Friday higher

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

• Friday higher, low confidence..
  
• ES pivot 1691.921691.92.  Holding above is bullish.
• Next week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going long at 1695.00.

Recap

Well Washington tried to dump some cold water on Thursday's rally but the Dow managed to finished 55 points higher anyway.  This has some interesting implications for the technicals, so read on.

The technicals (daily)

The Dow: The Dow's 55 point move up on Thursday wasn't that dramatic but it was enough to exit the descending RTC for a bullish setup.  Because the channel is so steep, we'd have to close below 15,122 on Friday to not get a bullish trigger, something that seems unlikely.  Also, the stochastic is now clearly moving into position for a bullish crossover, either Friday or Monday by the looks of it.  So this chart is now looking bottomy.

The VIX:  What the heck's going on here?  Once again, the VIX traded in a positive correlation with the market on Thursday, gaining 0.36%, exactly the same as the Dow.  However, the candle was positioned largely below Wednesday's and the stochastic is just about to form a bearish crossover.  And of course, once again, the 200 day MA acted as a roof on the VIX so it's looking like there's more downside to come.

Market index futures: Tonight the futures are mixed at 1:11 AM EDT with ES down by 0.01% but NQ up 0.08% and YM up 0.09%.  On Thursday ES retraced all of Wednesday's losses  and that was enough to exit its descending RTC for a bullish setup.  The indicators are now officially oversold and the stochastic is within a hair of a bullish crossover.  So for the first time in five days, this chart is looking positive.

ES daily pivot: Tonight the pivot rises from 1688.42  to 1691.92.  Like last night we are very close to the new pivot, only tonight we're above it so this indicator is now bullish, but just barely.  It won't take much to slip below the pivot so I'll be watching this closely on Friday.

Dollar index: The dollar remained in a nervous little trading range for the sixth day in a row on Thursday.  We got a bullish RTC exit and the indicators continue to rise off oversold but the dollar continues to have trouble getting anything going.  So my best guess is for just more sideways action here on Friday.

Euro: On Thursday the euro gave up most of Wednesday's gains in a move that dropped it back into its descending RTC, thus canceling the bullish setup.  The overnight is just wandering but the bias now seems to be negative again.

Transportation: Unlike the Dow, the trans' gain on Thursday wasn't enough to exit its descending RTC, but it did provide a bullish harami candle.  So we have at least a reversal warning, but the bull case isn't as strong here as it is for the Dow.


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    11      3      6           2        0.813    687
September  7      3      3           3        0.769    356

     And the winner is...

After some faint stirrings of a reversal last night, I'm now getting some more solid indications that the market is ready to move higher.  The NYSE A/D line has swung positive again and the SPX Hi-Lo index has also moved higher.  And last but not least, Dr. Copper exited his own descending RTC and so looks ready to move higher too.  So all signs seem to point to the logical conclusion that we will close Friday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we go long at 1695.00, having found what looks like a trend change.

Thursday higher if ES pivot holds

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

• Thursday higher only if ES stays above its pivot, else lower..
  
• ES pivot 1688.42.  Breaking above would be bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well it turns out that ES made three attempts to break above the pivot on Wednesday, around 3 AM, 9 AM, and finally 11 AM.  And after those three strikes, it was out and we finished the day lower.  So the losing streak is now extended to five, the most so far this year.  Will Thursday make it six?  The charts just might have something to say about that, if you ask nice.

The technicals (daily)

The Dow: On Wednesday the Dow remained in its falling RTC as the indicators approach oversold.  The stochastic %K line began flattening out suggesting a bullish crossover is in the works, maybe i a few days.  But for now this picture remains bearish.

The VIX:  The VIX continues to act peculiarly, falling 0.50% even as the Dow was down 0.40%.  But while the latter is in a steep descending RTC, the VIX just continues to consolidate around 14.15.  It took another stab at its 200 day MA on Wednesday and this was rejected again.  So the VIX continues to look for its mojo as it seems unable to get anything going here.  I don't expect much different on Thursday.

