Friday higher if pivot holds

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

• Friday higher only if ES stays above pivot, else lower..
  
• ES pivot 1666.42.  Holding above is bullish...
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

Well calling Thursday was pretty much a no-brainer, as the Dow jumped 169 points after being juiced by the one-two combo of Uncle Ben and the BOJ (hey that would make a good band name).  So life goes on and we move on to Friday.

The technicals (daily)

The Dow: With the Dow enjoying its best day since June 7th, the rally rolls on.  Thursday's gain put us right back into the rising RTC as we closed just under the upper BB.  The indicators are all hopelessly pegged on overbought and therefore have lost their predictive value.  So there's still really nothing bearish about this chart.

The VIX:  Interestingly, although the Dow gained 1.11% on Thursday, the VIX only lost 1.41% - and did it on a green candle.  This traded entirely outside the descending RTC so that's now a bullish trigger.  And the support level I mentioned last night, 13.62, held up nicely, with the VIX opening at 13.57 and moving higher from there.  So although the lower BB continues to fall away rapidly, I'm thinking there's now a chance the VIX could go higher on Friday.

Market index futures: Tonight all three futures are slightly lower at 1:37 AM EDT with ES down by 0.06%.  A strong five day run in ES has brought it to its upper BB and kept it in its rising RTC, easily breaking resistance at 1633.  However, 1670 now appears to be a stumbling block and ES is looking a bit in need of a well-deserved rest.

ES daily pivot: Tonight the pivot jumps from 1649.50  to 1666.42.  Despite this big gain, ES remains above the new pivot, but just barely.  Still, as long as we do not break under, it remains a positive sign.

Dollar index: The dollar just fell out of bed on Thursday with a monster gap down for a 1.57% loss that put a convincing end to the current uptrend.  But even that was only enough to drive the indicators about halfway from overbought to oversold.  So while we now have this yawning gap that invites filling, there is no real support until 56.12.  That leaves this chart rather uncertain.  Maybe the euro will provide some clues.

Euro: After its monster pop in the overnight last night, the euro finished the day hanging onto enough gains to remain above the 200 day MA and form a  giant inverted hammer.  The overnight is now trading lower, down 0.17% and it looks like a test of the 200 MA is imminent.  With the heady heights of 1.3200 rejected, the euro could move lower on Friday.

Transportation: After taking a break on Wednesday, the trans motored higher again on Thursday, up a big 1.22% to remain in their rising RTC and closing just shy of their upper BB.  There are no bearish signs 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        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July       5      1      0           1        0.867    447

     And the winner is...

Although the charts appear to be slowing down a bit tonight, at least compared to the rip-snorting advances we've seen the past few days, I'm still not really seeing much serious pressure from the bears.  So it's kind of a toss-up.  I'm inclined to make this a conditional call, particularly in view of the PPI and Michigan sentiment numbers coming out on Friday.  So let's say this: if ES can manage to stay above its pivot by mid-morning then we close Friday higher.  But if ES gives up the pivot by then, then 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 go remain at 1643.00 and take some more heat.

Thursday higher

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

• Thursday higher, medium confidence.
  
• ES pivot 1649.50.  Holding above is bullish...
• Friday bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

Things were looking good for a lower close early on Wednesday.  Then the Dow made a brief pop when the Fed minutes came out but that went pfft and we ended lower after all (though the SPX did post a small gain).  But this all created an interesting candle which we will now examine as we proceed to dissect the charts as we do every night.  Scalpel!

The technicals (daily)

The Dow: After four straight days of respectable gains, the Dow gave us a clear star on Wednesday.  And because of the steepness of the rising RTC, it also just barely exited, for a bearish setup.  And the stochastic also barely squeaked out a bearish crossover (%K of 91.51 just moving under a %D of 91.94).  So this chart is now looking officially bearish to me.

The VIX:  Meanwhile, the VIX is back in its "Help I've fallen and I can't get up" mode, dropping another 0.98% on Wednesday with a bearish engulfing candle that canceled Tuesday's  doji.  So it remains in a downward RTC and the lower BB just keeps falling away.  With no support now until 13.62 (just above the lower BB at 13.56) I now think the VIX can move still lower.

