Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1673.58.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains long at 1695.00.

Recap

Yowza!  I was figuring we were going higher on Thursday but I sure wasn't counting on a 323 point rocket ship from the Dow, especially since the proximate cause was only that the head clowns down at Reedling Bros. Obamnum & Boehnly apparently have agreed to put down their squirting flowers and start talking.  But hey, my account doesn't care why it went up today, only that it did. As an interesting aside, according to The Stock Trader's Almanac, this week back in 2008 the Dow lost 1874 points, its biggest drop in history.

Now let's see if we can keep climbing or will we give it all back on Friday.  The charts aren't the best predictor, but they're all we've got.

The technicals (daily)

The Dow: Holy moly - in one swell foop, on Thursday the Dow put in the mother of all green marubozus and popped out of its descending RTC for a bullish setup while confirming Wednesday's spinning top and the support we found at the 200 day MA, now a distant memory.  And even after this big gain, we're only still just off oversold on the indicators.  There's now no resistance until 15,315, we have a fresh bullish stochastic crossover, and unless there's some profit-taking Friday after such quick, easy gains, there's suddenly nothing bearish on this chart.

The VIX:  Last night I wrote "there's more downside risk than upside potential from here".   And so there was with the VIX gapping down nearly 16% in one day.  The VIX can only spend just so much time hanging around its upper BB before running out of O2 and heading back to earth.  And even this big dump only took the indicators just barely off oversold, leaving plenty of room to run lower on Friday.  VVIX shows the same thing, but even more dramatically.

Market index futures: Tonight all three futures are higher once again at 12:47 AM EDT with ES up by a modest 0.09%.  The talking heads on CNBC were moaning Thursday about "light volume" but when ES can manage to move higher at all even after such a big move as we had Thursday, there's definitely some hi-test in the tank there.  With a completed bullish stochastic crossover, a bounce off the lower BB confirming Wednesday's doji and a bullish RTC trigger, this chart now looks bullish.

ES daily pivot: Tonight the pivot rockets from 1649.00  to 1673.58.  And even with that big jump, we're still above the new pivot, quite a bullish sign indeed.

Dollar index: I'm glad I waited for confirmation on the dollar because on Thursday it did not even try to fill Wednesday's big gap up and in fact moved 0.06% higher.. But it did it on a big inverted hammer which strengthens the case for a move lower, though once again, a candle like this requires confirmation so we still can't call the dollar lower yet.

Euro: The euro did not fall on Thursday as I had expected, but it didn't make much headway either, closing at 1.3538 at the lower end of Wednesday's big drop.  The indicators continue falling towards oversold and the overnight is now up just a tad as the euro finds a measure of support in the 1.3525 neighborhood.  So now it's looking possibly higher on Friday.

Transportation: Technically, the trans on Thursday were identical to the Dow, so all the comments there hold here too.  This chart now looks bullish.


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  8      3      3           3        0.800    485
October    2      1      3           1        0.750    459

     And the winner is...

Ordinarily, I'd be wary of the day following an outsized gain like we got Thursday as there's a natural tendency for the market to at least take a breather.  But it's still possible for those gains to be extended, especially in the case where we're far from natural reversal points such as upper BB's, overbought indicators, or resistance lines.  And that's the situation right now.  It's a bit dangerous because all the headline risk is still out there but I'm going to go out on the limb and call Friday higher anyway.  I'm not expecting a big move though.  See you again Sunday night!

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 remain long at 1695.00.

Thursday higher

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

• Thursday higher, low confidence.
  
• ES pivot 1649.00 .  Holding above is bullish.
• Friday bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains long at 1695.00.

Recap

Hmm - today was one of those occasions where ES failed to break decisively above the pivot but the market closer higher anyway (though the gains were pretty puny), so that one's a miss for me.  We now move on to Thursday as the Washington DC National Fiddlers Society fiddles on, unable to even decide which key they're playing in.

The technicals (daily)

The Dow: Last night I mentioned that the Dow was "within shooting range of its 200 day MA at 14,720" and that it was "the make-or-break line"  Today's low?  14,719.  Bingo.  By the end of the day we had formed a nice classic spinning top reversal candle and the 200 MA dam held back the tide of bears.  The fact that we had a support line right here helped too  So now there's at least some sign of a reversal, though remaining in a descending RTC as we are, we'll need some confirmation before calling Thursday higher.  But I'd at least not be going short at this point.