Market index futures: Tonight all three futures are finally higher at 12:39 AM EDT with ES up by 0.13%.  ES has been in a very steep (Pearson's = 0.992) descending RTC for five days now, so this move higher in the overnight is significant as it is forming a bullish RTC setup.  The indicators are also now close to oversold ad the stochastic has gone quite low so a bullish crossover may be in the works in a day or two.  I definitely would not be shorting ES right now. 

ES, 5 min. bars

ES daily pivot: Tonight the pivot falls from 1693.67  to 1688.42.  We were below the old pivot most of Wednesday and had a shot at breaking above right at midnight, but instead ES caromed right off the new pivot like a Minnesota Fats bank shot.  This is worth a picture - check this out.  But, as I write this, ES seems to be showing some interest in taking another look at the pivot.  A break above would be bullish but for now it remains bearish.



Dollar index: On Wednesday the dollar completed a bearish evening star by gapping down 0.31%.  But with fresh support just below and indicators remaining oversold, it's not clear how much downside is available.  While this pattern is bearish, I'd take this particular instantiation of it with a grain of salt..

Euro: Ah, that tricky euro fooled me.  It looked set to go lower on Wednesday but instead put in a great big bullish engulfing marubozu to end at 1.3525, right back in the middle of late last week's range.  The gain was big enough in fact to jump out of the descending RTC for a bullish setup.  But the indicators remain pretty overbought so it's not clear how much upside is left here.

Transportation: The trans continued lower on Wednesday but even after four down days, they remain overbought, though now only by a little.  There's a modicum of support just below us around 6590 but I'm not sure that will hold on Thursday as this chart continues to look bearish.

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   16/31  13/28

 32  8/5        46         27        +      +   1710   16/32  13/29

 33  8/12       32         41        -      -   1691   17/33  14/30

 34  8/19       23         54        -      -   1656   17/34  14/31

 35  8/26       23         50        -      -   1664   17/35  14/32

 36  9/3        21         54        -      -   1633

 37  9/9        35         30        +      +   1655

 38  9/16       40         28        +      +   1688

 39 9/23        52         36        +      +   1710  

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 once again we were both wrong.  Therefore we continue the year with an accuracy of 17  for 35, or 49%.   The poll as a whole drops to 14 for 32 or 44% - it continues to be a tough year for the poll so far.


This week I voted bullish again for the third week in a row.  And I had some new company as the bullish fraction of the poll rose to 52%.  This ties the record, set way back on January 14th for bullish sentiment this year.  And point to note - back then, the Dow  then went on a two week tear straight up.  Oddly enough, bearish sentiment also rose this week, and by almost as much, to 36%.


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    11      3      6           2        0.813    687
September  7      3      3           2        0.750    356

     And the winner is...

The charts remain pretty bearish tonight with the exception of the futures.  Also, Thursday is historically a fairly bullish day in an otherwise poor week.  However the SPX Hi-Lo index at 93 isn't ready to signal a rally and the NYAD line did not follow through on Tuesday's gains.  Further however, in the time it took me to write this paragraph, ES has just broken above its pivot so it looks like another conditional call is in order.  If ES can hang onto this and remain above its pivot by mid-morning Thursday we'll close higher, else lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside once again  waiting for the next trend change.

Wednesday higher only if ES pivot crossed

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

• Wednesday lower, medium confidence.
  
• ES pivot 1693.67.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I'll readily admit I was somewhat surprised to see the Dow higher when I got up this morning at the crack of 11 AM.  But I was vindicated by the close when we finished with a 67 point loss thus saving my call for a lower close.  Now we move on to Wednesday.

The technicals (daily)

The Dow: The Dow remains in its latest falling RTC and the indicators continue their match towards oversold but we're not there yet.  So with no nearby support, this chart still looks bearish.

