Thursday lower unless ES pivot passed

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

• Thursday lower if ES stays below pivot, else higher.
• ES pivot 1850.08.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well once again the technicals prevailed as my call for a higher Wednesday came to pass.  Putinoia was held at bay and whatever it was that Aunt Janet said didn't seem to bother Mr. Market much.  Now we come to an oddball day indeed - the end of a holiday-shortened week and also op-ex.  Hmm - can the charts point the way out of this conundrum?  Let's take a look.

The technicals

The Dow: After Wednesday's gains we now have a nominally bullish three white soldiers going.  But I will observe that each day's gains have been smaller than the day before.  This may be a function of the approaching holiday, waning buying interest, or both.  Nonetheless we now have a good rising RTC going, along with rising indicators so this chart remains bullish until proven otherwise.

The VIX:  Last night I wrote of the VIX "there's still more downside on the way for Wednesday".  And was there ever, with the VIX falling out of bed in a big 9.16% gap down that sliced right back through its 200 day MA.  With a completed bearish stochastic crossover, 200 MA cross, falling indicators that are still a ways from oversold and only halfway to the lower BB, I still don't think the VIX is done falling.


Market index futures: Tonight, all three futures are lower at 12:52 AM EDT, with ES down by 0.18%.

ES daily pivot: Tonight the pivot rises again from 1830.92  to 1850.08. This bump combined with ES's sag now leaves us below the new pivot so this indicator turns bearish.  ES gave us a three white soldiers pattern on Wednesday and remains in a new rising RTC.  However, it appears to be running out of gas after such a nice three day run and the indicators seem to have peaked before even hitting overbought.  It's looking like ES may be taking a breather on Thursday.

Dollar index: Last night I wrote "the dollar's going lower on Wednesday." and it did, just barely, down 0.01% but on a green candle.  With a completed bullish stochastic crossover and rising indicators, I'm now thinking the dollar could move higher on Thursday.

Euro: I didn't call the euro last night which is just as well since it put in an inverted hammer on Wednesday for a fractional gain.  But it seems to be getting into gear in the overnight, up 0;3% so far which is bending the stochastic around to nearly form a bullish crossover.  Money flow continues to rise and we now have a bullish RTC trigger so I'd say the euro's moving higher on Thursday.

Transportation: Last night I wrote "This chart is now looking solidly bullish".  Well I'd say a solid green marubozu for a 1.67% gain on Wednesday counts as pretty bullish in my book.  This move solidified the bullish stochastic crossover, sent the indicators rising off oversold, and gave us a bullish RTC trigger.  This chart remains bullish except for the fact that we closed right as resistance on Wednesday.  But there does seem to be some gas in the tank to motor higher from here Thursday.

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      6       2      3           0       0.750    301

   
     And the winner is...

Tonight most of the technicals are bullish, with the lone exception of the futures.  And why might that be?  Well it's a funny week, with a holiday on Friday and op-ex on a Thursday.  Traders might not want to be long over a long weekend while in the grips of Putinoia, possible invasions from Mars, and all the other things that they're always worrying about.  So this looks like a good time to make a conditional call: if ES remains below its pivot by mid-morning Thursday, we close lower.  But if ES breaks above the pivot and stays there by mid-morning, we close higher.  Hey it's worth a shot.  Happy Easter egg hunting and see you again Sunday night.

ES Fantasy Trader


Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 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 1830.92.  Holding above is bullish.
• Thursday bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Whee!  Who needs Disneyland when we've got the stock market, which took us on a wild roller coaster ride on Tuesday.  First it was up, then it was down, then it was up again - it's almost enough to make me start daytrading.  Blame it on Putinoia, on op-ex, on the holiday week, whatever.  The technicals came through and that's all that counts.  So with just two more days to go in this week, let's see what Wednesday has in store, chartwise.

The technicals

The Dow: Last night I wrote "suddenly this chart turns bullish".  I was mentally writing my excuses for being so badly wrong around lunch time Tuesday but then a fierce afternoon rally saved the day.  Whew!  This left us with a fat hanging man and a bullish, if somewhat sketchy RTC setup.  We're still only just coming off oversold on the indicators and a bounce off the lower BB so I have to think there's still more upside left here.

The VIX:  Last night I wrote (I need an acronym for this, like LNIW) "there's more downside to come here on Tuesday".  And the VIX obliged, dropping 3.10% on an inverted hammer that just barely gets us off overbought and completes a bearish stochastic crossover.  Note how once again, the VIX wasn't able to hang onto its upper BB.  A tip of the Hatlo hat - they'll do it every time.  With the bearish evening star confirmed, it looks like there's still more downside on the way for Wednesday.

