of that magnitude already in place, I don't know how much more downside is left for the regular session Friday, although the daily trend remains down.

Transportation: The trans as a leading indicator are boding poorly for the market, down 0.31% on Tuesday and confirming the latest rising RTC exit.  With overbought indicators and the stochastic inches away from a bearish crossover, this one looks more likely to go lower than higher 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        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July       0      1      0           1        0.500    -43 

     And the winner is...

Trading is likely to be choppy on Friday sandwiched as it is between a holiday and the weekend.  The futures are pointing to a big gain but we've got a bunch of employment numbers coming out.  My guess is that even if those are bad (which means good), that won't be enough to override the ECB news.  So with most of the charts looking positive, I'm just going to go ahead and call Friday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we stand aside again.  It's one of those nights where the big move happened before I got around to it so we'll just have to let this bus go by.

Wednesday - no call

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

• Wednesday - no call.
  
• ES pivot 1608.67.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing saide..

Recap

Tuesday's action was pretty typical of the perils one encounters trying to call pre-holiday sessions.  We were up early and things were looking pretty good for my call for a higher close.  Then CNBC started putting up non-stop video of a big bunch of yahoos jumping around in the town square of Cairo waving their stupid laser pointers in the air and that was all it took to send Mr. Market sprinting for the exit screaming like a school girl.  Hey, didn't we just see this movie a couple of years ago?  Check this out:

News story, Financial Times, Feb. 11, 2011:

"Defiant Mubarak refuses to resign"

And then all of one day later,

 News story, BBC News, February 12, 2011:

"Egypt crisis: President Hosni Mubarak resigns as leader"

Now today we've got

News story, www.marketwatch.com, July 2, 2013

"Egypt’s Morsi rebuffs calls to step down"

Oh my!  How will it turn out this time?  The suspense is just killing me (not).

Ho hum.  What Mr. Market fails to realize is that Egypt is not the US.  Here we elect a leader every four years.  If the losers don't like him (or her), it's just tough beans until next time.  Egypt has no such democratic tradition.  Over there, elections are basically just political theatre.  If the winner turns out to be, uh, unsuitable in some fashion, then everybody heads for the streets to party like it's 1999 until the poor guy throws in the towel and then the army takes over.  Until the next "election".  Lather, rinse, repeat.  Etc., etc.

On Feb. 11, 2011, the Dow closed at  12,273.  A week later it was at 12,391.  A month later, 12,264.  So please, give me a break.  Of all the things to worry about in the world today, Egypt is not one of them.  Now pass the popcorn while I wait for Act II of As the Nile Turns...

The technicals (daily)

All that stuff is canceled for tonight.  With Wednesday being only a rump session and all the big players already heading for the airport to helicopter out to the Hamptons, there's absolutely no point in trying to predict which way the market will close on Wednesday.  So we won't.


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       6      5      6           0        0.545    543
July       0      1      0           1        0.500    -43

     And the winner is...

Me.  I plan to spend Wednesday relaxing out on the patio sipping a gin & tonic and reading a good book.  A cursory glance at the charts suggests we may be getting a bit overbought here and could be looking at lower prices in a bit, but I'm not touching this action with a 10 foot swizzle stick.  Happy Fourth to one and all and see you back here Thursday night.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we stand aside in the face of the Egyptian shenanigans and another low-volume pre-holiday session...

Tuesday higher

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

• Tuesday higher, low confidence.
  
• ES pivot 1606.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well looks like the tradition of the first day of July held up once again on Monday as the Dow rose 65 points, admittedly well off its intra-day high, but a win nonetheless.  And my call worked out well too, with ES moving above its pivot at 2:25 AM and then making a series of attempts to break back under between 4 and 5:30 AM to no avail.  And up we went from there.  Now we move on to Tuesday in this mid-week holiday shortened week.

The technicals (daily)

The Dow: Despite the Dow's 0.44% gain on Monday, it still counted as a bearish RTC trigger, having closed outside the rising RTC for two days in a row.  The indicators are very close to overbought now and the failure of the Dow to hang onto the 15K level for three days running is somewhat of a bearish sign.

The VIX:  The VIX canceled Friday's bullish setup in emphatic fashion by dropping 2.91% on Monday.  While this also served to depress the indicators further into oversold territory, the stochastic is still not even starting to curve up for a bullish crossover.  And with no further support until 16.10 (we closed at 16.37) there's a good chance the VIX still has room to run a least a bit lower.  I note too that VVIX broke under its 200 day MA on Monday but put in a hammer in the process.  So Tuesday could be a bottoming day for the VIX.

Market index futures: Tonight all three futures are higher at 12:49 AM EDT with ES up by 0.26%.  

ES daily pivot: Tonight the pivot rises from 1602.67  to 1606.83.  But even that wasn't enough to move ES under the new pivot so this data point remains bullish.  ES seems to be having some trouble making up its mind, putting in a third straight spinning top in a row on Monday.  But the late night pin action remains positive right off the top of Monday's candle.  And with indicators not yet overbought, last night's bearish signs are canceled.  There's no resistance now til 1618, so that's not looking out of the question.

Dollar index: Last night I mentioned some impending resistance for the dollar and on Monday it was indeed unable to crack the 57 - 57.10 area, ending down 0.14% in a move that just took it out of its rising RTC for a bearish setup.  That also finally brought the indicators off extreme overbought and just created a bearish stochastic crossover so now I feel more confident in calling the dollar lower for Tuesday..

