Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1696.17.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

So after a slight six session sag, the Dow put a definitive end to it on Thursday with a 128 point pop right out the gate to close at yet another record high.  Is the air getting kind of thin at these altitudes or is Mr. Market getting ready to go on oxygen as he climbs clear through the stratosphere?  You don't need an X-15 to answer that one - just some good old reliable charts.  So fasten your seat belts - it's going to be a bumpy month.

The technicals (daily)

The Dow: Huh - last night I wrote "this chart just looks vaguely bearish".  Gee, I'm glad I added "vaguely" because Thursday's big green marubozu smashed right through last week's resistance around 15,600.  It also exited the descending RTC in a big way for a bullish setup, gave us a bullish stochastic crossover, and turned the other indicators upward.  With a record close, the only resistance now comes from the upper BB at 15,715.  And with the indicators still a ways from overbought, I think more upside might be possible here on Friday.

The VIX:  At least I got this much right when I wrote "I'm doubtful we'll see a significantly higher VIX any time soon" last night.  On Thursday the VIX dropped 3.79% to close back under 13 on a gap-down inverted hammer that set off a bearish stochastic crossover and sent RSI moving down.  That all spells continued lower for Friday.  Next support isn't til 12.43.

Market index futures: Tonight all three futures are higher once again at 1:27 AM EDT with ES up by 0.10%.  Last night I wrote "this chart is looking pretty positive to me tonight" and it did not disappoint, crashing through resistance at 1693 to close at 1700.25.  Our bullish stochastic crossover is complete but the indicators are now entering overbought territory (though this year we've seen them remain that way for long periods of time before the market moved lower).  So with the only resistance now the upper BB at 1710.7, I expect ES to take a look at that level before we hit the traditionally down month of September.

ES daily pivot: Tonight the pivot jumps from 1684.92  to 1696.17.  We were considerably above the old number and remain five points above the new pivot, enough to remain bullish.

Dollar index: The dollar continued its wacky ways on Thursday.  After a big bearish candle on Wednesday, it put in a big 1.09% gain that vaulted it right back over its 200 day MA, the fifth such crossing in as many days.  I'm not even going to hazard a guess as to where this currency may be headed on Friday..

Euro: At least I got the euro right last night when I said "I just have to believe that the euro is going lower on Thursday" as it fell throughout the day to close at 1.3216.    It's continuing a tad lower in the overnight but that's enough for a bearish RTC exit so I'm going to say the euro goes lower again on Friday.

Transportation: Last night I wrote here "I'm thinking the trans go higher from here on Thursday."  And holy moly did they ever - up 3.22% for their biggest gain of the year, closing above their upper BB at 6642 on increased volume.  That also caused a bullish stochastic crossover.  But even with all that the indicators aren't yet overbought.  However, I now have two concerns - one is having hit the upper BB and two is that we're now way over-extended from the pivot, at 6464.  Still there seems to be a lot of gas in this tank so one more up day is not out of the question.

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      10      2      4           4        0.875    486
August     1      0      0           0        1.000    128

     And the winner is...

Interesting move on Thursday.  We were up big, but not really all that big.  It seemed bigger just because the recent action has been pretty lackluster.  So was it big enough to trigger some retracement?  I'm not so sure.  I see two competing forces at work tonight.  The charts are generally bullish but we've got a Friday coming up and there's always an incentive there for some profit-taking before the weekend, particularly given the first week of August's historically weak track record.  This could be amplified by the fact that we hit record highs on Thursday.  Buy low, sell high, eh?

Nonetheless, I'm not happy calling the market lower in the absence of any clear bearish technical signs, so here's what I think: we will see Friday higher, but less than Thursday.  We could possibly see some sort of topping candle in the process.  Happy weekend and see you again Sunday 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 remain short at 1643.00.  We're in too deep to ditch this trade now.  I think it would be a mistake to dump it just when the market hits a record high.

Thursday higher

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

• Thursday higher, low confidence.
  
• ES pivot 1683.50.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

So on Wednesday the market was holding its breath until the Big Bernank spoke.  Then then market was up, then it was down, then it was up some more, etc., etc., until by the end of the day, we were down all of 21 points on the Dow.  Big whoop.  After all this anticipation, we're pretty much left right back where we started.  Is there any further guidance in the charts tonight/  Beats me - let's find out.

