Friday lower

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

• Friday lower, low confidence.
• ES pivot 1871.58.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

It was nice to get one right for a change as Wednesday night's technical setup played out to perfection on Thursday with broad losses across the board.  Trouble in Europe, housing prices, whatever - the nice part about technical analysis is that you can ignore the news - it's already baked into the charts.  So let's take a peek inside the oven to see maybe what's cookin' on Friday.

The technicals

The Dow: Thursday was a good example of the power of regression trend analysis coupled with candlestick charting.  Tuesday the Dow  gave us an inverted hammer that touched the upper BB.  Wednesday's drop took us out of the rising RTC for a bearish setup, and then boom, on Thursday the bottom fell out.  We've now got a bearish RTC trigger and a fully developed bearish stochastic crossover.  The indicators suggest there's still more downside to come but the magnitude of the losses of the two past days makes me think that we could see a DCB before proceeding on to the lower BB which is now at 16,345.

The VIX: On Thursday the VIX broke out of a narrow three-day range with an 8.22% pop with an inverted hammer.  But with indicators only just now coming off oversold, s fresh bullish stochastic crossover, and an upper BB not til 14.25, it looks like more upside is not out of the question.  I am a bit bothered by a star/inverted hammer combo in VVIX though, which suggests lower so that might act as a brake on the VIX on Friday.

Market index futures: Tonight all three futures are lower at 1:23 AM EDT with ES down a slight 0.03%.  ES is, so far at least, seeming to have found some support around 1866.  But with indicators still only halfway to oversold and the lower BB not til 1856.73, there's clearly still some room left to run lower.

ES daily pivot: Tonight the ES daily pivot dives from 1888.25 to 1871.58.  And even that's not enough to put ES above the new pivot so this indicator remains bearish.

Dollar index:  Last night I wrote "the dollar looks lower on Thursday" and it was, just 0.09% but on a really tall red candle that broke above its upper BB at the top and pushed the indicator s to very overbought.   A bearish stochastic crossover is now complete so I think this somewhat unorthodox bearish evening star is suggesting lower still on Friday.

Euro: Meanwhile in euroland on Thursday we got  a simple long-legged doji  I did say last night that "I'd be looking for a higher euro on Thursday" and that's just what we got with a close of 1.3714.  But with this sort of indecision, where we go from here is anyone's guess.  I'm not touching this chart with a 10 foot Pole - or Ukrainian.

Transportation: The trans suffered on Thursday, but only 2/3 as much as the Dow and ended with a respectable hammer suggesting a reversal.  But we also got a bearish stochastic crossover along with indicators coming down off highly overbought and a fresh descending RTC.  I think that takes precedence, so I'd have to say this chart is still looking bearish for Friday.

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      9       3      5           0       0.750    482    May        3       4      3           0       0.429     40


     And the winner is...

The technicals are still generally pointed lower tonight but after two days of non-trivial losses, we're nearing some reversal points.  But we're not quite there yet and since I dont' see any actual bullish reversal signs, I think I'm just going to have to call Friday lower again, though I'm not expecting another triple digit down day.


ES Fantasy Trader

It seemed like a reasonable setup last night so I decided to go for it with a short play and was rewarded with a nifty 19.75 point profit Wednesday morning.  Not bad for 11 hours work, most of which I, once again, spent sleeping.  We only left a little bit on the table so I can't really complain.  Here's the trade right from the Interactive Brokers ledger, as posted live on Twitter:

BOT    10    false    ES    JUN14 Futures     1865.25    USD    GLOBEX    11:08:31
SLD    10    false    ES    JUN14 Futures     1885.00    USD    GLOBEX    00:17:12
Portfolio stats:  the account now rises to $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside with the expectation that we've caught the meat of the current trend and that a reversal could be coming soon.

Thursday lower

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

• Thursday lower, low confidence.
• ES pivot 1888.25.  Holding below is bearish.
• Friday bias lower technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader goes short at 1885.00.

Recap

Well I sure picked the wrong day to be wrong as the Dow took a 101 point dump on Wednesday.  It's not like we didn't have any warning of a reversal though - it was just one that required confirmation, and we got that in a big way.  So the question becomes whither Thursday.  Let's see if we can get one right for a change.

The technicals

The Dow: Wednesday's dive sent the Dow out of its rising RTC for a bearish setup.  It also peaked the indicators at overbought and formed a bearish stochastic crossover.  So we go from a reversal warning to an out-and-out bearish chart..

The VIX: Somewhat surprisingly considering the sharp reversal in the market, on Wednesday the VIX was up only 0.33% - and it did that on a red candle, the sixth in six days.  We once again touched the lower BB and it looks like support is holding just above 12.  The three-day pattern isn't one I officially recognize, but it has the flavor of a morning star, so with oversold indicators I'm going with that - I say the VIX looks higher from here.  A big jump in VVIX supports that idea.

Market index futures: Tonight all three futures are mixed at 12:15 AM EDT with ES flat, NQ up 0.08% but YM down just one pip.  Call it basically unchanged.  On Wednesday ES confirmed Tuesday's doji in a big way, bouncing right off the upper BB to form a bearish stochastic crossover.  With the overnight pin action going nowhere, this chart continues to look bearish.