The VIX:  Monday's inverted hammer was confirmed on Tuesday as resistance at the 200 day MA proved impossible to beat.  The net result was another strange day in which both the markets and the VIX were down.  But that's the third time in two weeks this has happened - odd.  In any case, Tuesday's little red spinning top indicates indecision.  Combined with indicators right at the midpoint between overbought and oversold and this one is too tough to call.

Market index futures: Tonight the futures are mixed at 12:43 AM EDT with ES down by 0.03%, YM down just 0.01% but NQ up 0.11%..  After a two black crows pattern, ES on Tuesday pulled off a star signaling that the bears may be running out of, um, whatever it is bears run on - berries?  And the overnight candle is forming as a doji too.  Meanwhile the indicators continue to fall and the stochastic looks to be within a few days of a bullish crossover.  But not just yet.  I'd expect to see some sort of bottoming process here on Wednesday.

ES daily pivot: Tonight the pivot dips from 1696.58  to 1693.67.  Once again, we remain below the new pivot, even with this drop.  We are however now within two points so that puts the pivot in play.  But for the moment, it remains bearish.

Dollar index: After Monday's bullish RTC trigger, the dollar gained 0.15% on Tuesday but did it on a star, so we can't really call this a new uptrend.  We may be in for some wandering around current levels for a day or two..

Euro: On the other hand, the euro is in a much more clearly defined descending RTC now, down three days in a row and continuing lower in the overnight.  Indicators remain overbought but have peaked and the bearish stochastic crossover is complete, so I'd say we're not done going lower here.

Transportation: The trans put in a doji on Tuesday but surprised me by actually finishing up just a tad.  But with the indicators still overbought and some downward momentum established, I don't think we're ready for a move higher here just yet.


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    11      3      6           2        0.813    687
September  7      3      3           1        0.727    356
 
     And the winner is...

Tonight I'm seeing a bunch of indecision in the charts as the forces that have driven us lower for the past few days seem to be dissipating.  I hate these sorts of falling-knife situations so I'm just going to make a conditional call: if ES can break over its pivot at 1693.67 by mid-morning Wednesday, we'll close higher.  If not, we close lower once again.  Let me add that the NYSE A/D line turned positive again on Tuesday, further weakening the bears' case.

ES Fantasy Trader

Portfolio stats: the account now rises to $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside waiting for the next trend change.

Tuesday lower

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

• Tuesday lower, medium confidence.
  
• ES pivot 1696.58.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1695.50.

Recap

Monday was a good example of why the futures don't always predict, well, the future.  They were up last night at this late hour but we closed lower anyway, a move predicted on all the other charts.  So that worked out OK.  Now we move on to Tuesday.  Will the traditional September funk finally assert itself?  Let's take a look.

The technicals (daily)

The Dow: The Dow just continued lower form where it left off on Friday, dropping another 50 points on Monday for a bearish RTC trigger.  It was enough to finally bring the indicators off overbought as they cycle back to oversold.  And we now have a new descending RTC so this chart continues to look bearish.

The VIX:  Last night I wrote "we could finally see a move higher on Monday" and did we ever.  The VIX put in a 9% gap-up pop that tested its 200 day MA intraday to end with an inverted hammer.  So now we have a reversal candle, a big unfilled gap and some resistance close above.  But the indicators aren't supporting a move lower so we might see another test of the 200 MA on Tuesday.

Market index futures: Tonight all three futures are lower at 12:31 AM EDT with ES down by 0.16%.  Monday handed us a two black crows pattern and a bearish RTC setup.  The overnight is following lower so that would make it a bearish trigger unless we can close above 1715 on Tuesday which seems unlikely.  The indicators continue their march from overbought to oversold and with support at 1697 broken, this chart remains firmly bearish.

ES daily pivot: Tonight the pivot drops from 1707.75  to 1696.58.  But that drop wasn't enough to bring ES back above the new pivot, so this metric remains bearish.  Indeed, ES is showing no inclination to mount an assault on the pivot.