Euro: Last night I wrote "this chart looks ready to move higher" and that's just what it did, briefly touching its 200 day MA before closing just below at 1.3063.  The overnight is forming a small spinning top but with a big bullish engulfing candle in place and indicators still just beginning to rise off oversold,   I think the euro will be continuing higher from here.  That syncs with my call for a lower dollar.

Transportation: What a difference a day makes.  Last night's bearish indications here were all canceled today by a nice 1.1% gain that just brought the trans back into their latest rising RTC, restoring the uptrend.  And with indicators still rising but not yet overbought, it's now looking like we've got some more room to run.

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.  Note that I've corrected the data in the accuracy columns due to a mistake I made in week 13 but only just noticed now.
 

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    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643

 25  6/17       32         40        +      -   1627 

 26  6/24       13         46        -      -   1592

 27  7/1        25         42        -      -   1606

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 I and the poll I voted bearish four weeks ago, so we were both right.   Therefore we  continue the year with an accuracy of 13  for 23, or 57%.   The poll as a whole drops to 10  for 20 or 52%.

Interestingly, while bullish sentiment doubled in the past week bearish sentiment dropped only three points.   That may be another consequence of the recent market volatility.

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       6      5      6           0        0.545    543
July       0      0      0           1        0.000      0

     And the winner is...

Holiday weeks are always difficult to call and that goes double when the day in question doesn't fall on a Monday or Friday.  Tuesday is historically pretty weak, but with all of the charts looking bullish again and Dr. Copper staging a comeback from its lowest levels since 2009 I think the logical call here is for Tuesday higher.  And that's my final answer.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we stand aside in anticipation of a tricky low volume day..

Monday higher if ES pivot passed

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

• Monday higher only if ES pivot passed, else lower.
  
• ES pivot 1602.67.  Holding below is bearish.
• Resr of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

My reluctance to call the market higher again last Friday after three solid days of gains proved well-founded with the Dow dropping 115 points as triple-digit days being to prove more common than the thermometer in Las Vegas this summer.  So much for end-of-quarter window dressing.  Now we're faced with another holiday-shortened week - this one coming in the middle of the week.  How will this affect the mood of Mr. Market?  Let's catch up with him before he fires up the grill and touches off the fireworks.

The technicals (daily)

The Dow: On Friday the Dow gave back all of its gains from Thursday and then some, cutting short the advance of the three white soldiers in dramatic fashion with a quick exit from the rising RTC for a bearish setup.  The stochastic continues to rise but OBV is now down for three days straight.  With an almost-bearish engulfing pattern in place, this chart is suddenly looking rather negative.

The VIX:  After a small green spinning top on Thursday the VIX gave us a bigger red one on Friday.  Net result - zip, zero, nothing as the VIX closed absolutely unchanged.  It did however close outside the descending RTC so that's a bullish setup.  However, the indicators are still only about half way to oversold so I'm a bit wary of this.  OTOH, VVIX tested its 200 day MA once again on Friday and succeeded again, so we might indeed be seeing a higher VIX soon.  Last Thursday night I wrote "this run may be reaching an end and we could see a reversal in a few days", and I'm sticking to it.

Market index futures: Tonight the futures are mixed at 1:05 AM EDT with ES down by 0.13% but NQ up 0.03% and YM up two ticks (0.01%).  On Friday ES gave us a nearly dark cloud cover-looking thing that closed outside the rising RTC for a bearish setup.  However the overnight is forming as something of a hammer as ES has been drifting higher since 9 PM.  At this rate it should hit the pivot around dawn which will be do or die time.  Since the indicators are still not overbought, this chart is something of a mixed picture tonight so I'm not calling it.

ES daily pivot: Tonight the pivot dips from 1605.17  to 1602.67.  After dropping under the old number just before Friday's close we remain below the new pivot, a bearish sign.

Dollar index: On Friday the dollar posted a big bullish engulfing pattern to soundly reject Thursday's doji and remain inside its rising RTC.  But indicators are now at extreme overbought levels and with some resistance in the 57 - 57.15 area ($USDUPX) it's not clear to me how much upside is left here.  We'll need to see some confirmation on Monday.

Euro: The euro tested its 200 day MA on Friday and was rejected but nonetheless closed just outside its descending RTC for a bullish setup on small losses.  With the indicators now quite oversold and some decent support in the 1.3010 area, this chart looks ready to move higher.  And we are indeed drifting higher in the overnight so far up 0.06%.

Transportation: On Friday the trans also gave us a rising RTC exit for a bearish setup along with a bearish harami candle.  So even though the indicators are not yet oversold I'm starting to think we could see lower here soon.


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       6      5      6           0        0.545    543

     And the winner is...

Much of the bearish aspect of Friday's charts was baked in by a last minute downdraft as traders ran for the exits ahead of a pre-holiday week weekend.  Still, the bulk of the evidence points to a lower close on Monday.  However, Monday is the first trading day of July and historically one of the best days of the entire year, so I'm also loath to go against that sort of track record.  So with two conflicting forces at work I'm going to appeal to the ES pivot with a conditional call: if ES manages to break through its pivot by mid-morning, we'll close Monday higher.  If not, we close lower.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we stand aside on the conditional call.