ES daily pivot: Tonight the ES daily pivot drops from 1894.92 to 1888.25.  After falling below the pivot early Wednesday we remain below the new number so this indicator is now bearish.

Dollar index:  Last night I wrote "I'd not be going long the dollar on Wednesday" and good thing too because the dollar took a small gap down for a 0.10% loss.  But that was enough to leave us hanging on the edge of a bearish RTC setup and a bearish stochastic crossover.  With a bearish evening star pattern going, and a fair amount of gap from last week still needing retracing, the dollar looks lower on Thursday.

Euro:After a week of big losses, the euro took a breather on Wednesday, ending with a tiny gain that still left it pretty oversold.  A gap up move higher in the overnight suggests that the selling may be over and I'd be looking for a higher euro on Thursday.

Transportation: Ah, that upper BB gets 'em every time.  On Wednesday the trans dropped 0.87% and like the Dow formed a bearish stochastic crossover with indicators that have now peaked at overbought.  And we also have a bearish RTC setup so this chart is looking just plain ugly tonight.

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      9       3      5           0       0.750    482   
May        2       4      3           0       0.333   -127

     And the winner is...

Last night I made a bullish call mostly on the absence of any overtly bearish signs.  Well tonight we've got them, pretty much all over the place.  Hence, I am calling Thursday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 short.  Tonight we go short at 1885.00.

Wednesday higher

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

• Wednesday higher, low confidence.
• ES pivot 1894.92.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Last night I cautiously called Tuesday higher with "the expectation of a much smaller move than Monday and possibly a doji day."  I'd say Tuesday's modest 20 point gain on a stubby inverted hammer qualifies.  So with that out of the way, we move on to Wednesday without further ado.

The technicals

The Dow: Tuesday's inverted hammer left us clinging to the upper BB while driving the indicators further overbought, though not yet extremely so.  We also remain in a rising RTC so what we have here is a reversal warning but one which requires confirmation..

The VIX: :Last night I thought the VIX might be getting ready to move higher but it wasn't quite time as it dropped a meager 0.82% on Tuesday, once again touching its lower BB with a lumpy-looking spinning top.. We remain right around an important support level above 12 so I still think the next move is higher from here.

Market index futures: Tonight all three futures are higher at 12:45 AM EDT with ES up 0.12%.  Last night I expressed some concern about ES approaching its upper BB and how that could provide resistance.  That proved to be the case as ES made a failed attempt to break above the BB on Tuesday finishing just below it with a lopsided spinning top.  However - the overnight is not confirming that sign and despite indicators now overbought, both money flow and OBV continue to rise.  And the new candle is in fact making a new move on the upper BB.  With Tuesday acting as something of a backstop now, this chart still looks bullish to me.

ES daily pivot: Tonight the ES daily pivot rises from 1886.92 to 1894.92.  Thanks to a slow drift higher after the close Tuesday ES remains above the new pivot by a few points so this indicator continues bullish.

Dollar index:  Last night I anticipated a drop in the dollar - a bit prematurely, as the dollar took a big 0.31% gap-up pop on Tuesday.  But that formed 2/3 of a classic evening star pattern.  And given that the indicators are now overbought and that the stochastic is starting to flatten out in anticipation of a bearish crossover, I'd not be going long the dollar on Wednesday.

Euro: And so of course I was wrong about the euro to, which continued its now week-long slide on Tuesday to close below its lower BB at 1.3697, right on a support line.So this is one falling knife I'm not going to try and catch.  We remain in a descending RTC and until I see an exit, it's lower for the euro.

Transportation: Amazingly, on Tuesday the trans continued to outperform the Dow, gaining another 0.46% to trade entirely above their upper BB.  That drove the indicators well into overbought territory and started me thinking that what goes up that much must come down eventually.  The last four days' action has the look of an exponential run-up anyway which makes me think some profit-taking is coming Real Soon Now.

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      9       3      5           0       0.750    482  May        2       3      3           0       0.400    -26

     And the winner is...

What a difference a day doesn't make.  Tonight we're pretty much in the same situation as last night technically, with charts, near various support and resistance lines.  And the conclusion seems to be pretty much the same as last night too - in the absence of any direct bearish signs, I guess I just have to cautiously call Wednesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 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 1886.92.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well we finally got on the board for May with a correct call as the Dow gained 112 points on Monday for another record close.  he headline risks of the Ukraine didn't amount to much so that crisis is averted for now.  So we simply move on to Tuesday and follow wherever the charts may lead us.

The technicals

The Dow: On Monday the Dow remained well within a rising RTC and disconfirmed Friday's hanging man to finish at another record close, just barely reaching its upper BB.  But even this big gain didnt' quite push us to overbought.  The question now is do we creep up the upper BB or bounce off?  My guess is that after a big move like this, some consolidation is in order, particularly off the upper BB..

