Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1648.00 ..  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well that was odd, with the Nasdaq "flash freeze" dominating the news all afternoon and urgent pop-up windows from Interactive Brokers beeping at me every five minutes about everything that was down.  Whatever it was, it serves me right for second guessing my bullish bias from Wednesday.  Turns out I wasn't wrong, just a day early as all three major averages closed higher on Thursday with the much-maligned Nasdaq turning in the best performance.  I'm not going to engage in any conspiracy theories here because all we care about is what's coming next.  So we march on to Friday.  Ooh-rah!

The technicals (daily)

The Dow: On Thursday, the Dow did indeed open lower as I had been expecting.  But then it spent the rest of the day, wiggling higher - as I had not been expecting.  That's what I get for not sticking to my first prediction based on the SPX Hi-Lo index that we were due for a rally.  And Thursday's candle was a bullish harami that saw the first rise in RSI in days.  This alone looks like a good bet for higher on Friday.

The VIX:  Last night I wrote "if the technicals can reassert themselves, the VIX is looking lower for Thursday".  Well they did and it did, with a big 6.15% gap down to complete the bearish evening star.  In the process, the VIX touched its 200 day MA intraday but with some good downward pressure now in the form of a bearish pattern and bearish stochastic crossover with indicators that remain quite overbought, I'm looking for more downside on Friday.

Market index futures: All three futures are higher at 1:17 AM EDT with ES up by 0.17%.  Thursday saw ES put in a big bullish engulfing candle that ran outside the descending RTC for a bullish setup and a good indication that the downtrend is over.  Indicators remain oversold and the bullish stochastic crossover is complete.  With continued upside it he overnight, this chart looks ready for higher again on Friday.

One interesting point - it looks like we now have a developing megaphone pattern in ES.  Since this one was entered from above odds are 75% that it will exit higher.

ES daily pivot: Tonight the pivot rises from 1641.75 to 1648.00 even.  We remain well above the new pivot so this indicator is bullish

Dollar index: On Thursday the dollar gapped up for a 0.38% gain on a red handing man.  However, with a completed bullish stochastic crossover and indicators rising, it looks like the dollar could go higher again on Friday..

Euro: Last night I wrote "I'd say the euro's going lower on Thursday", and it's good I said that because it did - with a gap-down long-legged doji that landed right on the rising RTC edge for a bearish setup.  We also got a completed bearish stochastic crossover and the overnight is following lower, now off another 0.10%, so this all favors continued lower on Friday.

Transportation: After Wednesday's bullish RTC trigger, we got the payoff on Thursday with a big 1.98% jump for the trans.  This marubozu clearly ends the descending RTC and the consolidation that led us out of it.  There's no resistance til 6511 so there's still room to run here 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      10      2      4           4        0.875    486
August     9      1      5           1        0.909    565

     And the winner is...

The general tenor of the charts is bullish tonight, so logic dictates that I call Friday higher.  Have a great weekend and see you again Sunday night.

ES Fantasy Trader

Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we continue to stand aside - while I do think we're going higher from here, I'd prefer to see a more clear turn-around.

Thursday lower

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

• Thursday lower, low confidence.
  
• ES pivot 1641.75..  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well after some usual Fed-induced gyrations, M.r Market finally he didn't like the Fed minutes, no sirree, not at all and the Dow extended its losing streak to six, a number not seen since, well quite some time now, down another 105 points.  So much for my reading of a higher bias.  This was a perfect example of why I automatically call all Fed days as "uncertain".

The technicals (daily)

The Dow: The Dow continued its decline on Wednesday, locked to its descending RTC like a railroad track and giving up the 15K support line in the process, not to mention support at 14,911.  Next support is nearby at 14,860 and the indicators are quite oversold now, but when we get into these waterfall declines that continue to creep down the lower BB, they can go on for a while.  Nothing bullish on this chart tonight, sad to say.

The VIX:  On Wednesday the VIX completely ignored three good reversal warnings, and thanks to the Fed, jumped 6.91% on a big gap-up evening star.  The VIX has now been closing at or even above its upper BB for five straight days now, a pretty unusual event and reminiscent of the latter part of May.  VVIX is in a similar position though, making me think that what goes up must come down.  Technically, anyway.  And if the technicals can reassert themselves, the VIX is looking lower for Thursday.