The VIX:  Ha - what goes up has to come down - sooner or later.  And the VIX finally did come down 3.64% on Wednesday forming a bearish harami in the process.  The indicators remain pretty overbought and we're still just barely below the upper BB so I'd say there's more downside risk than upside potential from here.

Market index futures: Tonight all three futures are higher at 12:46 AM EDT with ES up by a significant 0.42%.  ES gave us a decent reversal sign in the form of a doji on Wednesday sitting right on its lower BB.  And the indicators have now finally entered oversold territory, and the stochastic just formed a bullish crossover.  So with the move higher overnight confirming the doji, it looks like the tide may be turning here.

ES daily pivot: Tonight the pivot drops from 1656.00  to 1649.00 . That dip combined with ES's overnight advance now puts us above the new pivot by a on-trivial six points.  That means this indicator has now turned bullish.

Dollar index: Last night I wrote "we could see a move higher here on Wednesday" and boy did we ever with a 0.42% pop.  But the gap-up evening star doji is at least a suggestion now that we go back down on Thursday but one that requires confirmation.  Still, that gap is pretty big and will be wanting filling at some point.

Euro: On the other hand, the euro fell out of its recent congestion band with a big drop on Wednesday confirming the bearish RTC exit we just saw, and there's plenty of continuing negative pin action in the overnight, down another 0.20%.  With indicators now traveling down off oversold, this one looks bearish for Thursday.  That leaves us in conflict with my call for the dollar, but I have more confidence in this one.

Transportation: The trans gave us a nice doji star on Wednesday hugging the lower BB that with oversold indicators suggests a bottom may be close at hand.  The sort of candle still requires confirmation, but I'd definitely not be putting on any shorts from here.


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  8      3      3           3        0.800    485
October    1      1      3           1        0.667    136

     And the winner is...

Tonight I'm seeing enough technical reversal signs that taken as a whole they make a compelling argument to call Thursday higher, gummint shutdown or no.

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 remain at 1695.00.

Wednesday higher if ES breaks above pivot

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

• Wednesday higher only if ES breaks above pivot and stays there, else lower..
  
• ES pivot 1656.00 .  Breaking above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains long at 1695.00.

Recap

Hmm - so we continue marching lower while Emperor Nero and his pals continue to fiddle in Washington - for no real apparent reason other than irrational fear.  In fact, the Night Owl is starting to detect a whiff of panic in the streets.  Is this a good time to buy or should we head for the hills?  The charts, as always will tell.

The technicals (daily)

The Dow: How now Dow - wow!  A 160 point drop ended Tuesday as the Dow closed well under its lower BB and within shooting range of its 200 day MA at 14,720.  That is the make-or-break line right now.  We either bounce off or die.  The indicators are all useless and stuck on oversold.  In a scene of deja vu all over again, the last time we hit the 200 day MA was back on December 28th in anticipation of the dreaded sequestration calamity.  And then like now, we were coincidentally right at the lower BB.  After a one-day dip below the Dow took off on a five month bull tear.  Right now we've declined a lot more than we had back in December.  I know it's crazy to try and catch the falling knife, but things are starting to look bottomy right about now.

The VIX:  On Tuesday the VIX said bah to Monday's reversal candle and jumped another 4.79% higher to close at 20.34 and well above its upper BB.  In fact we're now back to the highs of the year set back in June.  Only this time we've been overbought for a lot longer than back then.  I know I've been wrong twice in a row now, but this VIX is just begging to move lower.  At the risk of sounding Chicken Little-ish about it, I'd get ready for the VIX to fall.

Market index futures: Tonight all three futures are higher for a change at 12:43 AM EDT with ES up by a respectable 0.33%.  Tuesday's big red candle broke support at 1656 and  took ES well below its lower BB at the same level.  But with all that, the indicators are still not quite down to oversold.  While it is encouraging to see ES rebounding in the overnight, we remain in a downtrend.

ES daily pivot: Tonight the pivot tumbles from 1671.25  to 1656.00 even.  That fall coupled with the rise in ES overnight now puts it just below the new pivot.  It is in fact mounting an attack on it as I write, with the last three five-minute bars just touching the pivot.  So it's definitely in play tonight.  Breaking above would be bullish.  A bounce off though would signal continued bearishness.

