Friday higher

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

• Friday higher, low confidence.
• ES pivot 1933.42.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap
Well after four consecutive days of dojis we finally got the break I was waiting for.  Only to my surprise, it was to the upside, not lower.  Blame it on the ECB or whatever, but this market seems determined to keep pushing into record territory.  I reluctantly had to let go of my ES hedge - let's go to the charts now to figure out if that was a good decision or not for Friday.

The technicals

The Dow: With Thursday's breakout, the Dow made it exactly to its upper BB on the dot, at 16,848 on a big green marubozu for yet another record close.  That was enough to curve the stochastic back around for a bullish crossover from a high level.  And with both money flow and OBV continuing to move higher,.it looks like there's more upside on the way.

The VIX: Last night I opined that "we just might get a lower VIX Thursday."  So at least I was right about something, as the VIX dropped 3.31% to fall right out of a short rising RTC and confirm Wednesday's spinning top in a big way.  With indicators still just barely overbought, it looks like more downside is possible Friday.

Market index futures: Tonight all three futures are higher at 1:04 AM EDT with ES up 0.13%.  Like the other charts on Thursday, ES finally broke out of its recent range to the upside, also closing on its upper BB.  RSI is now maxed out at 100 but both money flow and OBV continue to rise strongly.  That, plus a decent performance in the overnight demonstrate that there's still enough gas in the tank for another push higher on Friday.

ES daily pivot: Tonight the ES daily pivot jumps from 1922.92 to 1933.42.  We remain considerably above the new pivot so this indicator looks nothing but bullish.

Dollar index:  I was badly wrong about the dollar on Thursday.  Unable to capitalize on its 200 day MA breakout after an early spike, it was all downhill and it came crashing right back through the aforesaid MA for a 0.38% loss.  This is the mother of all bearish engulfing patterns and with indicators still only just off overbought, I'd say there's still room to run lower Friday.

Euro: At least I was right when I said the euro would get in gear on Thursday as it put in a giant hammer that finally broke it out of its seven day trading range and right on through its 200 day MA.  With that plus rising indicators, the euro looks higher again on Friday.

Transportation: Wednesday's doji was confirmed on Thursday forming a big morning star pattern and canceling the bearish RTC exit.  Indicators remain overbought but money flow and OBV have both turned around and are moving higher now so this chart now looks 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67   June       2       1      1           0       0.667     35

     And the winner is...

With Thursday finally having given the market the kick it's been waiting for, the charts are now looking bullish so I'm just calling Friday higher, though probably not as much as Thursday.  See you again Sunday night!

ES Fantasy Trader

Well I gambled and lost as ES took the less likely option and broke to the upside.  I closed out my ES trade around mid-day on Thursday for an unfortunate 18.75 point loss and our first loser of the year.  I figured that the market had spoken, and there was no point in standing in front of this train any longer.  I also got out of my SH, taking an annoying 41 cent loss.  At least I can just view that as an insurance premium paid at a point where my account was hitting record highs and I didn't want to give any of it back in the event of a reversal.  Turns out it went even higher since then so I can't really complain.

BOT    10    false    ES    JUN14 Futures     1939.00    USD    GLOBEX    13:08:39
SLD    10    false    ES    JUN14 Futures     1920.25    USD    GLOBEX    JUN 4 00:18:21

Portfolio stats:  the account now falls to $112,125 after six trades in 2014, starting with $100,000.  We are now 4 for 6 total, 2 for 2 long, 2 for 3 short, and one push.  Tonight we stand aside.  I'm worried that while we may go higher on Friday, a good part of that move is already in.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1922.92.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1920.25..

Recap

This is like deja vu all over again.  Once again, the Dow took a dive out the gate, only to recover as the day went on.  Only this time, it managed to get back above water, thus killing my call for a lower close on Wednesday, though only by 12 points.  Foo - will the charts yield any better direction tonight?  Let's take a peek.

The technicals

The Dow: We now have four reversal candles in a row from the Dow - three hanging men and a spinning top - and still no reversal.  The bears keep tugging away at it but it always manages to claw its way back to its starting point, but no further.  Meanwhile the indicators are slowly sliding off extreme overbought levels, suggesting a move lower.  But we've seen this before and it hasn't happened.  And we're still well within a rising RTC.  So the best I can say at this point is that we require confirmation of any move lower.  Fool me once, fool me twice, etc..