Market index futures: Tonight all three futures are lower at 1:12 AM EDT with ES down by 0.12%.  Wednesday featured yet another ugly red candle to keep us in a steep (Pearson's = 0.933) descending RTC.  But one thing about a steep channel is that it doesn't take much of a sideways move to leave it and ES is on the edge right now.  The indicators are all more oversold now than they've been since last November, but with no positive overnight action and no reversal candle in sight, I can't bring myself to believe the selling is over just yet.

ES daily pivot: Tonight the pivot drops from 1649.42 to 1641.75.  After spending most of Wednesday below the old number, we remain below the new pivot by a good six points, so this one remains bearish tonight.

Dollar index: The dollar continued its funny random walk lower on Thursday by gaining 0.36% on a gap-up inverted hammer. .At least I called this one correctly.  Now we've got a stochastic about to form a bullish crossover but a bearish candle, so tonight this chart is a wash.  Could go either way.

Euro: On Wednesday the euro respected its upper BB and gave back half of Wednesday's gains to close at 1.3376.  The overnight is gapping down, already off 0.24%.  That leaves it teetering on the edge of its rising RTC with a newly completed bearish crossover so I'd say the euro's going lower on Thursday.

Transportation: Interestingly, while the Dow has been nothing but DOWn lately, the trans have been consolidating in a narrow range of 6330 - 6388, alternating up ad down days for a week now.  Wednesday was down 0.60%but traded outside the descending RTC for a bullish trigger.  With oversold indicators, this is a bullish sign for the market.


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     9      0      5           1        1.000    635

     And the winner is...

Well you know how Mr. Market is.  When he goes off his meds he really gets into a funk.  And with the failure of the attempted "Prague Spring" rally on Tuesday, that sort of reinforces the subsequent downside.  The failure of the SPX Hi-Lo index (which came right back off 100 on Wednesday) is of particular concern to me.  Right now I'm casting about for bullish signs.  About all I can see are the VIX, which really looks due to move lower, and the trans which are ready to move higher.  Is that enough to overcome all the other bearish signs still lying about?  Or are those signs overdone artifacts of an overreaction to Wednesday's Fed minutes?

Hard to say, but with momentum turning lower again I'm afraid that the only logical call is for Thursday lower.  I'd love to be proven wrong, because my trading account is getting hammered here.

ES Fantasy Trader

Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we continue to stand aside, waiting on a new trend to start.

Wednesday uncertain, bias higher

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

• Wednesday uncertain pending Fed minutes but bias is higher, .
  
• ES pivot 1649.42..  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Once again, I'm glad I called Tuesday as "uncertain".  With the Dow ending down less than 8 points while the SPX ended higher by 0.38%, that's about as uncertain as it gets.  And I'll also note that I suspected we might get a bottoming day on Tuesday.  While it takes at least two days to confirm a bottom, Tuesday certainly had that feel to it.  Let's look into this in a bit more detail to see what we can scope out for Wednesday.

The technicals (daily)

The Dow: The Dow's 0.05% drop on Tuesday belies its candle - very nearly a tall bullish gravestone doji a la inverted hammer.  With RSI and the stochastic now both extremely oversold, it increases my belief that a reversal is coming soon.  Note too that momentum bottomed three days ago and has been rising ever since.

The VIX:  Last night I mentioned that the VIX was due to move lower by virtue of having hung around its upper BB too long.  And by golly it did jut that on Tuesday, down 1.26%.  Not only that, it gave us a tall hanging man, following Monday's spinning top.  And as a bonus, we got a stochastic on the verge of a bearish crossover.  So the odds now favor a move lower here on Wednesday.

Market index futures: Tonight all three futures are lower at 12:45 AM EDT with ES down by 0.17%.  On Tuesday, ES gave us a bullish piercing pattern that very nearly retraced all of Monday's losses.  And that was enough to give us a bullish stochastic crossover.  However, the overnight trade doesn't seem to be confirming any of that.  The fact that the indicators continue to be oversold suggests that ES may be basing in the 1647 area with resistance developing around 1652, suggesting some sideways action to come.

ES daily pivot: Tonight the pivot inches up from 1648.08  to 1649.42.  After threading about the old number Tuesday night, we finally broke below and are now a couple of points under the new pivot, so this indicator becomes bearish.

Dollar index: The dollar gapped down 0.40% on Tuesday with a hammer whose tail just touched the lower BB.  With a stochastic moving into position for a bullish crossover and a big gap wanting filling, this is looking like a prescription for higher on Wednesday..

