Friday lower

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

• Friday lower, low confidence.
  
• ES pivot 1680.25.  Holding below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00...

Short Post

I apologize for the brief post tonight, but the Night Owl is leaving on a quick overnight trip on Friday and needs to get some extra sleep tonight.  The blog takes about an hour to put together every night and I just don't have that kind of time right now.  We'll resume out regular chart run-down next Sunday evening.

For what it's worth, I do think the market's going lower on Friday.  Have a great weekend, happy trading, and see you Sunday!

Thursday lower

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

• Thursday lower, low confidence. 
  
• ES pivot 1673.92.  Holding below is bearish...
• Friday bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

I called Wednesday as "uncertain" and I'm glad I did because I wouldn't have expected such a muted market reaction to Uncle Ben's speech on Wednesday.  Still, a sideways move can be as important as one up or down and the charts will bring it all into focus, so let's  begin our investigation into where Thursday is headed.

The technicals (daily)

The Dow: With Wednesday's inconclusive candle complete, it's clear we're now in a period of congestion.  But the resolution isn't looking so good.  15,500 is proving to be a tough nut to crack and we've in fact been putting in slightly lower highs for three days now.  We also just traded entirely outside the rising RTC for a bearish trigger, supported by the continuing overbought readings on the indicators.  I'd say this chart is now looking rather bearish.

The VIX:  Just when it seemed that the VIX was ready to rally, it plopped right back to its recent support line at 13.79.  The overall gestalt of this chart remains bullish from here but the VIX is certainly taking its time getting into gear.

Market index futures: Tonight all three futures are lower at 12:25 AM EDT with ES down by 0.13%.  Sideways action on the daily continues here as ES is just not able to crack 1680.  With the bearish RTC exit complete, indicators finally starting to come down off extreme overbought, and the new candle forming as a dark cloud cover, I'd say this chart is now looking bearish.

ES daily pivot: Tonight the pivot inches up from 1672.42  to 1673.92.  The failure of ES to advance in the overnight means we finally broke under the pivot right at midnight, so this indicator now becomes bearish.

Dollar index: On Wednesday the dollar gained 0.25% on a wide-ranging bullish harami that brought the stochastic right into position for a bullish crossover.  With oversold indicators, this chart looks in good position to move higher on Thursday.

Euro: And the euro was indeed unable to break above 1.3172 on Wednesday, giving back half of Tuesday's gains to end at 1.3115.  With the overnight continuing lower, now down another 0.11%, and pretty overbought indicators, it's looking likely that we go lower on Thursday.  And that, for a change, squares with my call for a higher dollar.

Transportation: The up/down streak continues for the trans.  Wednesday marked the 10th straight day of alternating up and down sessions.  And Wednesday's 0.78% gain was not enough to break us out of a now five day trading range.  With indicators continuing to be overbought, resistance at 6475, a recent bearish RTC trigger, and yes, the fact that Wednesday was up all makes me think that Thursday's going lower.


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       6      1      1           3        0.900    467

     And the winner is...

With Philly Fed and some more jobs numbers coming out, this one's a bit risky but overall the charts are looking sufficiently bearish that I believe the logical call is for Thursday lower.  Simple as that.

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 remain short at 1643.00.  I'm expecting to start recouping some of these unrealized losses Real Soon Now.

Wednesday uncertain

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

• Wednesday uncertain. 
  
• ES pivot 1672.25.  Holding above is bullish...
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

It's not a sure thing, but the conditional call works pretty well a lot of the time.  In the case on Tuesday, ES remained above its pivot after my post last night until 9:40 AM Tuesday when It made its first attempt to break under.  This was rejected but a more prolonged attack that began at 10:30 AM succeeded (recall that I make "mid-morning" as one of the qualifiers for a conditional call) and it was all over.  The Dow closed down 32 points.  QED.  And with that little theorem out of the way, we move on to Wednesday.

The technicals (daily)

The Dow: After a weak gain on Monday, the Dow gave it all back plus a bit more on Tuesday in the form of a stubby hanging man.  But more importantly, this sideways action has now (finally) taken us out of the strong rising RTC of late for a bearish setup.  And after peaking at 98 on Monday, RSI has begun moving lower.  So things appear to be falling into place for a move lower here.

The VIX:  On Tuesday the VIX finally gained some traction with a 4.57% gain, it's biggest since June 20th.  This exited the descending RTC for a bullish trigger and brought RSI off of zero when it had languished for two days.  And VVIX posted similar gains.  So everything's pointing to more upside here on Wednesday.

