Friday higher

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

• Friday higher, low confidence.
• ES pivot 1889.00.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Quote of the Day

  "The stock market is in a particularly moronic phase of its life right now"

                                   - Jim Cramer

Recap

Poor Mr. Market, who just gets no respect.  At least we managed two consecutive up days in a row, even if Thursday was just 10 points for the Dow.  So as the madcap month of May merrily marches on, let's see now how the week before Memorial Day might end.

The technicals

The Dow: After a big gain on Wednesday the Dow put in a small spinning top on Thursday, warning of - surprise - a reversal for Friday.  Against that we have a second day outside the descending RTC and that's a bullish trigger.  Also the stochastic now clearly has a bullish crossover.  So overall I'd say this chart is still looking higher for Friday..

The VIX: The weirdness just continues as the VIX put in yet another day of positive correlation with the market, gaining 1.01% on Thursday.  This isn't all that big a surprise considering the strength of support at 12 and the fact that we touched the lower BB on Wednesday.  Anyway, Thursday's clear hammer is a bullish sign for Friday.

Market index futures: Tonight all three futures are higher at 12: AM EDT with ES up %.  ES made it two in a row with a small gain on Thursday that brought it near resistance at 1895.    But the indicators are not yet overbought and the upper BB is at 1896, so there's still some room to run left here.  The overnight action so far seems to support this idea.

ES daily pivot: Tonight the ES daily pivot rises from 1879.33 to 1889.00.  After being above the old number all day Thursday we remain above the new pivot, and although it's not by as much this indicator remains bullish.

Dollar index:  Ah, that tall inverted hammer on Wednesday sure fooled me.  The dollar did not go lower on Thursday but gained 0.19% to continue a week-long uptrend.  This move also formed a bullish stochastic crossover so it now looks like there might be some more upside available here.

Euro: At least I got the euro right which continued its recent slump on Thursday to close at 1.3650.  That consolidated our bearish crossover from a low level which is usually good for a day or two of declines.  And with the 200 day MA at 1.3627 now in easy striking distance, I expect the euro to take a peek at that number on Friday (and possibly bounce off).

Transportation: Well I missed the trans too which did not go lower on Thursday, gaining instead a decent 0.53% for another record close.  This comes even as the indicators were descending off overbought. With two white soldiers and an upper BB now at 7972, the way seems clear for at least a bit more upside on 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        5       6      4           0       0.455   -112

     And the winner is...

With a big holiday coming up next week, I expect trading to be on the light and choppy side Friday as the big players helicopter off to the Hamptons or guide their Gulfstreams to the Bahamas for the long weekend.  But with some bullish signs on the charts and no negative ones, I'm just going to call Friday higher.  Happy Memorial Day to all and see you again Monday night.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

Thurssday higher

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

• Thursday higher, low confidence.
• ES pivot 1872.42.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Huh - well Wednesday was the day I was expecting on Tuesday as the market retraced all of its losses plus a bit.  These kinds of move just mystify me.  But this one did provide a bit more clarity and we'll elaborate as we run down the usual suspects in search of Thursday's close.

The technicals

The Dow: On Wednesday the Dow posted a 159 point gain that made Tuesday just vanish.  It also sent the indicators higher just barely before they were to go oversold.  And it gave us a decent bullish stochastic crossover.. And taking a broad RTC back to May 13th, we got a bullish setup too so this chart now looks bullish, especially after bouncing off the lower BB on Tuesday.

The VIX: So much for the bullish harami - this chart surprised me by losing a big 8.10% on Wednesday, busting support at 12.45 and 12.13, and not stopping until it hit the lower BB at 11.79.  And that was enough to form a bearish stochastic crossover from a mid-level.  We now have to go to the weekly chart to fins and support and that's not til the end of July of last year.  And on a broader monthly view, we're at levels not seen since early 2007!  There now seems to be a lot more upside potential than downside risk to the VIX but I'm not sure that's happening on Thursday.  We'll need to see a reversal candle first and Wednesday was not it.

Market index futures: Tonight all three futures are higher at 1:52 AM EDT with ES up 0.19%.  Wednesday saw a big retracement, bullish-engulfingly of Tuesday's dump.  That confirmed support at 1866 and cleared the way to the upper BB at 1893.  Will we see that on Thursday?  I doubt it, but there's a fair amount of gas in the tank from these levels so this chart looks bullish to me from here.