Market index futures: Tonight all three futures are sharply higher at 1:39 AM EDT with ES up by a very strong 1.11%, a number you don't often see at this hour of the night.  On Wednesday, ES put in a classic star that coupled with highly overbought indicators suggested a reversal lower.  But the overnight action is just trashing that idea with a big gap-up that just now touched the upper BB and leaves us right at the all-time high resistance line set back in May.  With RSI now pegged at 100, I'd like to say we're due for a move lower, but Mein Gott, I'm not going to step out in front of this raging bull.

ES daily pivot: Tonight the pivot inches up from 1643.42  to 1649.50.   We were way above the old pivot and remain way above the new pivot, so nothing but bullish there.

Dollar index: Ha - so naturally just when I stopped believing the dollar would ever move lower, it did, dropping 0.64% on Monday to bring the indicators almost off overbought.. Even at that though, it remains in a rising RTC,  But with the dollar alternating up and down days for eight sessions in a row now, the only conclusions I can draw is that Thursday will be higher.

Euro, daily

Euro: Holy moly!  This one deserves a picture.  Just look at this chart of the euro.  On Wednesday it put in a bullish engulfing pattern that closed just outside the descending RTC for a bullish setup and then would you look at the overnight (last bar on the right) - the euro is now up an amazing 1.92% on a giant gap-up green candle that rocketed straight through the 200 day MA in one fell swoop, evidently thanks to the BOJ.  I scrolled the daily chart all the way back to 2007 and was unable to find any instance of anything even remotely close to this.

In any case, this is now a bullish trigger, though with such a big move and such a big gap, I'd expect at least some retracement on Thursday - maybe back to the 200 MA which is now support. Bottom line, I think we can safely say the latest euro downtrend is now officially over.

Transportation:Last night I wondered if a pause wasn't on the way here after Tuesday's big gains.  Well we got one and then some as the trans dropped 0.72%, bouncing off the upper BB.  It isn't fatal since we remain in a rising RTC, but the indicators have now all turned lower from overbought and the stochastic squeaked out a bearish crossover so like the Dow, this chart is now looking bearish to me.


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       4      1      0           1        0.833    278

     And the winner is...

With the futures seemingly headed to the moon, Alice after a one-two punch from Uncle Ben and the BOJ, and the VIX unable to make any headway at all, the only reasonable course of action is to call Thursday 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 go remain at 1643.00 and take some considerable heat.

Wednesday lower

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

• Wednesday lower, low confidence.
  
• ES pivot 1643.42.  Breaking below is bearish..
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1643.00.

Recap

Despite a less than totally unequivocal picture last night, my call for a higher finish played out nicely on Tuesday with the Dow gaining another 76 points to extend the winning streak to four in a row.  Can we go for five?  Let's see what the charts have to say about that one.

The technicals (daily)

The Dow: On Tuesday, the Dow put in another green marubozu for a three white soldiers pattern as it continues to march towards its upper BB at 15,377.  We remain in a very steeply rising RTC so there's really no suggestion of lower here.  The only issue is that we've got resistance at 15,322.  If we can pass that, the upper BB is assured, but with the pace of the gains decelerating and volume declining I'm wondering if there's going to be enough gas in the tank to punch through this level on Wednesday.  After a nice four day run like this, I'd be expecting some profit-taking to kick in at some point.

The VIX:  Last night I wrote "a VIX turnaround may be coming soon, but it's still not clear it will be on Tuesday" and a good thing too, because it wasn't.  The VIX continued to sink on Tuesday, down another 2.91%.  But we now have two dojis in a row - Monday's inverted hammer and Tuesday's doji star.  And with VVIX actually finally posting a gain (for the first time in 10 days) with a bullish piercing pattern, there are some signs that the VIX may now be ready for that turnaround I mentioned.

Market index futures: Tonight all three futures are lower at 1:05 AM EDT with ES down by 0.12%, the first time we've seen the futures lower at this hour in a few days.  In fact, while the decline is small so far, it has already left the rising RTC for a bearish setup and the candle is shaping up as a dark cloud cover.  RSI is now extremely overbought (96.35), momentum and OBV appear to have peaked, and the stochastic is ever so close to forming a bearish crossover.  So this chart is now looking weaker than it has in days.

ES daily pivot: Tonight the pivot rises again from 1633.67  to 1643.42.   However, tonight we have a difference.  ES is no longer above the new pivot.  In fact it is conducting a test of this level as I write.  A break under would be bearish.