The VIX: And the bizzaro May monkey motions continue with the VIX again rising on a day the market is up.  I've lost track of how many times this has happened - I think it's like four in the last month.  Anyway, Wednesday's 1.77% advance  came on a spinning top that pushed the VIX overbought.  So we have a suggestion of a move lower here but like the Dow, I'm going to want to see confirmation before calling the VIX lower.  Interestingly though, VVIX is already falling, so we just might get a lower VIX Thursday.

Market index futures: Tonight all three futures are slightly lower at 12:26 AM EDT with ES down  0.04%.  On Wednesday ES posted a small gain but on a hanging man, following two doji stars in a row.  Just what does it take to get this chart to move lower, an engraved invitation?  The indicators remain pegged on overbought but still no break lower.  This can't go on forever.  But I've been seeing signs of a reversal for several days now and it just doesn't want to happen.

ES daily pivot: Tonight the ES daily pivot rises once again from 1920.50 to 1922.92.  We remain above the new pivot so this indicator continues bullish.

Dollar index:  Last night I just gave up on the dollar which is just as well because I dont' see how you could have predicted the 0.14% gain on Wednesday that took it right back above its 200 day MA.  This did though also give us a bullish stochastic crossover from a high level and those are usually good for a day or two of higher action, so I'll guess that the dollar can extend its gains on Thursday.

Euro: And meanwhile the euro continued in its week-long consolidation, dropping right back to the lower end at 1.3599 on Wednesday.  With this sort of horizontal motion, there's just no calling this chart.  I think it will finally start moving after we hear from the ECB on Thursday.

Transportation: In a bit of bearish divergence, on Wednesday the trans lost 0.02% on a day the Dow was up 0.09%.  The candle was basically bearish engulfing and it dropped the trans out of their rising RTC for a bearish setup.  With indicators now falling off overbought and a completed bearish stochastic crossover this chart looks lower for 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67  
June       2       1      0           0       0.667     35

     And the winner is...

Well just like last night and the night before, the market once again technically looks to be topping.  But it's all starting to remind me of that scene in The Pirates of Penzance when the policemen sing "We go, we go!" to which the exasperated Maj. General Stanley replies, "Yes but you don't go!".  So I'm just going to call Thursday uncertain until Mr. Market decides to go, one way or the other.  Oh and this ECB announcement business has me wondering too.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after five trades in 2014, starting with $100,000.  We are now 4 for 5 total, 2 for 2 long, 2 for 2 short, and one push.  Tonight we hang on to our short at 1920.25,in the hope of eventual redemption.

Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1920.50.  Holding below is bearish...
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1920.25..

Recap

Well it looks like June wants to continue playing the same games May was.  After a dump right out the gate on Tuesday, the Dow crawled out of the pit to end with only a small loss.  But it made for some interesting moves, chartwise, so let's take a look.

The technicals

The Dow: Although the Dow battled back from some early losses Tuesday, it left us with a trifecta of hanging men, with the latest being the first with a lower high. The indicators remain overbought and the stochastic's on again-off again bearish crossover looks like it may finally be gaining some traction.  So I have to think this chart continues to look bearish.

The VIX: The VIX finally broke out of its magical attraction to the 11.50 level on Tuesday - sort of.  The +2.5% move was the biggest we've seen in over a week even if it was on a gap up stubby red spinning top.  But it took the indicators out of oversold so we at least have some sign that the VIX may finally be getting ready to move higher.  Unless of course Tuesday's move was just a little evening star.  That's just a good example of how this nervous market is playing its hands close to the vest.  I still think the short-term outlook is higher but we'll need some confirmation on Wednesday..

Market index futures: Tonight all three futures are lower at 12:17 AM EDT with ES down  0.09%.  On Tuesday ES put in a doji star - exactly like the one it made on Monday.  Two of these in a row is highly unusual, and quite bearish.  We also traded outside the rising RTC again for a bearish trigger.  The indicators continue to be pegged at overbought (RSI = 99.22) so I just have to think the next move from here is lower.  The overnight seems to be confirming that in the form of a big bearish engulfing candle.

ES daily pivot: Tonight, like last night, the ES daily pivot ticks up from 1919.92 to 1920.50.  However, the slow drift lower of ES in the overnight has just put it below the new pivot, barely - but that still turns the indicator bearish.

Dollar index:  As another example of how tricky this market is, last night I thought the dollar looked higher, having just cleared its 200 day MA.  Well on Tuesday it fell right back under the MA for a 0.12% loss - but on a green candle.  Go figure.  This chart is now totally bollixed and I have no clue where it's headed on Wednesday.

Euro:Well at least I got this one right, calling the euro higher for Tuesday on the hail Mary idea that if it went lower Monday it was going higher Tuesday - and it did!  There's some sophisticated analysis for ya! But Tuesday's gain just left us still in the same week-long consolidation range.  We may see some action later this week when the ECB makes some policy announcements.  No doubt the euro is just marking time until then.