Market index futures: Tonight, all three futures are higher at 12: 22 AM EDT, with ES up by a respectable 0.30%.  Monday's bullish piercing pattern in ES paid off nicely on Tuesday giving us two white soldiers marching higher.  And we're getting some decent pin action in the overnight with a move that pulls ES out of a wide descending RTC back to April 4th for a bullish setup.  The indicators all continue rising so this chart continues looking bullish tonight.

ES daily pivot: Tonight the pivot jumps from 1818.58  to 1830.92. The monster Tuesday afternoon rally has placed us well above the new pivot so this indicator remains quite bullish for Wednesday.

Dollar index: Last night I was looking for some sort of gap-filling for the dollar but mentioned that lower was possible at some point this week.  Well we rose 0.10% on Tuesday but did it with a red hanging man.  That leaves the chart (bearish) in conflict with the oversold indicators and bullish stochastic crossover.  I think I'm goring to go with the candlesticks and claim the dollar's going lower on Wednesday.

Euro: Last night I wrote about the euro, "there's more downside left here on Tuesday" and so there was, with the euro ending at 1.3808 with a red spinning top.  The indicators are now falling off overbought with the lone exception of money flow which is rising.  And we're up 0.07% in the overnight, just crossing above the pivot.  But that all leaves this chart too conflicted to call tonight.

Transportation: Last night I wrote "this chart now has a suggestion of a move higher".  And it was an excellent suggestion indeed as the trans rose 0.86% on Tuesday, completing a bullish stochastic crossover and exiting their descending RTC for a bullish setup.  This chart is now looking solidly bullish, you betcha.

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      5       2      3           0       0.714    139

   
     And the winner is...

We went a bit out on a limb last night by calling Tuesday higher based primarily on reversal signs.  But tonight we've seen those signs confirmed so I feel a bit better calling Wednesday higher.  Of course with things possibly heating up in the Ukraine, this could change quickly.  Unfortunately, my bug in the Kremlin seems to be out of order at the moment, so we'll have to go with just the technicals.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 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 1817.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Hmm - interesting.  Last night I suspected we were nearing a reversal at some point this week but I didn't think it would come on Monday, hence I went with the patterns I saw which suggested lower.  Turns out we got our reversal after all, ostensibly on some economic news - whatever.  As I said last night, I'm always glad to be proven wrong on a bearish call since I'm always net long.  So the underlying thesis worked out but the timing was a bit off.  But then calling the bottom is probably the hardest thing to do - even more than calling tops.  So now we have to ask whether this reversal's got legs or if it's just another fakeout breakout like we got last Wednesday.  To the charts!

The technicals

The Dow: Just last night I talked about the pivot.  Had I been awake at 9:30 AM on Monday I would have seen the Dow jump above its daily pivot right out the gate.  And that was all it took as we finished with a nice 146 point pop that completely erased Friday losses.  The candle is sort of piercing line meets engulfing pattern but bouncing off the lower BB as it did, it sure looks bullish to me.  RSI looks to have bottomed and the 16K round number support was never even threatened.  So suddenly this chart turns bullish.

The VIX:  Last night I wrote "it looks like a lower VIX is coming soon" and it came sooner than I thought, down 5.4% on Monday on a big (and unusual) gravestone doji.  For my money, this completes the bearish evening star from Friday and with indicators still overbought, I now think there's more downside to come here on Tuesday.

Market index futures: Tonight, all three futures are higher at 12:18  AM EDT, with ES up by 0.07%.  On Monday ES put in a class bullish piercing pattern and money flow turned higher for the first time since April 3rd.  The stochastic is still pretty jumbled but after two days closing and then opening under the lower BB, this chart now looks positive to me.

ES daily pivot: Tonight the pivot inches up from 1817.00 to 1818.58.  Thanks to its amazing late afternoon rally, ES is now well above the new pivot so this indicator is bullish.

Dollar index: On Monday the dollar had a big gap-up but small range day that was enough to generate a nice bullish stochastic crossover.  These big yawning gaps always want refilling though some I'm going to guess that some sort of gravitational attraction will pull the dollar back modestly on Tuesday.  Longer term though, we now have a completed bullish RTC trigger so I'm looking for higher later this week.

Euro: And on Monday the euro took a dump, falling out of its rising RTC for a bearish setup and a bearish stochastic crossover.  With indicators still overbought, I claim there's more downside left here on Tuesday.

Transportation: On Monday the trans posted a somewhat less impressive gain than the Dow with a little inside harami spinning top.  Having also bounced off their lower BB with oversold indicators, this chart now has a suggestion of a move higher.

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      4       2      3           0       0.667     50

   
     And the winner is...

