Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1876.08.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

The technicals worked out well on Thursday as the Dow gained another 62 points, pretty much as I'd expected.  So as the first week of March draws to a close, let's see now where Friday is headed.

The technicals (daily)

The Dow: Thursday's action was quite bullish, canceling any doubts I was having last night with a bullish engulfing candle that pushed us back into the middle of the rising RTC,  It also brought out a bullish stochastic crossover from a high level, quite a bullish sign at least for a day or two.  So with the upper BB still about 100 points away, this chart remains bullish.

The VIX:  Last night I wrote "I expect the VIX to at least take a look at [13.65] on Thursday" and that almost happened as the VIX bottomed at 13.73.  But the VIX ultimately rose 2.30% in an unusual correlation with the Dow which was also higher.  This bullish engulfing candle makes me think the VIX could now go higher again on Friday.

Market index futures: Tonight all three futures are higher at 12:47 AM EST with ES up by 0.15%.  Little has changed since last night - we remain in a rising RTC and I still think we're headed to the upper BB, now at 1888.

ES daily pivot: Tonight the pivot rises yet again from 1871.92  to 1876.08.  And once again we remain above the new pivot even as it continues higher, so this indicator is still bullish.

Dollar index: On Thursday the dollar took a big dive, down 0.56% and surprising me greatly as I was thinking it would go higher.  We not only cratered out of the rising RTC but also broke support at 54.68 (remember, this is the $USDUPX, not $DXY).  It also drove RSI lower and formed a bearish stochastic crossover.  But we just barely bounced off the lower BB so given the magnitude of the day's decline, it's possible we could get a bounce on Friday.

Euro: And then of course as the dollar floundered on Thursday, the euro took off, busting right through resistance from last October to close above its upper BB at 1.3861.  So I was of course wrong about this too.  Now the euro has been taking profits after big run-ups lately so I'd have to guess that's what will happen on Friday.

Transportation: On Thursday the trans continued to climb their upper BB with a nearly 1% green marubozu.  We are now just off resistance at 7570 so with the indicators now moderately overbought, Friday is do or die day to see if we can make another push higher.  I'm not sure there's enough gas left in this particular tank.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March      3       0      1           0       1.000    444

     And the winner is...

The overall technical picture remains bullish tonight as the bears are all MIA.  Therefore, I can only call Friday higher.  The trend is your friend, as they say.  Happy weekend and see you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside.

Thursday higher

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

• Thursday higher, low confidence.
  
• ES pivot 1871.92.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

This is the Night Owl's 1000th post!

I know it seems hard to believe, and I wasn't at all sure I'd make it even one year when I first started this blog over four years ago but here we are in 2014, and still going strong publishing every night before a market day (well except for when the Olympics are on).  Many thanks to all my readers for their continuing support, and we'll see you again for number 2000.

Recap

I believe it was correct to call Wednesday uncertain as the Dow ended the day down a scant 36 points.  Now let's see if we can get a better sense of direction for where Thursday's going.

The technicals (daily)

The Dow: This is pretty much what I expected - what's the inverse of a dead cat bounce?  The Dow put in a lackluster small-range red candle at the top of Tuesday's monster pop.  Technically, that was just enough to fall out of the rising RTC for a new bearish setup.  The indicators remain vague and indecisive, wandering about just below overbought so it's hard to give them much credence here.  But there's at least a hint of reversal now but one that requires confirmation so bzzzt - no call on this chart tonight.

The VIX:  Last night I wrote "more downside now seems possible Wednesday" and that possibility came to pass as the VIX dropped another 1.5% on Wednesday.  We are now approaching a level of aupport at 13.65 but in the absence of any bullish signs, I expect the VIX to at least take a look at that number on Thursday.

Market index futures: Tonight all three futures are higher at 12:38 AM EST with ES up by 0.12%.  Last night I wrote that I expected a "small range or doji day" and ES delivered a perfect spinning top on Thursday right at the upper end of Wednesday's big pop.  But the new overnight isn't confirming that as we continue to trade inside the rising RTC.  And the indicators are only just barely overbought while the stochastic has actually formed a bullish crossover from a high level which is generally good for a day or two of further gains.  So this chart moves from indecisive back to bullish again.  The upper BB, now at 1888 is still not out of the question.

ES daily pivot: Tonight the pivot rises once again from 1863.25  to 1871.92.  Once again we remain above the new pivot so this indicator continues bullish.