Transportation: Well the trans sure fooled me.  Last night I called them higher but the trend proved not to be my friend as they dumped 0.84% on Tuesday to fall out of their rising RTC for a bearish setup and cause all the indicators to peak at overbought.  So this chart is now looking clearly 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        6       7      6           0       0.462    -67 June       2       0      0           0       1.000     47

     And the winner is...

Actually, I think the entire market is waiting for the ECB to make its move on Thursday as we see a plethora of dojis on the charts tonight.  In the meantime though, the bearish pressures that existed last night are still there tonight, and even more so, so I guess I might as well just call Wednesday lower.

ES Fantasy Trader

Last night I decided to go short.  It seemed like a good idea at the time and there were in fact multiple opportunities to get out with a small profit Tuesday morning.  Unfortunately I was still asleep, so I settled for a break-even exit and was glad I did because ES just kept creeping higher the rest of the day.  Oh well - you snooze, you lose.  Here's the trade:

BOT    10    false    ES    JUN14 Futures     1920.75    USD    GLOBEX    12:44:37
SLD    10    false    ES    JUN14 Futures     1920.75    USD    GLOBEX    00:24:08

Portfolio stats:  the account still remains at $121,500 after five trades in 2014, starting with $100,000.  We are now 4 for 5 total, 2 for 2 long, 2 for 2 short, and one push.  Tonight we take another stab at this same play, going short at 1920.25, just below the ES pivot.

Tuesday lower

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

• Tuesday lower, low confidence.
• ES pivot 1929.92.  Breaking below is bearish...
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going SHORT at 1920.75.

Recap

Out the gate Monday morning I was worried that perhaps I'd backed the wrong horse by calling the close higher.  But coming around the first turn, Seabiscuit recovered enough ground to prove me right by the closing bell.  So we now turn our attention to the next race, the Tuesday Trotters.

The technicals

The Dow: Well it was a modest 26 point gain on Monday but it came as a hanging man, the second in two days.  The indicators remain quite overbought, but so far all we have is a pattern that requires confirmation though as the saying goes, two hanging men are better than one.

The VIX: The VIX made a valiant effort to push higher on Monday but it eventually mostly failed, though it still ended up 0.70% in a bit of divergence on a day when the Dow and SPX were also higher.  The resultant long-legged red spinning top indicates massive indecision (so what else is new).  The indicators favor a move to the upside but for the time being, we remain stuck in consolidation mode around 11.50.

Market index futures: Unlike last night, tonight all three futures are lower at 12:21 AM EDT with ES down  0.05%.  Of all the charts in the nightly roundup, tonight ES perhaps provides the most clarity.  It gave us a classic doji star on Monday that traded just outside the rising RTC for a bearish setup. Indicators appear to have peaked at extreme overbought levels now and we have finally peeled away from the rising upper BB.  That all looks to me like a setup for a move lower.  And so far at least, the new developing candle seems to be confirming that.

ES daily pivot: Tonight the ES daily pivot ticks up from 1919.33 to 1929.92.  While we're still above the new pivot, it's now by only less than one point so the pivot is in play.  A move below would be bearish.

Dollar index:  The dollar which for all its worth looked to me like it was going lower on Monday instead gained a big 0.46% to bust through its 200 day MA and regain its rising RTC.  This move was powerful enough to bend the stochastic bearish crossover around into a bullish crossover from a high level and that is generally good for a day or two of higher prices.  So now I'm thinking the dollar looks higher still.

Euro: And so of course I got the euro wrong too - it was unable to break through the 200 day MA and on Monday gave up all of last Friday's gains and then some to close right back around support at 1.3593.  Indicators remain oversold but that doesn't seem to account for much in this crazy market.  My best guess at this point is that since we were down big on Monday, to support, that we'll reverse and go up on Tuesday.

Transportation: After a fake-out doji last Friday, the trans rejected it in a big way on Monday, gaining 0.54% to remain solidly in their rising RTC.  The trans are now 7 for 8 and the indicators are extremely overbought..  But the trend is your friend, etc. and it looks like there's nothing that can stop this train, so in the absence of any bearish signs, it's up, up, and away!

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       7      6           0       0.462    -67
June       1       0      0           0       1.000     26

     And the winner is...

The toppiness I spoke of in the market last night is looking more pronounced in the charts tonight.  While I don't think this is the start of a major correction or anything, I think there are enough reversal signs now to warrant calling Tuesday lower.

