Friday lower

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

• Friday lower, low confidence.
• ES pivot 1827.33.  Holding below is bearish.
• Next week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

Finally, I got one right. My call for Thursday lower played out, as well as my reading of every individual chart I looked at.  But we will avoid committing too much hubris here and simply move on to Friday.

[Note: the Blogspot spell checker is on strike again tonight, so I apologize in advance for any typos.]

The technicals (daily)

The Dow: Last night I wrote "there's more downside to come on Thursday." and did it ever come - down 176 points for its worst one-day loss since last August.  That broke support at 16,263, completed the bearish stochastic crossover, and busted through the lower BB but did not drive the indicators oversold yet.  So we might still see some more selling on Friday.

The VIX:  Last night I wrote that the VIX "now at least seems to be wanting to move higher" and on Thursday it put in an unusal gap-up gravestone doji that just touched its 200 day MA before retreating.  Although the indicators ar enot yet overbought, this is bearish for Friday.

Market index futures: Tonight all three futures are lower at 12:42 AM EST with ES down by 0.14%. Last night I noted congestion in ES and wrote "we may be setting up for a move lower out of this range" and that's just what happened on Thursday with ES taking a decsive dump to send the indicators lower.  And with some negative pin action in the overnight, the selling may not be over yet.

ES daily pivot: Tonight the pivot drops from 1838.83  to 1827.33.  We remain below, so this indicator remains bearish.

Dollar index: I didn't call the dollar last night, which was good because I sure didn't see a one percent drop coming on Thursday.  This big gap-down marubozu took the indicators off overbought and broke a couple of support levels.  But with this big gap, a DCB isn't out of the question on Friday..

Euro: Last night I wrote "the euro is ready to move higher" and boy did it ever, up a whopping 1.11% on Thursday to blast right out of its descending RTC and clear past resistance at 1.3515.  And even that wasn't enough to drive the indicators overbought.  But after such a big move, I'd expect a pause on Friday.

Transportation: Last night I wrote "more upside is not out of the question" here and indeed we got another 0.28% out of the trans on Thursday as the bullish divergence continued.  But now it's hard to say.  With the indicators pretty overbought and the trans clinging to their upper BB, we don't have a reversal candle, but a move lower could come at any time.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    2      8      5           0       0.200     -224

     And the winner is...

I don't know - after such a big move down, it's tempting to call for a DCB, but with all the charts continuing to look bearish, I'm afraid I'm just going to have to call Friday lower.  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 lower

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

• Thursday lower, low confidence.
• ES pivot 1838.83.  Holding below is bearish.
• Friday bias lower.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

The mysterious 2014 market sea change continued on Wednesday.  I called the Dow higher, but while the Nasdaq and SPX both did rise, the Dow moved lower once again.  I am now seriously considering abandoning the Dow as my benchmark.  In nine years of doing this I have never seen such a disconnect between the Dow and the SPX.  And another odd thing - my REITs, which had underperformed most of 2013 are suddenly roaring ahead.  I'm now up 2.47% YTD after just three weeks into the new year.  I guess you just have to love that about the market - just when you think you've got it down, it throws you a new curve.  So let's see if we can wind up and get the signals straight for Thursday.

The technicals (daily)

The Dow: Last night I wrote "this chart favors the downside for Wednesday" and that proved to be correct.  But I called the close bullish anyway based on the other charts that looked bullish.  So we're left with this strange situaiton where the Dow seems to be getting decoupled from the rest of the market.  And the odd thing is that it isn't the same players yanking it around every day.  It's pretty strange.  In any case, on Wednesday we got a fat spinning top that provided us with a bearish RTC trigger and a bearish stochastic crossover so I'd say there's more downside to come on Thursday.

The VIX:  We now have two inverted hammer in a row here, rising indicators and a rising, though choppy, RTC.  So although the VIX actually lost 0.23% on Wednesday, it now at least seems to be wanting to move higher.

Market index futures: Tonight all three futures are lower at 12:49 AM EST with ES down by 0.30%.  ES has now put in four dojis in a row.  It has attacked the 1844 level five days in a row and failed every time.  The net result has been congestion between 1832 and 1844.  We're now right on the lower end of that range again.  With RSI overbought and momentum, money flow, and OBV moving lower, we may be setting up for a move lower out of this range.

ES daily pivot: Tonight the pivot steps up from 1836.25  to 1838.83.  But ES fell under the old pivot around 10 PM so this indicator turns bearish.

Dollar index: I also missed the dollar on Wednesday as it posted a small gain off Tuesday's slide.  That was enough to push the indicators overbought.  The pattern is very nearly a bullish piercing line but with the dollar having had a two day streak only once so far this month, this chart remains too tough for me.

Euro: I thought the euro was going higher on Wednesday and while it did that intraday, it ended giving it all back and then some for a small loss and a fat little spinning top.  The new overnight is forming as doji and its outside the descending RTC for a buollish setup.  Indicators are now oversold and the stochastic is ready for a bullish crossover so I'll claim once again that the euro is ready to move higher.

Transportation: We got some more bullish divergence on Wednesday as the trans jumped over a percent while the Dow fell 0.25%.  The trans closed on their upper BB with a green marubozu that also caused a bullish stochastic crossover from a high level.  These are unusual and often good for a few additional days of gains.  So as we march further into record territory, more upside is not out of the question.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      8      5           0       0.111     -400

     And the winner is...