Dollar index: The dollar is now congesting around the bottom of last Wednesday' big dump.  But with a small gain on Monday we got a bullish RTC trigger suggesting the month-long downtrend is over.  With highly oversold indicators, I'm expecting a move higher next,.

Euro: Last night I wrote "This chart is looking toppy".  And on Monday we got the break with a bearish engulfing candle that also qualified for a bearish RTC trigger while peeling away from the upper BB.  Indicators remain highly overbought so this chart continues to look weak.

Transportation: Last night I wrote "this one's looking lower Monday" and so it was, down another 0.61% on a bearish RTC trigger.  And even that wasn't enough to bring the indicators out of overbought.  With support at 6667 cracked, this one continues to look bearish.


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    11      3      6           2        0.813    687
September  6      3      3           1        0.700    289

     And the winner is...

All the bearish indications from last night remain in play tonight, only more so.  Being as I see nothing bullish on any chart, the only logical all is for Tuesday lower.

ES Fantasy Trader




Well patience paid off once again as we managed to turn an ugly Fed-fueled loss on this short trade into a modest three point profit after covering mid-day Monday.
.
Portfolio stats: the account now rises to $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside waiting for the next trend change.

Monday lower

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

• Monday lower, low confidence.
  
• ES pivot 1707.75.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1695.50.

Recap

Well I guess the technicals trumped last Friday's history of being positive, with a 185 point dump in the Dow resolving the uncertainty in a big way.  Gotta love those crazy op-ex days.  And big moves mean big changes, so let's get right to them as we run down the charts for Monday.

The technicals (daily)

The Dow: Friday's 1.19% move was the Dow's biggest loss since August 15th.  But more importantly, it dropped it right out of a steeply rising RTC for a bearish setup.  And as might be expected, it also formed a bearish stochastic crossover and drove the indicators firmly off their overbought peak.  So this chart now is looking firmly bearish.

The VIX:  The VIX continued its weirdness on Friday.  I don't know it this was related to op-ex or not, but the VIX was down, slightly, even as the rest of the market was down.  However, the candle was a hammer that just touched the lower BB which is a good combination for a reversal, so we could finally see a move higher on Monday.

Market index futures: Tonight all three futures are higher at 12:43 AM EDT with ES up by 0.12%.  Unlike some other charts, Friday's drop in ES did not take it outside its rising RTC and the small gain in the Sunday overnight is enough to just keep us inside it, barely.  Nevertheless, the indicators continue falling from overbought so this chart continues to look bearish.

ES daily pivot: Tonight the pivot drops from 1719.17  to 1707.75  That still leaves ES below the new pivot, but only by 3 and a half points, putting the pivot in play.  While it remains bearish at this point, I'll be watching for any sign of a break above the pivot which would be bullish.

Dollar index: After a spinning top Thursday, the dollar put in a star on Friday for a small gain that took it out of its descending RTC for a bullish setup.  So this downtrend may be nearing its end.

Euro: Same deal with the euro - two reversal candles and a rising RTC exit for a bearish setup suggest that its uptrend may be over.  This chart is looking toppy.

Transportation: The trans only dropped half as much as the Dow on Friday but it was still enough to exit the rising RTC for a bearish setup.  With no support til 6671 and indicators continuing to come off overbought, this one's looking lower 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    11      3      6           2        0.813    687
September  5      3      3           1        0.667    239
     And the winner is...

There's no economic news coming out Monday and the SPX Hi-Lo index remains stuck on 100, not the sort of thing presaging a big sell-off.  And the A/D line is closer to indicating a bottom than a top.  However, ominously the Morningstar Market Fair Value Index hit 1.05 on Thursday, matching its previous high for the year on May 20th.  And that was just before a long decline as you may recall.

So much as I dislike going against the futures, which are up at the moment, the preponderance of evidence seems to come down in favor of the bears on Monday, therefore I'm calling Monday lower.

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 remain short at 1695.50.