The technicals (daily)

The Dow: OK, so now we've got an amazing nine reversal candles in a row on the Dow.  None of which have amounted to a hill of beans.  The3 most we can say is that the Dow is now pretty clearly in a shallow downtrend - descending RTC with a Pearson's of 0.890.  The indicators also continue their decline, now off overbought.  Wednesday's candle was an impressive inverted hammer, possibly distorted due to the Fed news.  All we can really deduce from that is that we remain, ahem in a shallow downtrend.  So this chart just looks vaguely bearish tonight.

The VIX:  And on the VIX we now have three reversal candles in a row, Wednesday's being a spinning top on a minor 0.45% gain.  And although the indicators are now overbought, I suspect none of this means a damn thing.  FWIW- VVIX is headed lower, so I'm doubtful we'll see a significantly higher VIX any time soon.

Market index futures: Tonight all three futures are higher at 1:00 AM EDT with ES up by a significant 0.49%.  Wednesday saw a big inverted hammer, however, this was largely driven by the Fed announcement so I'm not reading too much into it.  The overnight gain on the other hand, is currently breaking above recent resistance at 1688.  This also distances us somewhat from the most recent descending RTC and also caused RSI to briefly dip into oversold territory.  And notably, the stochastic has just formed a sweeping rounded bottom bullish crossover.  So this chart is looking pretty positive to me tonight.

ES daily pivot: Tonight the pivot inches up once again from 1683.50  to 1684.92.  And for the third day in a row we have a similar pattern  of ES drifting higher after the close to keep us above the new pivot.  In fact, the spread is increasing a bit so this remains a bullish sign.

Dollar index: After breaking over the 200 day MA on Tuesday, the dollar broke right back down again on Wednesday, losing 0.46% on a big bearish engulfing pattern and its largest move since June 19th.  So I was wrong about this one and now it looks more like it's going lower again on Thursday.

Euro: And of course I was wrong about the euro too, as instead of moving lower it took a big pop on Wednesday to close at 1.3339, its highest level of the month.  That negates the previous three dojis in a row.  However, the euro is coming back down big time in the overnight, now 0.47% lower.  The larger uptrend remains intact, however.  But with indicators continuing to come off overbought, I just have to believe that the euro is going lower on Thursday.

Transportation: Here's a divergence - the Dow was down 0.14% on Wednesday but the trans were up a non-trivial 0.62%.  This was also the bullish trigger off the descending RTC.  And with indicators now having bottomed on oversold, I'm thinking the trans go higher from 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       6      5      6           0        0.545    543
July      10      2      4           4        0.875    486

     And the winner is...

Thursday is the first day of a new month, and while August is not particularly strong, this effect cannot be ignored.  Also notable is the fact that the market basically shrugged off Wednesday's Fed announcement.  The charts as a whole seem to be looking bullish tonight, perhaps in anticipation of positive jobs and ISM numbers on Thursday, with the futures leading the way higher.  This is not the sort of action I want to stand in front of so I am going to have 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 remain short at 1643.00.  I'm getting ready to pull the plug on this loser.

Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1683.50.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

Well can you blame me for calling Tuesday uncertain?  The Dow finished down all of 1.38 points while the SPX was up 0.63 points.  There's no way to make a rational call on that sort of unchangedness.  So when will these summer doldrums end?  Let's see if the charts have something to say about that.

The technicals (daily)

The Dow: And the dojis just keep coming.  We now have eight reversal warning candle sin a row for the Dow.  And none of them have amounted to anything.  The Dow is sagging slightly over that timeframe but it's nothing to write home about.  Tuesday's candle was a spinning top - ho hum.  Been there, seen that.  Clearly, Mr. Market is just waiting to hear from the Fed.  And so are we.

The VIX:  While it didn't finish lower on Tuesday as I had thought, in fact ending exactly dead even, the VIX nonetheless put in a tall inverted hammer that was good for a bearish RTC trigger.  The indicators are also now closing in on overbought, so I'll claim again that it looks like a lower VIX for Wednesday.

Market index futures: Tonight all three futures are higher at 12:50 AM EDT with ES up by 0.07%.  With yet another reversal candle, this one a green spinning top on Tuesday, ES continues to hunt for direction.   Tuesday's action was entirely outside the descending RTC though so that's a bullish trigger.

ES daily pivot: Tonight the pivot inches up again from 1682.33  to 1683.50.  This chart is almost a rerun of last night's - a break above the pivot before the close and then continuing to drift higher.  That leaves us above the new pivot and is therefore bullish.