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 go short at 1920.75.  I know these counter-trend plays are quite risky, but the edge finally seems to be there.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1919.33.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

It was looking pretty good for my call for a down Friday until a late afternoon mini-rally took off and torpedoed my call, though the damage was minimal.  I'm not going to lie, I'm glad May is over.  What an odd month that was.  Now let's move on to see whether or not June will be bustin' out all over.

The technicals

The Dow: Friday's 18 point gain in the Dow created a classic hanging man reversal warning.. It also traded outside the rising RTC for a bearish trigger and left the stochastic within a hair of a bearish crossover, and all on the highest volume of the week.  We also stopped exactly on resistance at 16,717 from the record high last month.  Does the Dow have the mojo needed to break through on Monday?  Going by the overboughtedness of the indicators, I'd have to say no.  OTOH, Monday is the first day of June and that's historically quite bullish.  So I'm hesitant to call the Dow lower just yet, especially since my Friday call did not pan out.

The VIX: Just when you thought the VIX couldn't  go any lower - it did, down another 1.47% on Friday to close at the low, low level of 11.40.. I had to go to the weekly chart to find the last close at that level.  It was March 11th of last year.  After that, you have to go all the way back to March of 2007 to find a lower close.  And the lowest VIX I can even find with eSignal (all the way back to 1990) is 9.39 in December 2006.  Now the monthly lower BB is 11.06 and the daily is 10.96, so I'd say 11.00 looks like about the lowest I can imagine the VIX going from here.  That level is easily attained in one day and for my money that could be Monday.  I'll even guess we could get a VIX doji on Monday.

Market index futures: Tonight all three futures are higher at 12:33 AM EDT with ES up 0.10%.   On Friday ES rose again to continue crawling up its upper BB, now five in a row.  This can't go on forever.  RSI also hit an amazing 99.53 - it doesn't get much more overbought than that.  The stochastic meanwhile is plastered flat against the ceiling waiting for a break that looks like it may never come.  But we may finally be getting some action, as the overnight is now trading outside the rising RTC for a bearish setup.  But as the frustration goes on, that action is drifting higher.  If ES can close Monday above 1925, barely higher than it is as I write this, then we're back inside the rising RTC.

ES daily pivot: Tonight the ES daily pivot rises from 1914.42 to 1919.33.   Once again we remain above the new pivot, so once again this indicator remains bullish.

Dollar index:  In a potentially telling sign, the dollar on Friday fell out of its rising RTC with a 0.17% loss for a bearish setup.  That also confirmed the bearish stochastic crossover so with indicators remaining overbought, this chart looks lower for Monday.

Euro: I was badly fooled by the euro on Friday.  I thought for sure we were going lower but instead we got a bounce that reclaimed the 200 day MA and nearly took us out of a descending RTC.  The tell will be the overnight, if it can hang on to the MA and push higher  or bounce off.  The indicators, still oversold along with a bullish stochastic crossover suggest the former.

Transportation: In a bit of bearish divergence and perhaps foreshadowing, on Friday the trans dropped 0.07% on a small doji star to break a six-day winning streak.  Though we remain in a rising RTC, we're now peeled away from the rising upper BB and the indicators are all now highly overbought so my guess is that the trans go lower on Monday.

Performance:

With May now closed, here are my cumulative 2014 YTD trading results so far, compared to the Dow, my benchmark.  I continue to include the results of my traditional IRA too.

        Trading    IRA       Dow
Jan.     0.50%             -5.30%
Feb.     3.94%             -1.94%
Mar.     6.01%    6.14%    -0.72%
Apr.     8.22%    8.46%     0.02%
May      9.20%    9.96%     0.85%

As in April, the first half of May started off pretty flat for me, but we made up the difference in the last two weeks.  However, my equivalent annual run rate dropped from 24% to 22%, reflecting the lost time in May.  I'm not too concerned about this since there's still plenty of time to make it up and in any case, 22% is still pretty respectable.

Accuracy: 

We end May with our first losing month of the year, predictionwise, though not by much.  It reflects just how odd the month was, directionwise, an observation many others have  already made.

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       7      6           0       0.462    -67

     And the winner is...

While I'm seeing signs of overextension in the charts tonight, there are only scattered bearish warnings - not enough to call Monday lower, even though I think lower is coming soon.  And given the historical advantage to the first day in June, I'm going to go with the trend, call Monday higher, and speculate that it could be a topping day.

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.  I'm not committing any money here, not even play money until I get some real clarity.  Just like in Vegas, where there is no law that you have to sit down at the blackjack table and place bets.  You're free to wander around and watch.