Both the SPX Hi-LO index and the NYSE A/D line rebounded nicely on Monday.  And we're seeing more concrete reversal signs of a move higher tonight than last night.  The VIX in particular is teetering on its upper BB and seems more likely to move lower than higher from here.  I think I missed Monday by not having enough conviction in my position so tonight I'm just going  say I believe that we see Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Monday lower

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

• Monday lower, low confidence.
• ES pivot 1817.00.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

The selling simply continued on Friday as no one wanted to stay long the weekend with a weak-looking technical picture.  Someone on CNBC also mentioned tax selling.  I was thinking tax-loss selling, but that's supposed to happen in December.  Then I realized he meant people simply selling stocks to raise cash to pay their taxes.  Do people really  do that?  I mean wait til the last second to sell?    There maybe something to that as I went back and checked the week before April 15th.  Going back three years, yup sure enough, the market goes lower.  Something to think about next year.  Now things get complicated as we enter a holiday-shortened week.

The technicals

The Dow: Friday's action took the Dow down to and actually below its lower BB.  Indicators are now quite oversold though not extremely so.  We broke support at 16,066 and all that remains now is the hard number at 16K even.  The 200 day MA at 15,752 is coming into view as the ultimate backstop but I don't think we'll get there this week.  Still, there's no immediate reversal sign on this chart so it continues to look bearish.

The VIX:  On the other hand, there is a reversal sign on the VIX.  On Friday the VIX gained 7.27% but did it on a gap-up spinning top to form 2/3 of a classic bearish evening star.  Reinforcing this is the fact that the VIX crossed its upper BB and even closed above it.  Once again I state that the VIX rarely spends more than a day or two above its upper BB before retreating.  Indicators are now quite overbought so it looks like a lower VIX is coming soon, though maybe not perhaps as soon as Monday.

Market index futures: Tonight, all three futures are lower at 12:28 AM EDT, with ES down by 0.15%.  ES, like the Dow put in two nasty down days to end last week.  And there seems to be no end in sight.  OBV is decidedly negative and continues to fall, and money flow has been decreasing since April 3rd.  And what was an incipient bullish stochastic crossover was short-circuited so while the indicators are now oversold, there's no sign of a turn-around.  The only ray of hope here is that the developing candle is looking like a spinning top reversal but it's generally poor practice to read too much into a half-baked candle.  ES also has no support until the round-number 1800 level, and then 1797.

ES daily pivot: Tonight the pivot tumbles again from 1839.42 to 1817.00. Even with this big drop we're still beneath the new pivot so this indicator remains bearish.  I was asked today by a reader about my use of the pivot.  There's a good introduction to pivots here: https://en.wikipedia.org/wiki/Pivot_point.  This is a concept I can thank Dr. Steenbarger for s well as many other insights into the market.  I'm afraid my use of the pivot is pretty simple, some might say simplistic, but it works for me.

I really have just two basic rules.  Price moving above the pivot from below is a bullish sign, and vice-versa.  And the second rule is that you should watch out during a trending pattern for the stock or whatever to get too far extended from the pivot as that can signal a reversal.  I guess it's just a fancy way of saying "reversion to mean" but the pivot gives you a nice anchor for where that mean should be considered to be.

I also have what I call a "conditional forecast" that uses the ES pivot.  Sometimes if ES is close to its pivot in the wee hours of the night, I'll take a guess that the market will close in the direction of the pivot crossing if it makes one before mid-morning the next day.  So if we're above the pivot and stay above, that's bullish.  But if we break down under the pivot, the market will close lower.  It doesn't always work, but it works often enough to be useful.

Dollar index: The dollar on Friday posted a 0.09% gain on a red candle.  But that was enough toe just exit the descending RTC for a bullish setup, while driving RSI down to very oversold and leaving the stochastic on the floor flat as a pancake.  With support holding it looks like we have a hint of a reversal, but on that requires confirmation on Monday.

Euro: And on Friday the euro put in a classic doji star right at the top of Thursday's green marubozu after four straight days of gains.  The overnight is seeming to confirm this doji, trading sharply lower and creating a bearish stochastic crossover, and making Monday look like a loser for the euro.

Transportation: On Friday the trans pretty much reflected the Dow so the same comments apply here too - oversold but no immediate reversal in sight.

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      4       1      3           0       0.800    196

   
     And the winner is...

The SPX Hi-Lo indicator I use comes from stockcharts.com and they're showing a reading of zero tonight which I'm pretty sure is wrong.  I think it's more like 35 which is still pretty low but frustratingly not low enough to be a major reversal sign.  Also the NYSE A/D line continues to put in lower highs and lower lows - a bearish sign.  And the Morningstar Market Fair Value Index has now fallen to 1.01, its lowest level since January 27th (on the way down) - and that wasn't the bottom back then either.  There's only a tiny smattering of hope in the charts tonight making me think we might see a reversal later this week but I don't think it's going to be Monday, hence I'm regrettably calling Monday lower.  I'll be happy to be proven wrong since I'm always net long.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.