Market index futures: Tonight all three futures are somewhat surprisingly higher at 1:06 AM EDT with ES up by 0.06%.  ES was stopped cold by the 1679.50 level on Tuesday and gave up all of Monday's gains with a red candle that just exited the rising RTC for a bearish setup.  Indicators remain quite overbought, so despite tonight's modest move higher (so far), the overall look of this chart is negative.

ES daily pivot: Tonight the pivot dips from 1675.58  to 1672.25.  After spending Tuesday below the old number, we remain just below the new pivot, though ES is actively knocking on that door as I write.  A break above before the open would be bullish.  A bounce off would be bearish.

Dollar index: Last night I wrote "I'm thinking the dollar goes lower on Tuesday", and it did indeed, gapping down 0.67% as it was unable to continue its attempt to fill that big gap down from last week.  This now drives the dollar officially oversold and moves the stochastic into position for a bullish crossover, though not necessarily on Wednesday.  I see at least one more down day coming here first..

Euro: After bouncing around its 200 day MA for three days, the euro finally got some mojo and took off on Tuesday to close at 1.3163.  But that also took it into overbought territory and moved the stochastic closer to a bearish crossover - but not just yet.  Still, we're down 0.14% in the overnight, so some retracement isn't out of the question here for Wednesday.  But like last night, I can't call both the dollar and the euro the same direction, so one of these is wrong.  I just go by how each individual chart looks.  And like last night, it's hard to tell which one that might be.

Transportation: The trans continued their up/down thing by dropping 0.72% on Tuesday, outpacing the Dow's 0.21% decline and with a bearish engulfing pattern.  So Monday's bearish RTC trigger paid off and with the indicators still pretty overbought, it looks like more downside is possible on Wednesday.  We also have a pretty clear megaphone top pattern forming, so that increases the odds of a move lower 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       6      1      0           3        0.900    467

     And the winner is...

While the charts are looking rather bearish in general tonight, there's a slight problem and his name is Ben Bernanke.  His remarks on Wednesday are what will move the market, not any technicals here (gee, I could have saved myself the trouble).  So since I have no way of knowing what he's going to say (the battery died in my bug in his office) the only logical course of action tonight is simply to call Wednesday uncertain.  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 remain short at 1643.00.  I'm still not quite ready to give up on this one.

Tuesday higher if ES pivot holds

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

• Tuesday higher only if ES stays above pivot, else lower.
  
• ES pivot 1675.58.  Holding above is bullish...
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

So the rally rumbles on, eight days now including two dojis that both came to naught.  But we all know that what goes up must come down - the only question is when.  And that's what the charts will now tell us.

The technicals (daily)

The Dow: Monday's doji was non-confirmed on Tuesday, but not by much, with a 20 point advance on reduced volume.  So although we remain in a rising RTC, the closing prices are now more sideways than higher and the indicators are now hitting extreme overbought levels (RSI = 98.4)  Today's action also took kind of a right angle off the upper BB.  All of this makes me think that we're heading for a down day pretty soon.  Could it be Wednesday?  Maybe, but there's still no solid reversal sign on this chart.

The VIX:  On Tuesday the VIX lost another 0.35% but that drop belies the flow of the candles, which is now more sideways than lower.  And with RSI now at zero for two days in a row, I can't help but think that the VIX is due for a bounce soon.

Market index futures: Tonight the futures are mixed at 1:01 AM EDT with ES down 0.01%, YM up 0.01%, and NQ up 0.06%.  Call if basically unchanged..  However, after Tuesday's nice run, we're not seeing the same amount of follow-through that we've been getting recently at this hour.  And the sideways action in the overnight is pushing us out of the rising RTC for the first time in nine days.  Meanwhile RSI remains pegged at 100 for an impressive five days now.  I'd say the odds are slowly increasing that we may be seeing a down day pretty soon.

ES daily pivot: Tonight the pivot rises once again from 1670.25  to 1675.58  The only difference is that tonight we're only a point and a half above the new number.  Still, as long as we can hold above, that remains a bullish sign.

Dollar index: The dollar tried to do some more gap-filling on Monday but ended up putting in a red candle good for just a 0.05% advance.  The overall look of this chart is the little engine that couldn't.  Although the indicators are still a ways from overbought, I'm thinking the dollar goes lower on Tuesday.

Euro: On Tuesday the euro tried to break down but finally pulled right back to its 200 day MA.  Th3e overnight remains close to it, up just 0.06%.  So the wavering continues.  However, we finally have a bearish crossover on the stochastic, so that favors a move lower on Tuesday.  But then I'm thinking the dollar chart also looks lower - one of those two thoughts is wrong.  At this point, it's a toss-up - there isn't any super clear direction here.

