Friday lower

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

• Friday lower, low confidence.
• ES pivot 1914.42.  Breaking below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well I guess the trend is your friend after all.  Last night I was thinking hte market looked toppy but I couldn't call it lower in the absence of any outright bearish signs.  And that proved to be a good decision since the Dow was up 0.39% on Thursday and the SPX even more.  But I must say, this market is making me more nervous right now than I've felt in a long time.  I'll be glad to see May done with, and Friday's the end of the week and the month so let's do those charts and head for the beach.

The technicals

The Dow: That resistance at 16,678 just melted away on Thursday as the Dow managed to punch through with a 66 point gain.  But that still leaves it short of the record from a few weeks ago and the upper BB at 16,745.  And oddly, RSI just dropped off overbought, though the stochastic continues slowly narrowing in on a bearish crossover.  So despite Thursday's gains (on shockingly low volume I might add) I still think there's more downside risk than upside potential here.

The VIX: Meanwhile the VIX remains stuck in the basement and can't find the stairs, down another percent on Thursday, but with a doji star.  The trade was outside the descending RTC so that's a bullish trigger and the indicators are hovering just off oversold.  It looks like the VIX wants to go higher but simply can't find its mojo.  But with the VIX now at 11 and a half, there really seems to be a lot more room to run higher than lower, cf. everyone lately buying VIX calls.

Market index futures: Tonight all three futures are lower at 12:39 AM EDT with ES down 0.14%.  I really thought Thursday was going to be the turn for ES.  Silly me.  The move to 1918 kept us right in  a steeply rising RTC as we climb the upper BB for an amazing four in a row now.  Tonight though the chickens may finally be coming home to the rooster as ES seems to be stalling out with a move lower that has now taken it out of the aforementioned rising RTC for a bearish setup.  The stochastic has also finally squeaked out a bearish crossover.  IN sum, this chart now looks ready to roll over.

ES daily pivot: Tonight the ES daily pivot rises again from 1909.17 to 1914.42.  With ES drifting lower in the overnight, that still leaves us above the new pivot but just barely.  It won't take much to test the pivot and a break below would be bearish for Friday.

Dollar index:  Last night I looked at the dollar and claimed that "a reversal is coming Real Soon Now".  Well real soon proved to be Thursday with the dollar down 0.10%, though on a funny green marubozu.  Still that was enough to eke out a bearish stochastic crossover and with RSI now quite overbought, I'm going to go right back and claim there's more downside to come on Friday.

Euro: After blasting through its 200 day MA (down) on Wednesday, the euro found a modicum of support at 1.3595 on Thursday to end with a small gain.  Indicators remain quite oversold but we also remain in a two week declining RTC so until I see a reversal candle, it's look out below, euro.

Transportation: And finally the trans kept right on rocking in their railroad-straight rising RTC with another 0.43% gain on Thursday as they climb the upper BB, four days in a row now.  The stochastic is  threaded out but it's at levels from which down moves typically come Very Soon.  So despite a six day winning streak (or perhaps because of it), I just can't get on board this runaway train.

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        6       6      6           0       0.500    -49

     And the winner is...

The last day of May is historically fairly weak.  I'm also seeing the reversal signs strengthening in the charts.  It's still not a given, but I'm going to take a chance and go out on a limb and call Friday lower.  See you again Sunday 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.  But so far my SH at 24.07 isn't looking like such a great buy though I still have hopes for it.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1909.17.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I called the market uncertain despite a four day rally based in part on an "ES chart that is starting to look a bit toppy".  I think Wednesday's action bore me out with the SPX down 0.11% and the Dow down a quarter of a percent.  Now the question becomes, is this a top  or a one-shot?  We search the charts for clues to Thursday as we do this and every night, until victory.

The technicals

The Dow: The Dow meandered about on Wednesday before ending down 42 points.  It didnt' seem like much but it was enough to not only put an end to the rally but also just drop out of a rising RTC for a bearish setup.  Indicators remain overbought and the stochastic is curling over for a bearish crossover.  This failure of the Dow to take out this month's earlier highs concerns me, so this chart now looks bearish..

The VIX: Last night I wrote "the next move here is higher".  And so it was, with the VIX up 1.48% on Wednesday in a move that's approximating a rising triangle.  We also just barely got a bullish stochastic crossover and we broke out of the descending RTC (finally) for a bullish setup.  So that just reinforces my belief that the VIX is not yet done going higher.  A nearly 4% bump and bullish stochastic crossover in VVIX reinforces that belief.

Market index futures: Tonight all three futures are higher at 12:20 AM EDT with ES up 0.10%.  On Wednesday ES clearly did not pack the gear to serve in the bulls' corps as it pooped out around the 1910 level with a classic red spinning top.  That also just dropped it out of its rising RTC for a bearish setup.  We are also on the verge of a bearish stochastic crossover.  But the overnight doesn't seem to be confirming any of that, at least so far, with a non-trivial gain.  So it's too soon to call a top here.

ES daily pivot: Tonight the ES daily pivot rises from 1905.42 to 1909.17.  ES's Wednesday gains were enough to keep it above the new pivot so this indicator remains bullish.