Dollar index: The dollar gained 0.19% on Tuesday to break back above its 200 day MA.  With indicators still oversold, this chart now looks fairly bullish to me.

Euro: Meanwhile, the euro put in a really long legged star on Tuesday to close virtually unchanged.  But the overnight is continuing lower and with indicators having now begun to move off overbought levels, this one could close lower on Wednesday.  And that squares with my call for a higher dollar.

Transportation: Interestingly, after Monday's tall red marubozu, the trans put in a 0.32% gain on Tuesday with a spinning top on a day the Dow was down 0.01%.  This was also a bullish RTC trigger.  And with the indicators now quite oversold and the stochastic just about ready to make a bullish crossover, I'd lay money on Wednesday going 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
June       6      5      6           0        0.545    543
July      10      2      3           4        0.875    486

     And the winner is...

The charts are looking fairly bullish tonight.  Ordinarily, I would go ahead and call Wednesday higher on this alone but given that this is a Fed day, my policy is to always call those uncertain as I have no way of knowing what Uncle Ben may be planning.  So we will simply sit on the sidelines tonight and wait for the pronouncements from on high.  And judging from the recent string of low-volume dojis on the charts, the market in general is doing the same.  Technically at least, this market looks like it's wanting to move higher though.

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 at the stage of not even wanting to look at this trade anymore.

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1682.33 .  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

My conditional call for Monday worked again as ES briefly dipped below its pivot at 4 AM and 5 AM before making a final attack at 10:15 that finally succeeded at 11:05 - and then we closed lower, QED.  So that's that.  But in this game you're only as good as your last call, so let's make another one.  So it's back to the charts we trudge once again for Tuesday's direction.

The technicals (daily)

The Dow: On Monday the Dow dropped 37 points but that still only qualified as more sideways action.  FWIW, we're now well out of the rising RTC and still oversold, so this chart is looking more bearish than it has in six days.

The VIX:  And what of the all-important VIX?  Well on a down day for the market it rose as expected, up a decent 5.27%.  But it did so on an inverted hammer that closed outside the rising RTC for a bearish setup.  Therefore, despite indicators only recently off oversold I have to think the3 VIX might well be headed back down on Tuesday.  VVIX supports this idea, with the mother of all dark cloud covers on Monday.

Market index futures: Tonight all three futures are higher at 1:22 AM EDT with ES up by 0.13%.  Nothing much new on this chart.  ES continues to make intraday stabs lower and they continue to be rejected.  Meanwhile this is driving the indicators closer to oversold and Monday's candle exited the descending RTC for a bullish setup.  So overall, this chart is now looking more bullish than last night.

ES daily pivot: Tonight the pivot inches up from 1682.00  to 1682.33.  After breaking above at the close on Monday we remain above the new pivot so that is bullish.

Dollar index: The dollar put in a small red candle on Monday but because it opened higher, the net result was zip - 0.00% change.  Hovering below the 200 day MA as we are but with oversold indicators, this chart remains too tough to call.  Maybe the euro can provide us with greater clarity....

Euro: On Monday the euro fell out of its rising RTC for a bearish setup and the overnight continues a bit lower though it's been rallying since 11:30 PM.  Still with resistance at the pivot and indicators remaining overbought, this chart may well move lower on Tuesday.

Transportation: Lest anyone accuse me of only tooting my own horn, I will mention that last night I wrote "I'd be looking for further advances on Monday".   Bzzzt!  The trans dropped a big 1.10% on an ugly red marubozu that dropped us right back into the descending RTC.  So much for oversold indicators.  With a candle like this, the trend remains lower.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

  1  12/31      40         48        -      -   1402   0/1

  2  1/7        47         30        +      +   1466   1/2

  3  1/14       52         15        +      +   1472   2/3

  4  1/22       50         21        +      +   1486   3/4

  5  1/28       44         26        +      +   1503   4/5

  6  2/5        40         36        +      +   1513   5/6

  7  2/11       43         25        +      +   1518   6/7

  8  2/19       21         43        -      -   1520   6/8

  9  2/25       30         52        -      -   1516   6/9

 10  3/4        29         39        -      -   1518   6/10

 11  3/11       41         26        +      +   1551   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13    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   14/26  11/23

 27  7/1        25         42        -      -   1606   14/27  11/24

 28  7/8        42         29        +      +   1632

 29  7/15       48         22        +      +   1680

 30  7/22       42         19        +      +   1692 

 31  7/29       39         17        +      +   1692 

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 majority of the poll voted bearish four weeks ago, so we were all wrong.  Therefore we  continue the year with an accuracy of 14  for 27, or 52%.   The poll as a whole drops to 11 for 24 or 46%.  We are now, embarrassingly enough, beyond coin-flipping territory as far as accuracy goes.