Dollar index: The dollar just continues to get jerked around in random directions.  Monday saw an inverted hammer and that was itself inverted for a regular hammer on Tuesday.  We did trade outside the descending RTC for a bullish trigger and the indicators look to be coming off oversold so technically, we could see a move higher here on Wednesday.  But overall, it's all about the politics, baby..

Euro: The euro on the other hand is in something of a holding pattern right around the 1.3576 level with two spinning tops in two days and another one forming in the new overnight.  I'd have to hazard a guess that we're just in for more sideways action here.

Transportation: And finally on Monday the trans accelerated their losses with this chart starting to look like it's going exponential in the down direction - generally a good sign that a reversal is near.  We also closed below the lower BB and the stochastic is now at a level from which a bullish crossover can begin.  While there's no immediate reversal sign here, it looks like one will arrive in the next few days if not Wednesday.

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   17/36  14/33

 37  9/9        35         30        +      +   1655   18/37  15/34

 38  9/16       40         28        +      +   1688

 39 9/23        52         36        +      +   1710  

 40 9/30        39         43        +      -   1692

 41 10/7        30         33        +      -   1691

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 finally both right.  Therefore we continue the year with an accuracy of 18  for 37, or 49%.   The poll as a whole rises to 15 for 34 or 44% - it continues to be a tough year for the poll so far.

This week we see that oddly enough both bullish and bearish sentiment have decreased as more people head for the sidelines, no doubt confused by the ongoing idiocy in Washington.  And who can blame them?  Filtering out that noise, I still think that on purely technical terms, the market is looking higher for November.  And in that opinion I diverge from the majority for the second time in two weeks.

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  8      3      3           3        0.800    485
October    1      0      3           1        1.000    136

     And the winner is...

Tuesday had something of the feel of a mini-washout to me.  The SPX Hi-Lo index hit 66 on Tuesday, a level seen only four times in the last six months.  While that doesn't guarantee a reversal, it increases the probability of one.  The NYSE A/D line is also getting rather overextended to the downside just as the VIX is to the upside.    And tonight the market finally has some news to base a rally on, about Janet Yellin to be the next Fed head.  And as I write this, ES has just broken over its pivot, a bullish sign.  Therefore I'm going to make this a conditional call: if ES can stay above its pivot by mid-morning Wednesday, we close higher.  But if it can't hang on and drops back below it, we close 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 remain at 1695.00.

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1671.25.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains long at 1695.00.

Recap

Well it looks like Mr. Market is starting to get a slight case of the ol' Debt Ceiling Blues.  After a big dump right out the gate Monday morning, he made a valiant effort to retrace half that, only to see all those gains evaporate in the final hour as we ended right back where we started.  And so it goes.  The Destroyers of Wealth in Washington continue their pig-headed ways, every last one of them, fiddling away like mad while America burns.  Hello?  Earth calling Washington - clown time is over, you need to get your act together.  Meanwhile, we trudge along analyzing the market as best we can to see what the charts might have in store for Tuesday.

The technicals (daily)

The Dow: Monday's 0.90% loss felt worse than it looks on the charts.  We simply remain in a long-running descending RTC with highly oversold indicators.  Nothing is likely to change until the Clowns squirt their last flower and honk their last rubber bulb horn.  And so the bears roar on.

The VIX:  The VIX made a big move on Monday, gapping up a whopping 16% to close more than an entire point above its upper BB and handily clearing resistance at the patriotic 17.76.  This is starting to look like back in late May when the VIX crawled up its upper BB for two whole weeks before finally giving up.  So Monday's gap-up hanging man sure looks like a reversal candle, but given the current insanity, anything's possible.

Market index futures: Tonight all three futures are finally higher at 12:36 AM EDT with both ES and YM up by 0.01%.  That's actually a lot better than we were looking at this hour last night when ES was down 0.64%.  ES actually tried moving higher Monday morning but was rejected ending the day just about where we started on Friday.  The overnight is forming a star doji that came within two points of the lower BB so there's at least a hint of a reversal now.  We have support form the lower BB and some more at 1656 but with the continuing Washington nonsense, blah blah blah you know the drill...

ES daily pivot: Tonight the pivot drops from 1679.42  to 1671.25.  That still leaves us below the new pivot, though by a lot less than last night.  But until ES can break back above, this one remains bearish.