Euro: Last night I wrote that there was "a symmetrical triangle developing, which would suggest the next move will be higher."  ANd so it was, with the euro posting big gains on Tuesday to finish above its upper BB at 1.3421.  With that triangle now resolved, the upper BB hit, the euro at resistance, indicators overbought and the stochastic very close to forming a bearish crossover, logic now indicates that the next move will be lower.  In the overnight so far, the euro is wandering aimlessly, basically flat.  Its failure to continue higher at this point supports the idea of a move lower.

Transportation: Once again we got some divergence in the trans, this time of the bullish flavor as we gained 0.90% to the Dow's 0.05% decline.  This also confirmed yesterday's bullish stick sandwich and took us out of the descending RTC for a bullish setup.  Indicators have now all bottomed at oversold making it look like more upside is on the way.  Also note that support has now held at 6330 for four days in a row 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.

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   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692   16/30  13/27

 31  7/29       39         17        +      +   1692 

 32  8/5        46         27        +      +   1710 

 33  8/12       32         41        -      -   1691

 34  8/19       23         54        -      -   1656

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 bullish four weeks ago, so we were both wrong.  Therefore we continue the year with an accuracy of 16  for 30, or 53%.   The poll as a whole drops to 13 for 27 or 48% but remains in coin-flipping territory as far as accuracy goes.
This week we find that bearish sentiment has now increased to the third highest level of the year, following a spate at the end of April when it, in retrospect was definitely the wrong time to be bearish.  So this might be another contrarian bullish sign, though I'll admit I remained in the bear camp this week based on some negative looking weekly and monthly candles on the SPX 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      10      2      4           4        0.875    486
August     9      0      4           1        1.000    635

     And the winner is...

This Wednesday is, for some reason, historically bullish.  However, in this case we've got Fed minutes coming out and it is my policy to automatically call any day like that as uncertain given that Fed news generally trumps all manner of technicals.  For what it's worth, I'm seeing signs now that the market may be wanting to go higher on Wednesday, assuming the Fed doesn't torpedo that idea.  I note that the SPX Hi-Lo index popped all the way back to 100 on Tuesday and the AD line hit its highest level since July 11th, both bullish signs.

So bottom line is this: Wednesday uncertain, pending Fed minutes, technical bias is higher.

ES Fantasy Trader

Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we continue to stand aside, waiting on a new trend to start.

Tuesday uncertain, bottoming possible

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

• Tuesday uncertain, bottoming possible.
  
• ES pivot 1648.08..  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

The condition for my call worked out as ES made three weak attempts to break above its pivot, one early in the wee hours of Monday morning and the last at 10:55 AM.  After that it was all over and the market ended down with the Dow losing another 71 points for its first four day losing streak of the year.  So is it over yet?  We pore over the sea of red tonight looking for clues to Tuesday.

The technicals (daily)

The Dow: The Dow on Monday looked pretty much like the Dow on Friday.  The main difference is that everything that was oversold then is even more oversold now.  RSI is down to 5.7 and the stochastic %K line is about to fall right off the chart at 3.45.  But unlike Friday, the selling only stopped on Monday because the bell rang.  All in all, this chart's looking pretty ugly right now.  We've closed below the lower BB for four days running now and the lower BB just keeps falling away.  If support at 15K breaks on Tuesday then the next line is at 14,900.  We remain in a descending RTC and I see no reversal signs here.

The VIX:  Meanwhile, the VIX fooled me by gapping up right over its 200 day MA on Monday to finish 5.08% higher.  This makes three days in a row now that it's closed above its upper BB and that's about as much as it ever does before going lower again.  The candle was also a tall hanging man, lending support to the idea of a move lower.

Market index futures: Tonight all three futures are lower at 1:27 AM EDT with ES down by 0.09%.  After four straight down days, the developing candle remains solidly inside the descending RTC and has just broken support at 1645.  While the indicators are now oversold, OBV is looking rather worrisome, declining steadily since 8/13.  There's really nothing encouraging on this chart tonight.

ES daily pivot: Tonight the pivot drops once again, from 1654.17  to 1648.08.   And once again, ES continues lower to remain below the new pivot so this one remains negative.

Dollar index: The dollar found some stability on Monday, interestingly given the continued downside in the markets, losing just 0.04%on a stubby little spinning top.  That makes two dojis in a row now but no real indication that the dollar is getting ready to attempt a retracement of Friday's big dump.  This chart is purely wait & see.

Euro: And the euro is even more indecisive, with a similar double doji but with the overnight simply continuing in the same range of 1.3333 - 1.3357.  The only real clues here is something of a symmetrical triangle developing, which would suggest the next move will be higher.