ES daily pivot: Tonight the ES daily pivot rises from 1872.42 to 1879.33.  But even that gain still leaves ES above the new pivot so this indicator now turns bullish.

Dollar index:  On Wednesday the dollar gained a meager 0.07% but did it on a giant inverted hammer.  With the indicators continuing to fall off overbought, this one looks lower for Friday.

Euro:And on Wednesday the euro broke its support at 1.3693 with a long-legged doji lower to close at 1.3678.   That caused the stochastic to narrow up in preparation for a bearish crossover just as RSI came off oversold.  This chart now looks lower and the overnight seems to support that idea, down 0.10% already.

Transportation: After an up/down/up move, the trans just don't know which way they want to go.  The operative thing here is three days of lower highs.  Combined with support at 7833, we've got a descending triangle forming. That suggests lower to come so I'm not optimistic 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        4       6      4           0       0.400   -122

     And the winner is...

What a difference a day makes.  Tonight the picture is looking fairly bullish, and I do see enough positive signs in the charts to call Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

Wednesday uncertain

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

• Wednesday uncertain.
• ES pivot 1872.42.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well I certainly seem to have the knack for picking bad days to be wrong.  After my call for a higher Tuesday, the Dow lost a big 138 points after poor retail sales, more Fed Head blathering, whatever, pick your excuse.  Regardless, it looks like one of those days when the news trumped the technicals.  There's not much to be done about that, so we just move on to Wednesday.

The technicals

The Dow: n Tuesday the Dow short-circuited a nascent uptrend with a dive that erased two days worth of gains , broke support at 14443 and didn't stop til it touched the lower BB.  And even then we're still not quite oversold.  The indicators are in fact all still pointed lower.  The best hope at this point is support at 16,363 but there's no really good sign even that will hold on Wednesday..

The VIX: I didn't think the VIX looked bullish for Tuesday but it did deliver a 435% advance in the form of a textbook bullish harami.. With rising indicators recently off oversold, this chart now really does look bullish.

Market index futures: Tonight all three futures are basically flat at 12:39 AM EDT with ES unchanged and YM up just 0.02%.  On Tuesday we quickly erased two days worth of gains but stopped at strong support at 1867.  It was enough to drive ES oversold, though the indicators continue to head lower.  This is where the overnight becomes important.  But frustratingly enough, once again we've got no guidance at all.  This might actually be a positive as it indicates that support is holding.  But with the RTC in chaos, this chart is too tough to call.

ES daily pivot: Tonight the ES daily pivot falls from 1877.00 to 1872.42.   With Tuesday's action, we're now below the new pivot so this indicator turns bearish.

Dollar index:  And I got the dollar wrong too as it gained 0.06% on Tuesday to break out of a short descending RTC for a bullish setup.But it was a small red spinning top and with indicators still heading off overbought, I'll once again claim the dollar is moving lower.

Euro: Meanwhile the euro remains mired in the doldrums around 1.3696.  That level is now very good support but there seems to be no impetus to move higher so we just continue drifting sideways into a second week of this.

Transportation: After two big gains I wasn't ready to call the trans last night and it's good I didn't because they took a dump on Tuesday too, down nearly a percent for a bearish engulfing candle that caused the indicators to peak at overbought.  This chart now looks bearish/

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        4       6      3           0       0.400   -122

     And the winner is...

My carefully laid out thesis for a move higher last night was pretty much torpedoed by the news on Tuesday.  I think we may be near a move higher but Mr. Market seems to be tuning in to the Fed again and with Fed minutes out on Wednesday I think discretion is the better part of capital preservation, so we're going to sit on the sidelines for this one and call Wednesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

Tuesday higher

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

• Tuesday higher, low confidence.
• ES pivot 1877.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

On Monday we got a modest advance in the market but with an interesting candlestick that we will now examine in further detail as we examine the consequences for Tuesday.

The technicals

The Dow: The Dow gained 21 points on Monday but did it with a tomahawk (a hanging man with a bit of an upper shadow sticking out).  This gain caused the indicators to pause on their march towards oversold.  Of particular interest is that OBV has now been rising for three straight days.  So we have a reversal candle along with some bullish indicators.  That's a wash in my book so we take a pass on this chart tonight.