Dollar index:  Last night I was figuring the dollar for a move lower on Wednesday but it was not to be, though I might just have been a day early as the buck put in a classic hanging man after being repelled by its 200 day MA.  Indicators continued higher to very overbought and while we remain in a rising RTC I'm going to stick to my guns and claim a reversal is coming Real Soon Now.

Euro: And so of course I missed the euro too on Wednesday.  Instead of bouncing off its 200 day MA, it simply sank right though, glub glub to remain in a now two-week downtrend.  And despite oversold indicators, I see no reversal signs so there's no other choice than to call the trend my friend and say the selling isn't over yet.

Transportation: Unlike the rest of the market, in a bit of bullish divergence the trans rose 0.72% on Wednesday to remain in their rising RTC and continue crawling up their upper BB.  Indicators pushed further into overbought territory but with no reversal signs here I can't call this chart lower yet.

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        6       6      5           0       0.500    -49

     And the winner is...

We are now seeing some signs of trends ending, a down one for the VIX and an up one for hte Dow.  However, the overnight futures don't seem to be confirming any of this and our reversal signals are the sort that require confirmation.  So that all leaves us frustratingly just about where we were last night.  The market still looks toppy but also not quite ready to roll over.  Accordingly, all I can do is once again call Thursday uncertain.  Maybe after that we'll get some clarity.

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.  However, I have taken out an insurance policy in the form of some SH at 24.07.

Wednesday uncertain

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

• Wednesday uncertain.
• ES pivot 1905.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Interesting article of the day

There was an interesting article in Seeking Alpha today here entitled "Is This The Next 10 Years Of The Dow Jones Industrial Average?" by Seth Walters about a simple model that can apparently predict the market surprisingly well.  It's not long or overly mathematical and well worth a look.  Like they say down at the Public Library, check it out.

Recap

Well the SPX had another record close on Tuesday, but the Dow did not.  It just seems to go along with the overall confusing tenor this month has had.  How the market looks seems to depend a lot on what you're looking at.  So tonight we look at the usual charts to figure out where Wednesday is headed.

The technicals

The Dow: The Dow made it four in a row on Tuesday with a 69 point gain that kept it railroad-straight in a rising RTC.  Indicators are now overbought but there's no resistance til the upper BB at 16,720 which is coincidentally the same as the all-time high from earlier this month.. So I'd say we're getting close to a doji here, hanging-man style.

The VIX: Once again we had an unusual divergence form the VIX which gained 1.32% on a day the Dow was also higher.  The inside harami candle with oversold indicators and bouncing off the lower BB makes me think the next move here is higher.  And the stochastic is now well-positioned for a bullish crossover Real Soon Now.  However, VVIX continues to move lower slowly refilling a big gap from two weeks ago, so a higher VIX on Wednesday isnt' entirely assured.

Market index futures: Tonight all three futures are ever so slightly higher at 12:22 AM EDT with ES up 0.03%.  Now last Friday ES closed right on its upper BB..  Then on Tuesday it closed above the BB to extend its winning streak to four.  However, the indicators have now gone overbought and the new overnight candle is forming as a doji star sitting right on the edge of the rising RTC, making me a bit cautious here.

ES daily pivot: Tonight the ES daily pivot rises from 1895.25 to 1905.42.  That's the first time we've ever seen the pivot this high but even at that we're still above the new number so this indicator remains bullish.

Dollar index:  After a hanging man on Friday in evening star position the dollar moved lower on Tuesday by 0.06% with a long-legged doji.  But with indicators still quite overbought and a fair gap up remaining unfilled, it looks like the next move is more likely lower than higher.

Euro: After some indecision a couple of weeks ago the euro resumed its march lower until finally hitting its 200 day MA on Friday.  Then on Tuesday it bounced right off with an asymmetric spinning top and a stochastic trying to maneuver itself into a bullish crossover.  And although we're still in a descending RTC, it looks to me like the euro is trying to set up a move higher on Wednesday.

Transportation: Like the SPX, the trans hit a record close on Tuesday, also with a four day winning streak as they climbed the upper BB.  The indicators are now fairly overbought but we're still solidly in a rising RTC and without a reversal candle it's too early to call this chart lower.

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        6       6      4           0       0.500    -49

     And the winner is...

The last three times ES has hit its upper BB it has moved lower in just one or two days.  ES is now more overbought than the last time we were in this situation.  There are no overtly bearish signs in the charts tonight other than a VIX that looks like it wants to go higher and an ES chart that is starting to look a bit toppy.  But those aren't enough to warrant an outright bearish call.  So I guess I'll just have to settle for calling 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 1889.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

This Memorial Day evening we present an abbreviated version of the Night Owl, primarily because I spent it watching TCM instead of the stock market.  I saw two great movies, Twelve O'Clock High and arguably the best movie ever made, The Best Years of Our Lives. That's one of the nice things about being your own boss - you can goof off and no one's going to give you a hard time about it.  So I'm just going to cut to the chase and present my prediction for Tuesday without the usual chart rundown..

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        6       6      4           0       0.500    -49

     And the winner is...

It's of course always somewhat problematic doing predictions for holiday shortened weeks, but the day after Memorial Day is historically pretty strong and the futures seem to be supporting that idea tonight.  So does last week's higher close on building momentum and other rising indicators.  So I'm just going to call Tuesday higher.