Dollar index: I missed this one last night.  The dollar resumed its rise, gaining 0.43% on Tuesday to cancel the bearish RTC trigger.  About all I can say now is that the dollar remains in a choppy uptrend.  It has now cleared resistance at 57.88 and stands at its highest level in a year.  So I'm not going to stand in front of this train - the dollar will move lower when it's ready.

Euro: And the euro's vain attempt at a rally on Monday was rejected as it gave up support at 1.2823 on Tuesday to close at 1.2790 as it continues to dribble down the lower BB in a descending RTC.  And with the overnight action down another 0.07%, there's now no sign of a turnaround on Wednesday.

Transportation: Dow Theory note - on Tuesday the trans greatly outperformed the Dow, up a whopping 2.26% to the Dow's 0.50%.  This took them to 6440, just above their upper BB, and pushed the indicators deeper into overbought territory.  While none of that is a specific  reversal indicator, I have to wonder if a pause isn't on the way 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
July       3      1      0           1        0.800    269

     And the winner is...

Tonight I'm seeing some definite bearish signs on the horizon, for the first time in days.  Therefore I'm going to call Wednesday lower, in large measure because the VIX looks ready to move higher and because the futures are guiding lower.  That's all she wrote.

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 go short at 1643.00.  Things are feeling a wee bit toppy to me tonight.  I opened this position when ES broke under its daily pivot.  Reminder - you can follow my entries and exits for these trades live on Twitter @nightowltrader.

Tuesday higher

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

• Tuesday higher, low confidence.
  
• ES pivot 1633.67.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside..

Recap

It's nice when the technicals assert themselves and Monday's action was pretty much picture perfect as the Dow tacked on another 89 points to make a three day winning streak.  But with some growing flashing yellow lights, is this the end of the road or are we just getting started?  The charts will tell...

The technicals (daily)

The Dow: Last night I wrote "There is now some minor resistance at 15,177 but by and large this chart is now looking bullish".  Well the Dow made short work of that level and closed at 15,225 on Monday.  And speaking of resistance, the next level is at 15,246, then 15,316.  With three days of increasing volume, rising indicators (even though now overbought), and a bullish RTC exit of a weekly channel, I'd say this chart continues to look positive.

The VIX:  Last night I wrote "I'd not be at all surprised to see the VIX want to check [out the lower BB] on Monday.  But we could be in for a bounce in a few days".   Well we got a small 0.74% decline but on an inverted hammer that tested the 200 day MA and failed.  It also drove RSI to very oversold (2.72) so now I'm thinking the odds for a reversal on Tuesday may have gone up, even thought we haven't quite hit the lower BB yet.  OTOH, support for VVIX collapsed on Monday implying no hint of a rise in VIX.  So a VIX turnaround may be coming soon, but it's still not clear it will be on Tuesday.

Market index futures: Tonight all three futures are higher at 12:55 AM EDT with ES up by 0.37%.  After another decent green candle on Monday, ES is showing no signs of slowing down and is tracking up the left side of its rising RTC.  No resistance until 1647 and then the upper BB at 1653.57.  I think a visit to the former is not out of the question for Tuesday.

ES daily pivot: Tonight the pivot rises again from 1622.08  to 1633.67. Just like last night, after having spent the whole day above the pivot we remain comfortably above the new number so this indicator remains bullish.

Dollar index: On Monday the dollar gave us a textbook bearish harami that broke away from the upper BB.  It also traded outside the rising RTC for a bearish trigger.  I thought we might go higher but resistance at 57.95 proved impossible to crack.  At this point I see more downside risk than upside potential here.

Euro: Meanwhile the euro managed to retrace just a bit of Friday's big dump as support around 1.2828 held up.  But with indicators just barely oversold that's not enough to declare a new uptrend yet.  And the euro is in fact trading lower in the overnight once again, down another 0.10% already.  We could be in for another consolidation period right around the 1.2850 level here.

Transportation: The trans are starting to lag the Dow a bit, up just 0.13% on Monday.  More worrisome was the nature of the candle - a gap up doji for 2/3 of a bearish evening star pattern.  However, this remains a reversal warning, one which requires confirmation.  With no resistance still until 6345, I suppose another move higher wouldn't be out of the question.

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   13/24  11/21

 25  6/17       32         40        +      -   1627 

 26  6/24       13         46        -      -   1592

 27  7/1        25         42        -      -   1606

 28  7/8        42         29        +      +   1632

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 a miss.   Therefore we  continue the year with an accuracy of 13  for 24, or 54%.   The poll as a whole remains 11  for 21 or 52%, since there was a dead tie four weeks ago between the bulls and bears (that's why there's an "x" in that column).