The VIX: Last night I wrote "I think we could be in for more downside on Monday".  Good thinking, Night Owl as the VIX dropped another 0.16% on Monday..  The pattern isn't classical but reminds me of a bearish two crows so that will have to do.  The RSI moved lower and the stochastic squeezed a bit  as if to prepare for a bearish crossover from a low level which often precedes a move lower.  With no support still until the 12-ish area, this chart does not look bullish tonight.

Market index futures: Tonight the futures are mixes at 12: 13AM EDT with ES down  by just one tick but YM up 0.02%.  Like last night, we're essentially flat on the evening as the futures are giving up precious little guidance.  The ES daily on Monday did exit its descending RTC for a bullish setup.  ES would need to trade below 1870 on Tuesday to cancel that and I just don't see that in the cards.  We also now have a completed bullish stochastic crossover to go with indicators still a long way from overbought  And having now cleared resistance at 1879, I think this chart continues to look bullish.

ES daily pivot: Tonight the ES daily pivot rises from 1870.58 to 1877.00.  Despite this bump we are, once again above the new pivot so this one remains bullish.

Dollar index:  Last night I wrote "I still say the dollar's looking lower" and good thing too because the dollar gapped down 0.07% on Monday, though on a stubby green hammer.  Still the indicators remain quite overbought, the bearish stochastic crossover is complete and we have a new descending RTC so this chart still looks lower to me.

Euro: Last night I wrote "the euro seems to have found some stability around 1.3700".  And that was basically the story on Monday.  Not much new here - the rising indicators seem to favor the upside but the momentum isn't all that strong.

Transportation: LNIW (Last Night I Wrote) "this chart is now looking higher on Monday":  And that's where they went, handily outperforming the Dow 0.77% to 0.12% and stopping only on their upper BB for a bullish RTC trigger.  But that now leaves us back at all-time high resistance along with indicators back to overbought.  There's not much gas left in the tank for any further advance but this chart is overall too tough for me 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        4       5      3           0       0.444     16
     And the winner is...

Tonight the charts are looking basically bullish.  The SPX Hi-Lo indicator has just returned to 100, which is  a not-bearish sign, the NYSE A/D line is unremarkable and the Morningstar Market Fair Value Index is at 1.03 which is overbought but not extremely so.  Dr. Copper seems to have hit a short-term bottom and tellingly, the TLT took a big dump on Monday and looks quite bearish.  So to me that all spells Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1870.58.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

It was looking good for my call for a lower Friday until a mid-afternoon rally put the kaibosh on that theory.  But it was only a 45 point gain for the Dow so the damage was limited.  DCB or trend change?  We now consult the charts for answers.

The technicals

The Dow: After two days of accelerating losses, Friday's modest gain in the Dow sure looks like a DCB to me, especially since the indicators are still not yet down to oversold.  But this is a tricky chart - we're now right on a trend line of rising lows going back over a month.  Going by that, I'd hesitate to call the Dow lower again on Monday..

The VIX: Way back last Thursday I wrote that I was bothered by "a star/inverted hammer combo in VVIX though, which suggests lower".  Good suggestion as the VIX fell 5.554% on Friday on a big bearish engulfing pattern that bounced off the 40 MA.  With support still down around 12.10, I think we could be in for more downside on Monday.

Market index futures: Tonight the futures are mixed at 12:15 AM EDT with ES up just 0.03% but YM down 0.02% so once again we have a pretty flat overnight.  Friday's action in ES was vaguely bullish piercing line and while the indicators are not yet oversold, they seem to be flattening out in no-man's land halfway there.

ES daily pivot: Tonight the ES daily pivot dips from 1871.58 to 1870.58.  That keeps us above the new pivot so this indicator now turns bullish.

Dollar index:  While the dollar did put in a red candle on Friday, it came with a small gain which I wasn't expecting.  But the overall thesis remains intact - overbought, bearish stochastic crossover, etc.  I still say the dollar's looking lower.

Euro:After three big declines last week the euro seems to have found some stability around 1.3700. The indicators are all quite oversold now and we have exited that nasty descending RTC, so the next move seems more likely to be higher.

Transportation: This chart fooled me Friday as I dismissed the hammer and got hit on the head with it as the trans rose 0.83% with a bullish engulfing pattern to confirm that hammer in a big way.  We also got a bullish descending RTC setup so I'd say this chart is now looking higher on Monday.

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       5      3           0       0.375     -5

     And the winner is...

Tonight the general gestalt of the charts is bullish, not roaringly so but just barely enough for me to cautiously  predict Monday higher.  I'm not expecting a big advance though.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.