Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1832.08.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Thursday ended up being pretty uneventful with a Dow down all of 18 points while the SPX was up all of 0.64.  So as the market continues to look for direction, let's see if the charts have any guidance for Friday.

The technicals (daily)

The Dow - is  it in front or in back?

The Dow: The Dow is now in one of these Necker cube illusions.  Looked at one way and it's in a shallow descending trend.  Looked at another way and it's just in some sideways consolidation.  Either way, the famous First Five Days of January indicator was a flop.  But all is not lost - a down five days isn't as good a predictor of a bad year as an up five days is of a good year.

But with a long-legged red spinning top on Thursday and the indicators just nervously wandering about between overbought and oversold,  this chart is remarkably opaque.  I just have to take a pass on this one.

The VIX:  The VIX barely eked out a 0.16% gain on Thursday with a tall inverted hammer that just failed to escape its descending RTC,  Indicators continue to fall and VVIX is looking lower, so I'd say the VIX is headed down on Friday.

Market index futures: Tonight all three futures are higher at 1:04 AM EST with ES up by 0.15%.  ES has now given us two dojis in a row with Thursday's having a larger range than Wednesday's forming a mini-megaphone.  RTC-wise Thursday was the payoff for Wednesday's bullish trigger.  Indicators are now rising off oversold and with the overnight moving higher, this chart is looking good for Friday.

ES daily pivot: Tonight the pivot inches up from 1830.92  to 1832.08.  After breaking above the old number Thursday afternoon, ES has just continued to rise, leaving us sufficiently above the new pivot to call this indicator bullish.

Dollar index: The dollar completed a bearish evening star pattern on Thursday, falling off its upper BB with a small loss.  With indicators now quite overbought, the next logical move is lower..

Euro: And the euro is mirroring the dollar nicely with a tall spinning top on Thursday a la bullish piercing pattern.  The overnight is gapping up enough to cause RSI to bottom at oversold, so the euro looks higher for Friday.  That squares with my dollar lower call (I look at each chart independently).

Transportation: Some big bullish divergence in the trans on Thursday as they outperformed the Dow with a nearly 1% gain to the Dow's 0.11% loss.  This move also gave us a bullish RTC setup and a completed bullish stochastic crossover.  There's some resistance at 7400 but the upper BB isn't til 7469.  So with a decent three day winning streak going, this chart looks bullish on its own as well as being positive, Dow Theory-wise.

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   19/38  16/35

 39 9/23        52         36        +      +   1710   20/39  17/36

 40 9/30        39         43        +      -   1692   21/40  17/37

 41 10/7        30         33        +      -   1691   22/41  17/38

 42 10/14       48         22        +      +   1703   23/42  18/39

 43 10/21       57         30        +      +   1745   24/43  19/40

 44 10/28       59         19        +      +   1760   25/44  20/41

 45 11/4        42         25        +      +   1762   26/45  21/42

 46 11/11       39         39        +      x   1771   27/46  21/42

 47 11/18       52         30        +      +   1798   27/47  21/43

 48 11/25       58         29        +      +   1805   28/48  22/44

 49 12/2        56         26        +      +   1806   29/49  23/45

 50 12/9        55         30        +      +   1805   30/50  24/46

 51 12/16       30         43        +      -   1775

 52 12/23       38         29        +      +   1818 

  2014

 01 12/30       50         23        +      +   1841

 02  1/6        40         44        +      -   1831 

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 right.  Therefore the Night Owl continues the last few calls of 2013 with an accuracy of 30 for 50, or 60%.   And the poll as a whole rises to just above break-even at 24 for 46 or 52%.   In two weeks we'll be able to fill in the remaining blanks for 2013 and come up with the final numbers for the year.

This week we have our first divergence of the year.  I voted continued bullish while the majority voted bearish on a fairly substantial gain in bearish sentiment from last week.  I'm afraid I'm still not seeing it.  I could be wrong.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      3      2           0       0.250     -126

     And the winner is...

With the VIX, the futures, and the trans looking positive tonight, I'm just going to go ahead and call Friday higher.  Of course bad jobs numbers on Friday could torpedo that call, but the expectation seems to be for BTE (how do they know this?)  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Thursday uncertain

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

• Thursday uncertain..
  
• ES pivot 1830.92.  Holding above is bullish.
• Friday bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Huh - well apparently we are back in one of these periods of random turbulence where the market just gets bounced around for no readily discernible reason.  Last night I said we were going higher, so the Dow went lower on Wednesday.  Doh!  We can't even blame the Fed minutes, which had no apparent impact.  Oh well - we move on to Thursday and go from there.