Transportation: After a bearish harami on Monday the trans continued with a bullish engulfing pattern on Tuesday.  That pretty much cancels out with the trans unable to break resistance at 6472.  Today's gain was also not enough to regain the rising RTC, so that's a bearish trigger.  And by the old reliable down/up indicator, Tuesday should be down, since the trans have been alternating between gains and losses for eight days now.

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   14/25  11/22

 26  6/24       13         46        -      -   1592

 27  7/1        25         42        -      -   1606

 28  7/8        42         29        +      +   1632

 29  7/15       48         22        +      +   1680

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 majority of the poll voted bearish, so that's a miss for them.   Therefore we  continue the year with an accuracy of 14  for 25, or 56%.   The poll as a whole drops to 11 for 22 or 50%.

This week I remain with the majority in calling the SPX higher in 30 days.  Both the weekly and monthly charts are now looking considerably stronger than they were two weeks ago.

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       6      1      0           2        0.889    467

     And the winner is...

The current eight day uptrend has featured three doji reversal warnings so far and all three have failed.  The economic news that came out on Monday that I thought would be BTE was kind of mixed but the market went up anyway.  Now we're getting more reversal warnings but once again no real clear bear signal.  And  until I do see that, I can't really call the market lower.  OTOH, it's already been a pretty nice run and I'm not sure how much longer we can go.  So I'm going to make another conditional call: if ES manages to stay above its pivot by mid-morning Tuesday, we'll close higher.  If we break under before 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 remain short at 1643.00.  I'm still not quite ready to give up on this one.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1670.25.  Holding above is bullish...
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

Last Thursday night's conditional call for Friday worked out well.  ES never dipped below the pivot and we did indeed finish the day with a gain.  Even the Dow finished higher though it was down earlier due to yet another incident with Boeing and their new Ronson-liner.  Well anyway, that was then, this is now.  So we soldier on as always and move along to Monday.

The technicals (daily)

The Dow: Just like last Wednesday, on Friday the Dow turned in a classical star, just off the upper BB and well within the rising RTC.  So is this a reversal sign or just another fakeout like Wednesday?  The major difference is that the Dow has now cleared its last closing resistance line at 15,409.  Also, volume was down on Friday compared to Wednesday.  Nut with the indicators all pegged on overbought, there's really no way to call this without confirmation and we won't get that til Monday.  I'll just mention that the weekly chart looks quite strong at this point.

The VIX:  The VIX was unable to capitalize on Thursday's green candle and moved lower again on Friday, down another 1.21% on a small spinning top harami.  Meanwhile RSI has hit zero - it doesn't go any lower than that.  So like the Dow, while there's a hint of a move higher here, with so much downward momentum, one can't really call the VIX higher on this chart alone.  I'll note too that VVIX seems to be in no hurry to rise either, so it's doubtful that the VIX will be popping anytime soon.

Market index futures: Tonight all three futures are higher at 1:05 AM EDT with ES up by 0.25%.  After giving us a spinning top on Friday, we're already getting some non-confirmation as ES simply continues what is now a seven day uptrend.  The indicators are all useless, being pegged on overbought, and we remain in the rising RTC so I see no sign here of a reversal for Monday.

ES daily pivot: Tonight the pivot continues upward from 1666.42  to 1670.25.  And once again as we've been seeing so much recently, ES just keeps floating above.  I don't think the bears can gain any real traction until we break under here.

Dollar index: I noted the huge gap the dollar left last Thursday and it indeed tried to do a little filling on Friday, up 0.30%.  But with a red candle and indicators continuing to head towards oversold, I'm not sure we have the steam to push higher again on Monday..

Euro: And after Thursday's big pop for the euro, it tried to find some support at the 200 day MA on Friday but ultimately closed just below, at 1.3063 on a red hanging man.  However, i the Sunday overnight, the euro has just broken back over the 200 MA, up 0.12%, so there may be some support here after all.  We also just crossed above the pivot, so I'd expect the euro to continue higher on Monday.  That squares with my expectation that the dollar will have trouble advancing.

Transportation: The trans are suggesting a move lower, having dropped 0.55% on Friday to the Dow's 0.02% gain.  The red harami closed just outside the rising RTC and the indicators are slowly slipping off overbought, so there's some suggestion of continued 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        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July       5      1      0           2        0.875    447

     And the winner is...

We're now seeing a bunch of reversal warning dojis on the charts tonight, but those haven't been panning out at all well lately, so we'd have to wait for confirmation on Monday.  But with the weekly charts continuing to look strong, the futures guiding higher, and some retail sales numbers coming out which I'm thinking could well be BTE, the only logical call here is for Monday higher.  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 remain short at 1643.00 and take even more more heat.