Dollar index: On Monday the dollar was unable to capitalize on Friday's move out of its descending RTC.  The 0.24% drop cancels the bullish setup by dropping us just barely right back into that channel.  You can see the dollar weaving all over the place since the gummint shutdown began.  Accordingly, I have no clue where it might be headed next.  Hey, sometimes life is just like that..

Euro: The euro has been a bit more stable, though I was wrong about it falling on Monday.  Instead it put i a fat green spinning top to close at1.3580.  And then promptly gave in all back in the overnight where the new candle is starting to look  like bearish engulfing.  And with the bearish RTC exit complete and a bearish stochastic crossover complete, I'm sticking to my story and claiming the euro will go lower on Tuesday.

Transportation: The trans continued to put in lower highs, on Monday, down 1.09%.  But even that wasn't enough to drive the indicators oversold.  We're now near support at 6525, but overall this chart remains 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  8      3      3           3        0.800    485
October    1      0      2           1        1.000    136

     And the winner is...

I'm seeing a few turn-around signs tonight, but not a lot.  For example the NYSE A/D line had come down a lot and the SPX Hi-Lo indicator has come down off 100, though at 80, that's not exactly a roaring bull case.  What we do have is a VIX that looks ready to come down, though I hesitate to say it because it's not really being well-behaved right now due to you-know-what.  So  the market isn't a slam-dunk lower either, not like last night.  All in all, I'm not getting a good enough read to call this one either way, so all that leaves is Tuesday uncertain.

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 remain at 1695.00.

Monday lower

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

• Monday lower, low confidence.
  
• ES pivot 1679.42.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains long at 1695.00.

Recap

After a couple of disappointing days, the markets managed a gain last Friday despite the ongoing shenanigns in Washington.  How much weight should we give this move?  The charts will reveal all, so read on.

The technicals (daily)

The Dow: On Friday the Dow did manage a respectable 76 point rise.  The good news - it looks like support at 15K is holding, for now anyway, and the Dow remains oversold.  We're also real close to the lower BB at 14,972.  The bad news - we remains solidly in a descending RTC back to September 19th, so I'm reluctant to call this chart higher until I see some turn-around indications.

The VIX:  The VIX was overdue for a retreat, having touched its upper BB all of last week until then and we finally got it on Friday with a 5.26% decline as a dark cloud cover.  With indicators remaining overbought, this one looks like it's got more downside risk than upside potential for Monday.

Market index futures: Tonight all three futures are lower at 12:38 AM EDT with ES down by a substantial 0.64%.  Technically, on Friday we got a nice bullish engulfing candle out of ES but the indicators are wandering aimlessly and there's no real short-term trend on.  But that's all overshadowed by the overnight guidance lower.

ES daily pivot: Tonight the pivot rises from 1672.59  to 1679.42.  But that move combined with a lower ES now leaves us  squarely below the new pivot, so this indicator becomes bearish.

Dollar index: On Friday the dollar gapped up 0.47% in a move that took the indicators off oversold and just barely exited the descending RTC for a bullish setup.  So this chart now looks bullish for Monday though the longer intermediate term downtrend remains in force.

Euro: Meanwhile, the euro took a big dump on Friday for a bearish engulfing pattern that also exited the rising RTC for a bearish setup.  We also now have a completed bearish stochastic crossover and indicators just off overbought.  So overall, this chart now looks bearish.

Transportation: On Friday the trans put in a bullish piercing pattern with a 0.54% gain.  However, it also put in a bearish stochastic crossover and we're coming off four days of lower highs.  Finally, being stuck halfway between BB's, this chart pretty much just reflects the general angst in the market right now and is accordingly too tough to call, for me anyway.


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  8      3      3           3        0.800    485
October    0      0      2           1        1.000      0

     And the winner is...

Tonight the charts aren't really giving me any decent bullish turn-around indications and the futures are guiding lower, probably on comments Sunday from our esteemed Treasury Secretary, Jacob "Squiggles" Lew.  So as we stagger along towards Govergeddon on the 17th, the finger-pointing and political posturing continues unabated.  And until that's resolved, the markets will remain in flux.  Of course tonight, I think we're getting enough negative guidance out of the futures, combined with an absence of positive signs for me to call Monday 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 remain at 1695.00.