This week we see an almost complete flip-flop in the numbers, from 42% bearish to 42% bullish.  I changed my own vote and so remain with the majority.   I can't speak for why the others voted the way they did, but I'm seeing a weekly bullish stochastic crossover and a bullish monthly RTC exit, both of which I consider significant.


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       2      1      0           1        0.750    193

     And the winner is...

I'm still not seeing any real "go" signs for the bears on tonight's charts.  So while I'm becoming a bit cautious (Tuesday is historically a weak day) the preponderance of evidence continues to indicate that the logical call is for Tuesday higher.  So sez I.

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 because I don't like getting on a bus that has already traveled so far in the evening before getting to my stop at 1 AM.  Patience is a virtue.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1622.08 .  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside..

Recap

Friday's action, if it is to be believed, busted clear out of a five day trading range to close at 15,136 on the Dow.  Sure it was a low-volume post-holiday, pre-weekend session, but you can be sure everyone is looking at the resulting candles.  So let's see how that changes the picture.  But first...

Southwest Airlines goes down

Over the weekend, the Nightowl heard back from Visa about the complaint she filed last month over the fact that Southwest Airlines was advertising a fare that costs as much as a business class fare, offers the same perks as a business class fare, is called a "Business Select" fare, for a flight formerly operated by Airtran as business class, but is actually only steerage class.  Well Visa, which has been getting more and more hard-nosed about disputes in recent years, decided they agreed with me, that if it looks like a duck and quacks like a duck, but is in fact just a decoy, then that's fowl play, and they gave me the refund I requested.  So round one goes to the Night Owl.  Of course, SW has the right to appeal.  I'll be curious to see if they really want to make an issue out of this.  But for now anyway, fraud doesn't pay.  Moving right along...

The technicals (daily)

The Dow: All of the daily charts for Friday have to be taken with a large grain of salt, considering the lower volume.  Nevertheless, after an early false breakout, the Dow did grind steadily higher for the rest of the day closing at sessions highs with a nice green marubozu that finally got us off top-dead-center after five days of indecision.  There is now some minor resistance at 15,177 but by and large this chart is now looking bullish, even with indicators having gone overbought.

The VIX:  Last Thursday night I noted a big unfilled gap hanging below the VIX and posited that we were going to continue lower down to 16.0.  Well 16 cam and went so fast on Friday I literally missed it with the VIX ending down 8.09% at 14.09, breaking through its 200 day MA at 15.06 in the process.  While the indicators are very oversold here, there is now considerable downside momentum going and with a lower BB at 14.22, I'd not be at all surprised to see the VIX want to check it out on Monday.  But we could be in for a bounce in a few days - VVIX did hit its lower BB on Friday, which was also five month support.

Market index futures: Tonight all three futures are modestly higher at 1:04 AM EDT with ES up by 0.06%.  Friday's ES chart reflected the others with a big congestion-breaking move.  I peg the next resistance at 1635 so in the absence of any bearish reversal signs, it seems reasonable that we'll check out that level next.

ES daily pivot: Tonight the pivot jumps from 1605.33 to 1622.08   With ES pretty much steady in the overnight, we're still comfortably above the new pivot, so that's a positive for Monday.

Dollar index: The dollar took off like a Fourth of July skyrocket one day late on Friday, gapping up big time for a 1.49% pop that closed above its upper BB and brought it back into its last rising RTC.  It also just formed a bullish stochastic crossover from a high level and those are often good for one or two days of further gains..

Euro: And of course in mirror image fashion, the euro tanked on Friday, crashing right through support at 1.2987, more support at 1.2846, and its lower BB to close at 1.2833.  The 200 day MA is now just a distant memory and the overnight is guiding lower still, down another 0.13% already.  With no more support until 1.2785, I think the euro still has more downside available on Monday.

Transportation: Pretty much the same story as the Dow on Friday, only more so with an outsized 1.54% gain here.  I think we go 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        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July       1      1      0           1        0.667    104

     And the winner is...

Monday is historically quite bullish and with the VIX now back below 15, no particularly bearish signs on the charts, and no major economic news coming out, the most logical call is for Monday higher.  There are however, some developing signs of a possible turnaround soon, so Monday might be a short-term topping day.  That's all, she wrote.

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 because I'm not really seeing an ideal setup for going long here.