Dollar index: Huh - I though the dollar would rise on Wednesday but instead it lost 0.08%.on a stubby spinning top.  We're still in the rising RTC and still have a newly minted bullish stochastic crossover so I still have to believe the dollar's going higher.

Euro: OK, we now have a pattern here. I believe I detect a descending triangle with a base around 1.3736.  This is a pretty good play that when the break comes, it will be lower.  Just sayin'.  That also squares with my call for a higher dollar.

Transportation: In a show of strength, on Wednesday the trans managed to extend Tuesday's huge gains another 0.32% even as the Dow closed down 0.22%.  This is, to me, quite impressive.  We're on the upper BB now but the trans have shown an ability to crawl up this line for quite a while.  And with no resistance now til 7571, it sees like there's more upside left.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March      2       0      1           0       1.000    382

     And the winner is...

Tonight the charts are generally looking at least mildly bullish and there's really a general absence of bearish signs, so I guess I just have to call Thursday higher.

ES Fantasy Trader


Portfolio stats:  the account remains at $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside.

Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1863.25.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Wow - what a difference a day makes, eh?  I'll bet all the Chicken Littles who sold yesterday are regretting that now.  With the Dow having its best day YTD on Tuesday, it seems that the picture has changed once again.  So let's shift our focus to Wednesday now and figure out where it's headed.

The technicals (daily)

The Dow: Monday's bearish RTC setup was canceled in a big way on Tuesday as the Dow shot up 228 points to take it all the way to the other edge of the rising RTC.  With these successive triple digits moves the indicators are bouncing around a lot so I'm watching more the upper BB now and that' not til 16,546.  And there's no resistance til 16,511 so this chart once again looks bullish.

The VIX:  Last night I wrote "I'd give better than even odds of a move lower on Tuesday than higher" and no one would take me up on that bet.  Good thing for them too because on Tuesday the VIX dumped 12% on a gap-down marubozu that crashed right back through its 200 day MA and completed a classic bearish evening star.  So more downside now seems possible Wednesday.

Market index futures: Tonight the futures are mixed at 1:2:31 AM EST with ES down by 0.05%, YM down 0.04% but NQ up 0.03%.  Call it vaguely flat.

ES daily pivot: Tonight the pivot rockets from 1841.58  to 1863.25.  Even after that huge pop we remain above the new pivot, impressively, so this indicator continues bullish.  Tuesday's stellar performance in ES canceled Monday's bearish RTC setup and drove it right back into the rising RTC and fresh record levels.  With all resistance now behind, the upper BB at 1891 beckons.  There is really nothing bearish about this chart.

Dollar index: Last night I was a bit leery that the dollar could follow through on Monday's gains but it did, up another 0.12%.  That sets up a new rising RTC off the lower BB and bends the stochastic round close to a bullish crossover, so I'm now bullish on the dollar.

Euro: The euro made some big intraday moves on Tuesday but finished with just a long-legged doji around 1.3736.  And the overnight is continuing to hang around that neighborhood.  The only guidance here is from a new bearish stochastic crossover so on that basis I'll guess the euro goes lower Wednesday.

Transportation: Some talking head on CNBC Tuesday was making a big deal of the failure of the trans to "make new highs".  Well gosh, with a 2.23% gain that handily outperformed the Dow's 1.41% and closed above the upper BB, I don't see much to complain about.  If anything, I'd expect a pause here o Wednesday as we often get the day after a big advance.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March      2       0      0           0       1.000    382

     And the winner is...

Typically what we see after a big move up is a pause as the market consolidates and I see no reason to expect Wednesday will be any different.  While I'd not be going short right here, I think this is more of a wait & see situation so I'm just going to call Wednesday uncertain in the expectation of a small range or doji day.

ES Fantasy Trader

Portfolio stats:  the account remains at $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside.

Tuesday higher

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

• Tuesday higher, low confidence.
  
• ES pivot 1841.58.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Like shooting fish in a barrel.  You didn't have to be Carnac to see where the market was going on Monday - straight down.  Now we're left with the aftermath.  Mr. Market has a notoriously short attention span, so unless we see Putin's tanks rolling through the streets of Kiev on Tuesday, it's likely that he'll forget all about it (not to trivialize what's going on there).

The technicals (daily)

The Dow: So the Dow came off its lows by the end of Monday to form a fat hanging man.  It was enough to close just outside the latest rising RTC for a bearish setup and a bearish stochastic crossover.  So on the face of it, this chart is now technically bearish though one might want to take this with a grain of salt as with all news-related sell-offs.