Tonight the balance seems to have shifted in favor of the bears so I'm calling Thursday lower.

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 1836.25.  Holding above is bullish.
• Rest of week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

Up down up down - it's now been a week since the Dow managed to string together more than one day in a row in the same direction.  No wonder this market is so tough to call and no wonder I'm now sitting on the worst forecasting record since I began keeping score.  I've only gotten one right all month.  This is getting embarrassing.  Complicating matters is that both the Nasdaq and the SPX did close with gains on Tuesday, so it must be something in the Dow.  This is really making me consider switching over to the SPX for my forecasts.  In any case, we now move on the Wednesday where we may finally see what's what.

The technicals (daily)

The Dow: The Dow continues its recent nervous consolidation.  The only thing I see here right now is a stochastic that's just about to execute a bearish crossover.  We're sitting on the edge of the rising RTC right now so if I had to guess I'd say this chart favors the downside for Wednesday.

The VIX:  On Tuesday the VIX put in a big gap-up inverted hammer for a 3.46% gain.  The indicators are nearing overbought territory and meanwhile VVIX is nearing its 200 day MA from below and is already overbought.  All this makes me think that while a bit more upside might be available here, more downside seems to be in the offing pretty soon  Wednesday might be a topping day.

Market index futures: Tonight all three futures are higher at 12:26 AM EST with ES up by 0.24%.  On Tuesday ES put in a second spinning top, megaphone-style, larger than the day before.  In any event, the overnight is moving higher and with the indicators still not yet overbought and the upper BB at 1847, it seems likely we'll hit that level on Wednesday.

ES daily pivot: Tonight the pivot ticks up from 1835.42  to 1836.25.  With ES taking off in the evening hours, we're well above the new pivot so this indicator remains decidedly bullish.

Dollar index: Well the dollar did open higher on Tuesday but then it was all downhill from there, ending the day with a dark cloud cover that bounced off the upper BB.  So now I'll claim that the dollar goes lower on Wednesday..

Euro: At least the euro did move higher on Tuesday though it remains in a week-long downtrend.  However, it has now hit oversold and the stochastic is about ready for a bullish crossover, so I'd say a move higher on Wednesday is not out of the question.

Transportation:Last Friday's hammer here was confirmed on Tuesday with a 0.57% advance, providing some bullish divergence to the Dow's 0.27% loss albeit on a spinning top that just touched the upper BB.  And we also have a new bearish stochastic crossover.  But this chart in general remains ill-behaved so I'm not trying to call it for Wednesday.


Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      7      5           0       0.125     -359

     And the winner is...

At this point I have little to lose - the indicators continue to remain bullish so that's how I'm calling the close - Wednesday higher.  Perhaps I should just call the SPX instead of the Dow.  Normally these two trade in highly correlated fashion.  But that relationship has broken down since the beginning of the year for some reason.

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 1833.00.  Holding above is bullish.
• Rest of week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

The market concluded its nervous jiggling about last week with a win for the Dow but losses for the Nasdaq and SPX.  With this sort of action, is it any wonder I called Friday "uncertain".  Now we're starting  a holiday-shortened week.  If I had any sense I'd just take a vacation this week.  So instead on we go, to examine the charts, such as they are.

The technicals (daily)

The Dow: Last Friday the Dow continued its semi-random jiggling by retracing most of Thursday's retracement of Wednesday's retracement.  Indicators continue vacillating midway between overbought and oversold, there's no RTC or stochastic crossover so this chart is totally devoid of guidance.  I there's a pattern in here, I don't see it.

The VIX:  The VIX is similarly conflicted, putting in on Friday a green spinning top that nonetheless was a 0.72% loss.  We do at least have a descending RTC going, though it's wide and not very focused (Pearson's = only 0.870).  My guess is that the VIX may go lower Tuesday, but only because it doesn't seem terribly interested in moving higher.

Market index futures: Tonight all three futures are higher at 12:23  AM EST with ES up by an impressive 0.40%. Monday's trading yielding something very close to a dragonfly doji which is a very good reversal indicator.  And the overnight candle is confirming this in a big way, bringing ES all the way back to resistance at 1842.  But with indicators still a ways from overbought, we may have enough momentum to continue at least a bit higher from here.

ES daily pivot: Tonight the pivot drops from 1838.17 to 1833.00.  That move plus the big jump in ES now leaves us well above the new pivot to make this indicator solidly bullish.

Dollar index: After putting in candles with tails pointing in opposite directions last week, the dollar finally managed  a decent 0.42% gain to hit its upper BB.  But even that did not drive the indicators overbought so more upside could be coming on Tuesday..

Euro: On Monday the euro gave us a fat hammer with a small gain.  The overnight is retracing the same ground but support at 1.3529 is firming up nicely.  With indicators now oversold and the stochastic positioning for a bullish crossover, I'd look for the next move to be higher.

Transportation: The trans moved lower last Friday on a red hammer.  But I wouldn't put too much faith in this since we also got a bearish RTC trigger and the indicators have now peaked at overbought.  More downside seems possible from here.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      6      5           0       0.143     -315

     And the winner is...

Tonight the majority of the charts seem to have turned bullish, so I'm going to call Tuesday higher.  And I'm going out on a limb here because this week is historically terrible.

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.