This week we see that little has changed.  Both bullish and bearish sentiment dropped a few points as the head-scratchers decamped for the sidelines.  Personally, I'm sticking with the bulls as I still see nothing on either the weekly or monthly charts suggesting that a trend change might be at hand.  It makes me nervous to say that after such a long rally but it is what it is.


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      10      2      2           4        0.875    486

     And the winner is...

Another mixed picture.  We have the futures guiding higher and the VIX seeming to stall out, but the Dow and the trans are looking lower and we have little guidance from the currencies.  And with some more Fed pronouncements coming soon, this one is just too tricky to call tonight so well have to settle for a Tuesday uncertain.

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 at the stage of not even wanting to look at this trade anymore.

Monday higher if ES pivot holds

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

• Monday higher only if ES pivot holds, else lower..
  
• ES pivot 1682.00 .  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1643.00.

Recap

It may not be the greatest comeback since Lazarus, but it sure was close.  On Friday the Dow opened down big time.  Then it got worse, hitting a low of 15,405 just before 11 AM.  Then the little market that could started chugging higher, and higher ... and higher finally ending 154 points up  from the lows to finish the day up all of three points.  That's pretty impressive in my book.  And it painted an interesting candle.  So without further ado, let's take a closer look and see where Monday might be headed.

The technicals (daily)

The Dow: We just detailed the Dow's gyrations last Friday so all that's left is to discuss the candle -  a giant hanging man, in fact the second in a row with an even bigger tail.  And oddly enough, the Dow has been putting in lower intraday lows for four days in a row now even as the closing price remains essentially unchanged.  This is quite unusual.  I scanned the daily chart back two years and was unable to find anything even remotely close to this.  While some interpret this as bearish, I note that Friday gave us a bullish descending RTC exit and a narrowing of the stochastic spread that precedes a bullish crossover.  However, the indicators remain a long way from oversold so this chart picture is mixed at best.  We'll just have to see how it resolves on Monday.

The VIX:  Last Thursday's dark cloud cover on the VIX paid off on Friday with a 1.93% decline and an exit from the rising RTC for a bearish setup.  Indicators remain fairly low but it looks now like the rally attempt from last week has been quashed.  This does not look like a chart getting ready to run.

Market index futures: Tonight all three futures are lower at 12:51 AM EDT with ES down by 0.21%.  ES has now given us five daily reversal candles in a row without really reversing direction.  And while the overnight appears to be guiding lower, the pattern so often this year has been for overnight losses to turn into gains the next day, so I'm not putting too much faith in this.  Like the Dow, this chart is far from clear.

ES daily pivot: Tonight the pivot inches up from 1680.75  to 1682.00 even.   We were above the old number most of Friday afternoon and remain above the new pivot, but now  by only a point and a quarter.  With ES drifting lower in the overnight, that puts the pivot in play.  How ES behaves around the pivot in the wee hours of Monday morning will dictate the rest of the day.

Dollar index: The dollar continued its zig-zag trek lower on Friday with a gap-down loss of 0.35% that .punched under the 200 day MA.  With a lower BB rapidly falling away, this bodes ill for any move higher on Monday.

Euro: Last Thursday night I wrote "odds favor a higher euro on Friday" and sure enough we got a nice gap up doji star to close at1.3279 and keep us inside the rising RTC.  The Sunday overnight is a different story though, as the euro has given up early gains to return to unchanged.  It is now testing the pivot as I write.  If we bounce off, the euro goes higher Monday but if we break under, watch for a lower close.

Transportation: Last Thursday night I wrote "I'm now more confident that we'll see a move higher here on Friday".  And that confidence paid off with a 0.53% advance that confirmed the tall doji star.  It also moved the stochastic close to forming a bullish crossover and pushed us just out of the descending RTC for a bullish setup.  I'd be looking for further advances 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      10      2      2           3        0.867    486

     And the winner is...

We have sort of a mixed picture tonight with a number of bullish signs but not terribly convincing.  Therefore I'm going to make another conditional call: if ES manages to stay above its pivot by mid-morning Monday, we'll close higher.  However, if we fall convincingly through the pivot, then watch for a lower close.

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 at the stage of not even wanting to look at this trade anymore.