Transportation: So much for Friday's bullish piercing pattern.  On Monday the trans dropped 0.72% with a pattern that resembles a bullish stick sandwich, though not perfectly.  But since we remain in a descending RTC, it's too early to call a move higher here for Tuesday.


Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July      10      2      4           4        0.875    486
August     9      0      3           1        1.000    635

     And the winner is...

The SPX AD line continues to put in lower highs and lower lows.  And the Morningstar Market Fair Value index has been running overvalued since July 9th.  And all the charts look bearish.  There are just two bright spots - one, the VIX looks about ready to move lower, and two, the SPX Hi-Lo index appears to have bottomed last Friday at 25, its lowest level of the year by far.  It was back to 40 on Monday.  The last two times it bottomed were June 24th and February 26th, and the very next day in both cases we moved higher.  I'd be all over a bearish call were it not for these two items.

So here's the deal - I'm reluctant to go against the Hi-Lo, but there's just so much momentum to the downside lately that I also don't want to stand in front of this bus.  But it does look like the selling should be over soon.  So I'm going to call Tuesday uncertain, not because I have no idea which way the market's going, but because I'm expecting Tuesday to be a bottoming day, hammer style.  Yes, I will quite possibly live to regret it, but I'm going waaay out on a limb and calling a bottom.

ES Fantasy Trader

Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we take a break until a new trend develops.

Monday higher only if ES pivot passed

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

• Monday higher if ES pivot passed, else lower, low confidence..
  
• ES pivot 1654.17..  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

I'm glad I called Friday uncertain because it would have been tough to come out on the right side of a meager 31 point drop in the Dow.  Now that we've got all the op-ex hoopla out of the way, let's dig in to a new week and figure out which way it's going.

The technicals (daily)

The Dow: The Dow did not bounce on Friday but neither did it continue it's previous plunge posting instead a stubby little spinning top at the bottom of Thursday's big red candle.  While we remain in a downtrend, all of the indicators are now quite oversold and down to levels from which previous rallies have begun this year.

The VIX:  And the VIX had an interesting tell on Friday.  It tried, and failed to break through its 200 day MA, ending with a spinning top of its own in bearish harami position.  We now have moderately overbought indicators along with a yawning unfilled gap here.  And VVIX is similarly overbought but in addition just formed a bearish stochastic crossover.  So it seems a good possibility we could see a lower VIX on Monday.

Market index futures: Tonight all three futures are marginally lower at 12:58 AM EDT with ES down by 0.03%.  ES made a bullish inverted hammer on Friday to go with some rather oversold indicators.  So while this chart is still pretty much in falling-knife territory, there is at least a few reversal signs on the horizon.  A move higher on Monday would not be out of the question if the current slight but persistent drift lower can be reversed.

ES daily pivot: Tonight the pivot drops from 1664.00  to 1654.17.  We remain below the new pivot but by less than three points now, so the pivot is in play.    But for the time being, it remains bearish until ES can break through.

Dollar index: On Friday the dollar joined the doji club with a star positioned for a 0.11% gain on the day.  It also caused a bearish stochastic crossover though, so this chart is now seriously conflicted.  No call here..

Euro:And to the further surprise of no one, the euro made, yes, a red spinning top on Friday to put a cap on Thursday's big gains.  And the Sunday overnight seems to be confirming that, now down 0.07%.  So with the upper BB touched, the euro could move lower on Monday.

Transportation: And in a bit of bullish divergence, on Friday the trans gained 0.58% to the Dow's 0.20% decline and did it on a bullish piercing pattern.  While we remain in a descending RTC, the indicators now seem to have bottomed at oversold.  With the lower BB already touched, chances seem to favor a move higher here 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      4           4        0.875    486
August     9      0      3           0        1.000    635

     And the winner is...

We have now left the historically poor first part of August and last Thursday's big sell-off had more of the feel of a clearing of the air than the start of a cataclysm.  The bullish glimmers on the charts last Friday are starting to get a bit more distinct though they're still not crystal clear.  Therefore I'm going to hedge a bit and make a conditional call: if ES can break through its pivot in convincing fashion by no later than mid-morning Monday, we'll close the day higher, else lower.

ES Fantasy Trader

Well I finally got this monkey off my back.  I took a 13 point loss on this dog on Friday, but when you consider that I was down over $30,000 at one point, this trade ended up feeling like a winner.  At least now we can get on with our life.

Portfolio stats: the account now drops to $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we take a break until a new trend develops.

BOT    10    false    ES    SEP13 Futures     1656.00    USD    GLOBEX    AUG 16 15:10:03