The VIX: Last night I asked if the VIX support level would hold and opined that "A bearish stochastic crossover and a VVIX lacking support both suggest "no" despite oversold indicators.".  Good suggestion, as the VIX .gapped down 5.34% on Monday to just touch its lower BB right at a new support level of 12.23.  The resultant hammer suggests some retracement may be coming on Tuesday though.

Market index futures: Tonight all three futures are higher at 12:11 AM EDT with ES up 0.09%.  ES had a big day Monday finally breaking out of a nervous trading range that has plagued us and bedeviled me for over two weeks now.  We managed to take out the March highs and nearly hit the upper BB.  That also solidified the bullish stochastic crossover and broke money flow out of a slump that began at the start of May.  Now while that all looks bullish, we are in fact bumping right up against the upper BB in the overnight and it's been declining for a few days now.  These "roofing" upper BB's aren't too conducive to attempts to climb them so I'm not really sure how much upside is left here.

ES daily pivot: Tonight the ES daily pivot jumps from 1870.33 to 1886.92.    Once again we remain above the new pivot so once again this indicator remains positive. 

Dollar index:  Last night I wrote that "Monday will see a pause in the dollar" and I'd say that exactly unchanged fits the bill.  The failure of the dollar to advance along with indicators nearing overbought increases the odds of a drop to retrace some of last Friday's big gap up.

Euro:And on Monday the euro similarly went nowhere on a tiny star doji that only moved the indicators more oversold.  We've now glanced off the lower BB so the next move seems to be more likely higher from here. We do need to get past the pivot at 1.3758 first though.

Transportation: The trans shifted into high gear on Monday, powering nearly 2% higher right through their upper BB and moving the indicators overbought.  Recent history suggests the trans respect the upper BB so I'd look for a rest, possibly a doji, on Tuesday.

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      9       3      5           0       0.750    482 
May        1       3      3           0       0.250    -46

     And the winner is...

While we've clearly developed a bit of bullish momentum recently, we're also now nearing some stopping points in the form of resistance levels and we have some reversal warnings in the form of dojis on the charts tonight.  I think that we're near s short-term top but who knows whether it's Tuesday.  Accordingly, and in the absence of any overtly bearish signs, I'm just going to call Tuesday higher, with the expectation of a much smaller move than Monday and possibly a doji day.

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 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 1870.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

I kind of ran out of time last Thursday and wasn't able to put my post together to call Friday.  Turns out Mr. Market was interested in revisiting the all-time highs even after an inverted hammer on Thursday suggested lower.  That leaves us in an interesting state, which we will now proceed to investigate for Monday.

The technicals

The Dow: The combination of green marubozu, inverted hammer, then higher hanging man is highly unusual.  The last one I found was over a year ago, in February 2013 The next day back then was higher and I suspect it might be here too.  We have now exited a descending RTC for a bullish trigger and  also gotten a complete bullish stochastic crossover.  We are admittedly right on the resistance that stymied the Dow twice before last month but this time we're in much better shape, indicator-wise implying there's more gas in the tank for a push higher on Monday.

The VIX: Whew - the VIX now appears to be back in gear, in inverse correlation, falling 3.80% on Friday as the markets rose.  And right back to recent support too.  Will this level hold?.  A bearish stochastic crossover and a VVIX lacking support both suggest "no" despite oversold indicators.

Market index futures: Tonight all three futures are higher at 12:55 AM EDT with ES up 0.20%.  ES ended last week with a spinning top on Thursday and a hammer on Friday.  The latter provided a bullish RTC setup and the new overnight is the trigger.  We also have a nascent bullish stochastic crossover forming so this chart would appear to be gearing up for another stab at resistance around 1880.

ES daily pivot: Tonight the ES daily pivot dips from 1874.00 to 1870.33.  After breaking above the old number last Friday, that still leaves us above the new pivot so this indicator is now bullish.

Dollar index:  Wow!  On Friday the dollar took a monster sky rocket 0.70% gap up to bust out of a nearly month-long descending RTC for a bullish setup.  It also confirmed a bullish stochastic crossover in a big way.  These yawning gaps always worry me though as they invite retracement, so I'd have to guess that Monday will see a pause in the dollar.

Euro:And on Friday the euro gave us a dark cloud cover.  The new overnight is wide-ranging but ultimately lower, seeming to confirm Friday's pattern.  I'd have to say the euro's going lower Monday.

Transportation: The trans chart from Friday is particularly confused with a tall gravestone doji Thursday followed by a hanging man Friday.  Indicators  are mixed, with half moving higher and the rest moving lower so this chart is just too tough for me to digest tonight.

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      9       3      5           0       0.750    482    May        0       3      3           0       0.000   -158

     And the winner is...

The original Anschluss ballot, with sample voting instruction.

 

Technically, the markets are looking fairly bullish tonight.  The only question right now is the headline risk posed by the Anschuluss referendum in Austria, uh I mean Ukraine, this evening.  Now Adolf Putin has admittedly promised he was withdrawing his Panzers from the border last week but golly, I'm not sure the man is entirely trustworthy.  But for the time being the only logical course of action seems to be to stick our heads in the sand mumbling something about "Peace in our time" and call Monday higher.  That could change...

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 short.  Tonight we stand aside.