The VIX:  The VIX meanwhile of course blasted off with a huge 14.29%  gap-up bang.  But the result was a nascent bearish evening star and although we have a new bullish stochastic crossover, in such cases one must be wary of gap-filling.  In fact, I'd give better than even odds of a move lower on Tuesday than higher.

Market index futures: Tonight all three futures are higher at 12:38 AM EST with ES up by 0.24%.  On Monday ES traded entirely outside its rising RTC for a bearish setup with a sort of hammerish-spinning top thing.  But the overnight is forming as a bullish one white soldier that suggests the selling may be done at least for now.

ES daily pivot: Tonight the pivot dives from 1856.42  to 1841.58.  ANd that move combined with an overnight rise in ES was enough to drive it above its new pivot, thus turning this indicator bullish.

Dollar index: On Monday the dollar rebounded after gapping down all the way to its lower BB last Friday.  But with a bearish stochastic crossover, it's not clear the dollar can continue these gains on Tuesday.

Euro: On Monday the euro gave up most, but not all of Friday's gains with a classic bearish harami that suggests Tuesday lower.   The lack of action Monday night remaining below the pivot supports this idea.

Transportation: The trans also took a hit on Monday, though not as bad as the Dow to form a red hanging man that canceled Friday's bullish RTC trigger.  And given the lack of trendiness here recently, I'm just not feeling the love.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March      1       0      0           0       1.000    154

     And the winner is...

Well the market took its expected incipient disaster hit on Monday.  Nevertheless, the world did not come to an end and the Ukrainian situation is beginning to look more like a chess match than a steel cage death match.  If so, Monday's losses look a bit overdone and we might see something of a DCB cum relief rally on Tuesday.  The VIX in particular is looking ripe for a fall so I'm going to go a bit out on the limb and call Tuesday higher.  Of course if any real shooting starts, that could all go south in a hurry.

ES Fantasy Trader

Portfolio stats:  the account remains at $100,000 as we wait for the right moment to enter our first trade of the year.  While I do think we're going lower on Friday, I still don't have a good enough edge to warrant going short just yet, so we'll just stand aside again.  There's no rush.

Monday lower

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

• Monday lower, medium confidence.
  
• ES pivot 1856.42.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I got my Friday call higher although it was in a bit of jeopardy on Ukrainian news last Friday afternoon as traders didn't want to be holding anything over the weekend.  And that's starting to look prudent as the Ukranian straymash seems to be degenerating rapidly.  Now I haven't mentioned it before but I have planted a secret bug in Vladimir Putin's office, so I can now reveal to the world his reaction when Obama told him that there would be "consequences" if he invaded the Ukraine.  This is what Comrade Putin had to say, and I quote "Boo wah hah hah hah hah hah! "  (The thump was presumably him falling out of his chair laughing).

Look, the Empty Suit just made a lot of noise about reducing our army to pre-WWII levels (and that's World War Two, not Eleven, for those of you who weren't there).  And he's all hot to get the US out of Iraq and Afghanistan (which is actually a good idea).  So what exactly is it that Putin is supposed to be afraid of?  I'll tell you what he's afraid of - he just saw his fellow Ukrainian friend buddy pal dictator/thug deposed via nothing more than a bunch of loud angry people parading around the town square.

The man is absolutely petrified that if this could happen there then he might be next.  And just like on Wall St. where fear always trumps greed, he's going to do everything he can to keep himself in power.  And if that involves a few tanks and troops, then so be it.  The notion that he's afraid of Obama is ludicrous.  The chickens are now coming home to the roosters and Obama's foreign policy might be summarized as "Speak softly and carry a wet noodle".  I wish him well, but having sown the wind, he is ready to reap the whirlwind.

Trader Feed is Back

And as a postscript, let me point out that it seems that Dr. Brett Steenbarger has resumed his awesome Trader Feed blog after a long absence (see link in my blog list).  I credit the good doctor for turning around my trading to consistent profitability, and I highly recommend this blog to all my readers.  This should be your number one read every day.  No excuses, just read it.

The technicals (daily)

Tonight we're just going to skip the technicals since I believe that Monday is going to be news-driven.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107

     And the winner is...

With the futures tanking in the Sunday evening trade, Mr. Market is clearly not liking what's going on in Ukraine where things seem to be going from bad to worse.  Barring some major unexpected announcement, like say Putin resigning (which doesn't seem likely), it's looking right now like we're going to close Monday lower.  But again, Monday will be a news-driven day and on such days, the technicals don't count for much.

ES Fantasy Trader

Portfolio stats:  the account remains at $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside.