Friday uncertain

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

• Friday uncertain.
• ES pivot 1882.00.  Holding above is bullish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I called Thursday uncertain writing that "A doji day is possible".  Well check it out folks: Dow down 0.45 points on a perfect doji star.  'Nuff said, lest I commit one of the traders' deadly sins - hubris.  Let's just say that Thursday's outcome was about as uncertain as they come.  But this now leaves us in a quandary - whither Friday?  We once again appeal to the charts for, if not outright salvation, then at least some meager sense of direction.

The technicals

The Dow: So the Dow is now in a nearly perfect rising RTC (Pearson's = 0.980).  Thursday's doji touched its upper BB for the third day in a row before retreating to the aforementioned doji.  RSI is now overbought, though not extremely so.  The stochastic continues to curve around for a bearish crossover, though not there yet.  Money flow continues higher though momentum has turned lower.  So where does that leaves us?  Shoot - uncertain again.  We have more reversal warnings now but they all require confirmation.  It would be foolhardy to call a top based on the evidence so far.

The VIX:  In an interesting bit of divergence, the VIX on THursday rose 2.14%, as the Dow did nothing.  That was good for a bullish RTC setup as well as moving the stochastic very close to a bullish crossover.  The candle is also clearly bullish engulfing so all things considered, the VIX looks higher for Friday.

Market index futures: Tonight, all three futures are higher at 12:29 AM EDT, with ES up by 0.13%.  Wednesday gave us a doji just like the Dow and it remained inside a rising RTC.  SO far, the new candle is trading higher which is bullish.  But it's also trading outside the rising RTC which is a bearish setup.  But this RTC is so tight (Pearson's = 0.998) I'm inclined to cut it some slack, so we'll take this bearish setup with a grain of salt - for now.  Of more concern is the stochastic which is now just a smidge aways from making a bearish crossover.  And of course the RSI is now highly overbought.  So it's possible that this chart is now moving on rumors of Friday's jobs numbers coming out BTE.  We'll have to see.

ES daily pivot: Tonight the pivot barely ticks up from 1881.83 to 1882.00.  After breaking above the old pivot Thursday afternoon, we remain above the new one so this indicator remains bullish.

Dollar index:On Thursday teh dollar just laughed at the resistance that concerned me last night, blasting right through to ring the upper BB bell at 54.86.  The dollar has been very good about respecting its upper bB lately so given the overbought nature of the indicators I have to think that further upside is limited from here.

Euro: I missed the dollar but last night I wrote "the euro's three day winning streak may be over.".  And indeed it was, with the euro falling all the way back to 1.3742 after barely bouncing off its lower BB.  That completed a bearish crossover from a low level making me think the selling isn't over yet.

Transportation: Here's one of the more telling charts du jour.  I thought we'd go higher, but on Thursday the trans lost 0.16% on a classic spinning top sitting right on the upper BB.  With the stochastic moving into position for a bearish crossover, this chart is now ringing the bear alarm.  Roar!

Accuracy:

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     12       3      6           0       0.800    431
April      2       0      1           0       1.000    115    
     And the winner is...

We've had a nice run this week but tonight we're seeing a virtual army of dojis on the charts giving a warning of a reversal.  The technical bias is now rather bearish, certainly much more so than last night.  However, I expect Friday to be news-driven by jobs numbers.  Since I have no way of telling that, I can only call Friday uncertain.  But I'd definitely not be going long at these levels.  That's all she wrote.  See you again next 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 uncertain

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

• Thursday uncertain.
• ES pivot 1881.83.  Breaking below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

W aell we managed to squeak out another winner on Wednesday with modest 40 point gain in the Dow.  So with a four day winning streak going, when will the reversal come?  (And it inevitably must come).  Will it be Thursday?  Silence!  Let the charts speak!

The technicals

The Dow: The bears tried to draw the Dow down right after lunch on Wednesday (as they have successfully done for a number of days recently) but this time the bulls would not be denied and they motored on to end near session highs.  So thus our three white soldiers found a new recruit.  We now have a whole squad of white soldiers marching ever higher and rappelling up the upper BB on their way to record territory.  In fact all that stopped it on Wednesday was the previous record high, which we matched within a tenth of a point.  So we ask the same question as last night - does the Dow have the mojo to continue higher?  While the indicators are now all overbought, they're still nowhere near as overbought as the last time we were at these oxygen-mask levels (12/31/13).  So I'm going to have to cautiously say, yes, we could conceivably still go higher from here.

The VIX:  Last night I wrote that with "the lower BB not til 12.79, the VIX just might want to take a look at that level on Wednesday".  Well it didn't quite make it but it got a bit closer with a 0.08% loss.  Now we're near the lower BB with a perfect spinning top and oversold indicators, so the case for a reversal becomes stronger.  But still not quite strong enough that we don't have to wait for confirmation.   VVIX isn't much help here either, implying still lower to come.  So tonight I just take a pass.

Market index futures: Tonight the futures are mixed at 12:42  EDT with ES down  0.04% but YM up just 0.01%. Call it basically flat.  After another day of gains that took ES right to its upper BB, it looks like the tide is beginning to turn.  The futures are not running higher at this hour as they have been recently, the stochastic is starting to level off in anticipation of a bearish crossover rand OBV has peaked.  I'd say after a nice four day winning streak, this chart is turning bearish.

ES daily pivot: Tonight the pivot rises once again, this time from 1872.92  to 1881.83.  Unlike recent nights, this leaves us on the bubble with ES banging down against the pivot.  This is barely bullish, and only as long as we can remain above.

Dollar index: I took a pass on the dollar last night and I'm glad of it because I wasn't expecting a 0.15% gain on Wednesday.  That puts us right back to resistance with overbought indicators.  So the best bet here is a move lower on Thursday.

Euro: On Wednesday the euro took a big dump to fall right out of its rising RTC for a bearish setup. that caused the stochastic to curve over setting up for a bearish crossover.  It appears the euros' three day winning streak may be over.

Transportation: Last night I wrote that the trans had "a bit more room to run Wednesday".  Well they took a big bit with a 0.66% gain that latched onto the upper BB in a big way.  Indicators are now overbought but the stochastic has yet to even suggest a bearish crossover might be coming.  So this one continues to look bullish.

Accuracy:

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     12       3      6           0       0.800    431
April      2       0      0           0       1.000    115 
   
     And the winner is...

Tonight we're starting to see some signs that the recent rally is running out of gas.  There are some technical topping indications but they're not outright bearish at this point.  So the best I can do is to call Thursday uncertain but with a bearish bias.  I'd certainly not be going long at these levels.  A doji day is possible.

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 higher

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

• Wednesday higher, low confidence.
• ES pivot 1872.92.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

It was nice to start off the month and the new quarter with a win as the technicals paid off, no fooling, helped out by some good job numbers.  The leaves us at an interesting juncture so we return to the charts to plot our course forward to Wednesday.

The technicals (daily)

The Dow: Last night I wrote "with the upper BB still at 16,516, I'd say it's entirely possible to see further upside on Tuesday" and how about that, the Dow poked through the upper BB before closing just below it.  That leaves us with a bullish three white soldiers but a conundrum having hit the upper BB.  Do we bounce off or start climbing it?  The high-level bullish stochastic crossover is playing out well, money flow is rising, and RSI has only now just barely gone overbought.  And having easily cleared resistance (finally) at 16,462, it sure looks like we could see yet another day of gains on Wednesday.

The VIX:  I didn't want to take a stand on th3e VIX last night because it was sitting on very strong support with a spinning top.  Well the support just melted away on Wednesday as the VIX dropped 5.62% to 13.10.  And with a completed bearish stochastic crossover from a low level and the lower BB not til 12.79, the VIX just might want to take a look at that level on Wednesday.

Market index futures: Tonight all three futures are higher at 12:32 AM EDT with ES up by 0.17%.  We now have three white soldiers in ES too and a bullish RTC trigger.  RSI has just hit overbought but the stochastic continues rising as does money flow, so that's all bullish.  Also the overnight is continuing higher.  The only question is if it will bounce off the upper BB it just hit.  I don't think we're sufficiently overbought for that to happen immediately.

ES daily pivot: Tonight the pivot rises once again  from 1862.50  to 1872.92.  Just like last night, we remain above the new pivot so this indicator stays positive.

Dollar index: the dollar continued its weird ways on Tuesday, this time dropping 0.01% on a green hammer.  This chart is pretty indecisive tonight so I'll just leave it at that..

Euro: There's a bit more clarity in the euro, which rose again on Tuesday for its own three white soldiers.  The bullish stochastic crossover is complete, we have a new rising RTC and momentum is rising but the indicators are not yet overbought.  So I say we go higher yet again on Wednesday.

Transportation: The trans had another very good day Tuesday, doubling the Dow's gains and hitting their own upper BB exiting a descending RTC with a bullish trigger.  Indicators are still not overbought suggesting at least a bit more room to run Wednesday, especially since we cleared resistance at 7592.


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     12       3      6           0       0.800    431
April      1       0      0           0       1.000     75    

     And the winner is...

After three nice up days, I start to get at least a bit cautious about calling for more, but honestly I'm just not seeing any bearish reversal signs in the charts tonight.  So logic dictates a call of Wednesday 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.

Tuesday higher

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

• Tuesday higher, low confidence.
• ES pivot 1862.50.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Hyper-trading news release

Tue. April 1, 2014 (AP)

Chicago based derivatives exchange operator CME Group Inc said on Tuesday it will launch an innovative new trading platform beginning in April in a bid to boost trading volume.  Called LPT, or Linear Predictive Trading, this product is designed to appeal to high frequency traders looking for ever narrower edges to beat the competition.  To achieve the ultimate in execution speed, LPT actually executes trades before they are placed, thereby saving at least 20 milliseconds per trade.  "This technological breakthrough ushers in a new era in trading" said CME spokesman Emmett Brown.  "No longer will traders have to wait for trades to be executed to get results.  With LPT we are quite literally taking trading back to the future."

Recap

On Monday the technicals worked nicely as the Dow registered a handy 135 point pop.  Now as we begin a new month and a new quarter, what can we expect?  Let us query the charts as we do every night.

The technicals (daily)

The Dow: I'd say the Dow's big move Monday constituted a breakout of sorts from our recent trading range, finally cracking the 16,375 barrier.  In fact, we moved right on up to the next resistance level, right at 16,457.  So the question is, do we have enough gs in the tank to move higher?  Well we note that  the last time we were here, on March 7th, the indicators were quite overbought and the stochastic had just given a bearish crossover.  This time though, the indicators are still not overbought and the stochastic has e=actually executed a bullish crossover form a high level - something that's often good for another day or two of gains.  And with the upper BB still at 16,516, I'd say it's entirely possible to see further upside on Tuesday here.

The VIX:  I missed this one, thinking the VIX would go higher on Monday which it did not.  In fact Friday's spinning top was non-confirmed - by another spinning top, this one near recent support of 13.76.  We haven't been below that since January 22nd, so it would appear that caution is in order.  With a reversal suggestion here, I'd just have so say wait and see.

Market index futures: Tonight the futures are higher at 12:41 AM EDT with ES up by 0.08%.  Like the other charts, on Monday ES popped out of its descending RTC for a bullish setup while the completed bullish stochastic crossover marched on.  This all left us exactly on strong resistance at 1866.  Can we move higher this time?  Well the indicators are a lot less overbought now than the last time we tried so there does seem to be some gas in the tank for a push higher from here.  So far at least the pin action in the overnight seems to suggest  that ES has the mojo for at least a modest push higher on Tuesday.

ES daily pivot: Tonight the pivot rises again from 1850.50  to 1862.50. And once again we remain above the new pivot so this indicator stays bullish.

Dollar index: Last night the dollar looked like it might go lower - just like it looked the previous three days but didn't.  But I guess the fourth time's the charm as the $ finally dropped 0.10% on Monday to fall out of a razor-sharp rising RTC for a bearish setup.  With indicators coming off overbought, I think it's possible we could see more downside on Tuesday.

Euro: And on Monday the euro had the usual mirror image of the dollar, popping up out of its descending RTC for a  bullish setup with a bullish stochastic crossover.  So I'd say it looks good for a higher euro on Tuesday.

Transportation: Last night I wrote "it looks like further gains are a possibility here on Monday" and indeed the trans had an excellent day, doubling the performance of the Dow with a jolly green marubozu that popped right out of their descending RTC for a bullish setup.  With a completed  bullish stochastic crossover and solidly rising indicators, it looks like we could see still more gains on Tuesday.

Performance:

With the first quarter in the books, here are my 2014 YTD trading results so far, compared to the Dow, my benchmark:


        Trading   Dow
Jan.     0.50%  -5.30%
Feb.     3.94%  -1.94%
Mar.     6.01%  -0.72%

Again, my trading goals, in ascending order of difficulty, are:

1. Don't lose money.
2. Make money.
3. Beat the Dow.
4. Get a return around 30%.

So far this year I'm doing reasonably well, though a bit short of that elusive 30%.

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     12       3      6           0       0.800    431

     And the winner is...

Tonight we're seeing mostly bullish signs with a few caution lights.  However, the first of April is traditionally a very good day marketwise, no fooling, so we're going to go with history and call Tuesday 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.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1850.50.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

On uncertainty

Last week we were honored by a visit from Dr. Brett Steenbarger who commented on our occasional use of the call "uncertain" in this blog, here.  When I first started tracking my daily accuracy, it was either right or wrong, higher or lower.  After a while, I realized that sometimes it's not possible to meaningfully call the direction of the market.  Uncertainty comes in three basic forms.

First is the case of headline risk.  No technical analysis can prepare you for an earthquake in Japan or an unexpected Fed announcement.

The second case is when I expect the market to close nearly unchanged - a doji.  Technical analysis can tell you if the market's going higher or lower, but it can't slice finely enough to distinguish between a four point gain and a two point loss.  There's little point in calling such a day higher or lower.

And the third case is when I simply don't have a clue.  It sometimes happens that some of the technical indicators I use are bullish while others are bearish or just in a strange indeterminate state.  Maybe someone else is smart enough to figure out those days, but I'm not so it becomes an "uncertain" call.

But Dr. Steenbarger's comments got me thinking about the ways we can use uncertainty to improve our forecasting skills.  I'll write more about this later this week.  I try to keep the Night Owl short enough to keep from boring my readers to death and I'm afraid we're already over our daily limit.  So without further ado, let's move on.

Recap

Last Friday the market remained it its now six day long trading range seemingly unable to break out over 16,380 nor fall below 16,275.  So the big "X" remains firmly in place in our swing trend box as we move on to the first day of a new week and the last day of the month and the quarter.  Should be interesting...

The technicals (daily)

The Dow: On Friday the Dow bounced off its support once again, confirming Thursday's doji with a 59 point gain.  The indecision in my call for the day was reflected in the RSI which rose closer to overbought and the stochastic which continued falling towards oversold.  With an inverted hammer on the books ending smack in the middle of our recent range, this chart is no closer to resolution than it was last Friday.  So we wait some more for some answers.

The VIX:  nd on Friday the VIX dropped 1.44% to form a perfect spinning top, another candle that requires confirmation.  And yet another day where we touched the 200 day MA, now an amazing 13 or the last 15 days.  So being at the lower end of our recent range  with a rising stochastic and RSi closer to oversold than overbought, it looks like the next logical move is higher on Monday.

Market index futures: Tonight all three futures are higher at 12;41 AM EDT with ES up by a healthy 0.36%.  On Friday ES confirmed Thursday's spinning top reversal with a bullish one white soldier.  And the new candle has opened with a big gap up that was enough to take it just out of the descending RTC for a bullish setup (so far).  It has also formed a bullish stochastic crossover so this chart is now looking decidedly positive for Monday.

ES daily pivot: Tonight the pivot jumps from 1841.00  to 1850.50.  Despite this big gain we remain above the new pivot thanks to  a big gap up in ES as trading opened Sunday evening so this indicator remains  bullish.

Dollar index: On Friday the dollar continued its odd backward march higher, marking the fourth day in a row where it put in a red candle that nonetheless resulted in a daily gain.  This one was a nice hanging man.  So with RSI now just overbought we have a hint of a reversal though I'm not stick my neck out for this one.  It's entirely possible we visit the upper BB, at 54.79 (recall this is $USDUPX) first..

Euro: And on Friday the euro gave us a green hammer after three days of decline that took RSI off oversold.  The new overnight is trading up a bit just outside the descending RTC so there's a hint of a move higher here on Monday, though one that requires confirmation.  The overnight has just broken above its pivot but the trading is pretty flat at the moment.

Transportation: Perhaps the most clear chart of last Friday, the trans gained half a percent with an inverted hammer that confirmed Thursday's regular hammer and caused RSI to bottom at oversold.  The stochastic is now positioned to form a bullish crossover so it looks like further gains a a possibility here on Monday.


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     11       3      6           0       0.786    296

     And the winner is...

The last trading day of March is historically not so hot, but we're now seeing some definite reversal signs in the charts.  I'll note too that Dr. Copper is feeling much better since bottoming on the 20th  and even crossed his 200 day MA to the upside on Friday.  The SPX Hi-Lo index has also moved back to 100.  So all in all I think I'll go out on the limb and call Monday 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.  This is one of those nights where the opportunity was right at the open.  By now, I'm afraid the bus has sailed.