The technicals (daily)

The Dow: On Wednesday the Dow was unable to capitalize on Tuesday's gains, contrary to what I expected, and plopped right back into its descending RTC. canceling an incipient bullish stochastic crossover in the process.  With the indicators neither oversold nor overbought, that leaves this chart in an inscrutable morass.  So this one is just too tough for me tonight.

The VIX:  At least I had the VIX right last night when I wrote "there's still room to run lower here" as it closed down a tad, off 0.39%.  But it was a funny move with a red spinning top sitting in dark cloud cover position atop Tuesday's candle.  But with indicators continuing to decline and as we remain in a descending RTC, I still see no sign of a higher VIX.

Market index futures: Tonight all three futures are just barely higher at 1:01 AM EST with ES up by all of a single tick.  We got a lopsided green spinning top out of ES on Wednesday but with indicators continuing to rise and no evidence of it wanting to fall in the overnight, this chart continues to look ever so slightly bullish.

ES daily pivot: Tonight the pivot drops from 1828.33  to 1830.92.  Once again we remain above the new pivot so this indicator is still bullish.

Dollar index:  With ECB news coming out early Thursday morning, I expect that that is what will be moving the euro, and therefore the dollar by proxy, therefore we omit this chart tonight.

Euro: For the same reason, we also omit this chart tonight.

Transportation: Last night I wrote "this chart now turns bullish" and so it did, up 0.31% on Wednesday.  But it was with a hanging man that flattened out the indicators so this chart becomes a bit murky tonight - coudl go either way.


Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    1      3      1           0       0.250     -126

     And the winner is...

In general, the charts aren't all that clear tonight.  I see a slight positive bias but with potentially market-moving news coming from the ECB, I'm afraid I'm just going to have to call Thursday uncertain.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Wednesday higher

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

• Wednesday higher, low confidence..
  
• ES pivot 1828.33.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

It was a long shot, but one that underscores the importance of watching the VIX and the futures.  While the Dow daily chart was looking decidedly bearish last night, the other signs were bullish so I called Tuesday higher and that's all it took to finally get us on the scoreboard for 2014.  Now let's see if we can bat one in for Wednesday.

The technicals (daily)

The Dow: The Dow's big 106 point pop on Tuesday was just enough to take it all the way to the right edge of its descending RTC for a bullish setup.  It also turned all the indicators upward and set up the stochastic for a bullish crossover.  So that's the difference a day makes - this chart now looks bullish.

The VIX:  Last night I wrote "this chart looks continued bearish" and sure enough the VIX dropped another 4.65% on Tuesday.  It admittedly formed a funny gap-down green candle but with a fresh bearish stochastic crossover and the lower BB not til 11.68, it looks like there's still room to run lower here.

Market index futures: Tonight all three futures are higher at 12:15 AM EST with ES up by 0.10%.  Tuesday's tall green candle in ES completed the bullish RTC setup I mentioned last night and it also completed the bullish stochastic crossover.  Indicators remain low and there's no resistance til 1836 so I see more upside here for Wednesday.

ES daily pivot: Tonight the pivot rises from 1823.50  to 1828.33.  We remain above that number so this indicator remains bullish.

Dollar index: I did get the dollar wrong on Tuesday - I thought we'd see lower but instead it gained 0.22%.  That leaves us in a trading range with no RTC and indicators  that are not at either extreme, so there's little to go on here and consequently I'm not going to call this one..

Euro: And of course I was wrong about the euro which moved lower on Tuesday..  It is now, like the dollar, similarly conflicted with no clear direction so we'll just have to let this one be and see if Wednesday provides us with clearer guidance.

Transportation: And finally, the trans had a nice 0.74% gain on Tuesday with a bullish inside harami that moved the stochastic into position for a bullish crossover.  It wasn't clear last night, but support around 7240 held, so this chart now turns bullish.


Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    1      2      1           0       0.333     -58

     And the winner is...

Tonight there seems to be a general bullish consensus among the various charts so the logical call is for Wednesday higher.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Tuesday higher

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

• Tuesday higher, low confidence..
  
• ES pivot 1823.50.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Well the Santa Claus rally is now officially over and if the First Five Days of January indicator is going to kick in, it had better get going soon, as the market moved lower again on Monday with the Dow down another 45 points.  Last night I was looking for Monday to provide some clarity.  Let's check the charts to see if it did and where Tuesday is headed.

The technicals (daily)

The Dow: The Dow's 0.27% drop on Monday canceled Friday's spinning top with a bearish engulfing pattern.  The indicators are now on the march toward oversold, having just left overbought and we now have a new descending RTC so this chart now looks bearish for Tuesday.

The VIX:  Last night I wrote "lower looks more likely than higher here on Monday." and in an unusual bit of divergence, the VIX fell 1.53% on a day when the broader market also fell.  This established a new descending RTC and just squeaked out a new bearish stochastic crossover.  So despite the spinning top, with indicators very nearly overbought, this chart looks continued bearish.

Market index futures: Tonight all three futures are higher at 1:2:34 AM EST with ES up by 0.21%.  After a second, lower spinning top on Monday, ES has now gone officially oversold and its stochastic is leveling out in preparation for a bullish crossover.  We're also trading outside the latest descending RTC for a bullish setup.  So it's not guaranteed, but the signs of a reversal are getting stronger, I'd guess within a day or two.  And the overnight is supporting this idea with a developing bullish engulfing pattern that would provide a bullish RTC trigger if it holds up.

ES daily pivot: Tonight the pivot drops again from 1826.33  to 1823.50.  That move combined with ES's drift higher has (finally) popped ES back above the pivot, so this indicator now turns positive.

Dollar index: On Monday the dollar put in a dark cloud cover that bounced off its upper BB and turned both RSI and momentum lower.  There's no RTC to follow right now but the signs we do have point to lower again Tuesday..  And it's trading just outside the descending RTC for a bullish crossover so I'd say Tuesday looks higher for the euro.

Euro: I missed the euro which bounced off its lower BB on Monday for a bullish piercing pattern.  Though the overnight is fairly flat, it's moving the stochastic into position for a bullish crossover.

Transportation: The trans guided lower on Monday with an ugly 1.27% dive that provided the payoff for Friday's bearish RTC trigger.  The indicators are now close to, but not quite oversold so there really still isn't yet a reversal sign here for Tuesday.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    0      2      1           0       0.000     -164

     And the winner is...

The crystal ball isn't exactly, uh, crystal clear tonight, but I'm going to key off the VIX and the futures, both of which are looking positive.  It is always unwise to go against what these two are telling you, and for my money, they're saying Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Monday uncertain

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

• Monday uncertain.
  
• ES pivot 182633.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Arrgh - I hate it when this happens - Last Wednesday night I said the market would go lower, so it went higher.  Thursday night I said it would go higher ... so it went lower!  (admittedly, the SPX did go lower but the Dow, which is my benchmark, went higher).  Doh!  Maybe with a normal full week of trading coming up, the technicals will become better behaved and we can get on with the business of making money.  So let's get right  to the charts and see what's what.

The technicals (daily)

The Dow: On Friday the Dow put in a small lopsided spinning top constituting something of a DCB.  But it still counted as a bearish RTC trigger and the indicators continued to fall off overbought so I can't get too excited about a 29 point gain.  Overall, this one continues to look bearish.

The VIX:  Emphasizing the confused state of Friday, we got a 3.30% decline in the VIX on a broad gap-down spinning top, despite the SPX moving lower too.  This moves makes a bearish RTC setup though and with indicators very nearly overbought, I'd say lower looks more likely than higher here on Monday.

Market index futures: Tonight all three futures are basically flat at 1: AM EST with ES down by all of one tick, NQ up 0.06%, and YM down 0.02%.  And the new candle is developing as an inverted hammer after Friday's tall spinning top.  The indicators are now close to oversold and momentum has actually just turned higher.  We're also right on the edge of a very steep descending RTC for a bullish setup.  So while it's not entirely clear that Monday is set to move higher, at least it looks like the stage is now set for a reversal within a few days.

ES daily pivot: Tonight the pivot dips from 1829.678  to 182633.  But that wasn't enough to put ES above the new pivot, so this indicator continues bearish.

Dollar index: It's lucky I decided not to go with the incomplete evening star here last Friday as the dollar still had enough gas in the tank to gain another 0.21% and close right on its upper BB.  But with rising indicators not yet overbought, more upside is still possible here..

Euro: At least I got the euro right when I wrote "This chart looks bearish" last Thursday, as it closed right on its lower BB on Friday.   And the new overnight is continuing lower, so with indicators still not yet oversold and no support til 1.3534, more downside seem possible here.

Transportation: In an interesting bit of bullish divergence, the trans on Friday gained 0.54% to the Dow's meager 0.17% demonstrating support at the 7300 level.  However, the candle also gave us a bearish RTC trigger.  That plus indicators now halfway between overbought and oversold leaves this chart too tough to call.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    0      2      0           0       0.000     -164

     And the winner is...

I'm seeing some definite reversal signs in the charts tonight that suggest the recent sell-off might be washed up, but they're not conclusive enough to come right out and make a call for a higher close.  And after having been burned two days in a row, I'm just going to wimp out and call Monday uncertain.  I think we'll have more clarity for the remainder of the week by the end of the day.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.