Friday uncertain

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

• Friday uncertain.
• ES pivot 1957.08.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Oink oink oink - it seems the PIGS are at it again.  Or so one would be led to believe, as some announcement from a bank in Portugal caused the Dow to dive 160 points right out the gate on Thursday.  Or whatever.  Mr. Market subsequently thought better of it but still ended the day down 71 points.  This is precisely the sort of thing that technical analysis cannot anticipate.  Oh well - stuff happens.  We will not dwell on this and instead move directly on to Friday.

The technicals

The Dow: Wednesday's Kafkaesque action  ended up with a big hammer that ultimately respected support around 16,916.  But with no good RTC running and with indicators still closer to overbought than oversold, this is a reversal warning that needs confirmation.  So we take a pass on this chart tonight..

The VIX: And the porkers spoiled my VIX prediction too, killing the evening star with an 8% gap up hanging man that blasted right through the upper BB.  Of course, that's a better reversal sign than anything since the VIX rarely spend more than a day or two above its upper BB.  With indicators now nearly overbought, an upper BB hit, and a big gap up, I'll once again claim that the VIX goes lower on Friday..

Market index futures: Tonight ES and YM are just barely lower at 12:18 AM EDT with ES down  a single tick, or 0.01%.  On Thursday we got a fat hammer that nonetheless remained in a descending RTC, so like the Dow, we need confirmation  before calling this one higher.

ES daily pivot: Tonight the ES daily pivot drops from 1964.58 to 1957.08.  As last night, we are once again hugging the new pivot, in this case just barely above it, so we get no good prediction here tonight.  To remain bullish, ES will have to bounce off the pivot.

Dollar index:  And more funniness with the dollar too as it put in a skinny spinning top exactly in the center of Wednesday big drop.  This is indecision on top of indecision.  The overall RTC remains descending though, so that would seem to be the preferred direction on Friday.

Euro: On Thursday the euro gave up all of Wednesday's gains and then some to fall out of its rising RTC for a bearish setup.  And though we remain oversold the overnight is trending lower again so this chart looks still lower for Friday.

Transportation: On Thursday the trans took just half the hit of the Dow, and on a nice tall doji that curve the stochastic close to forming a bullish crossover.  With three days of higher lows going, this one looks like it has more upside potential than downside risk 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        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       1       0      0           1       1.000     44

     And the winner is...

Thursday's action did little to resolve last night's muddled charts.  If anything the situation is even more conflicted tonight.  So all I can realistically do is reluctantly call Friday uncertain.  See you again Sunday night!

ES Fantasy Trader


Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Thursday depends on ES pivot

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

• Thursday higher if ES hold above pivot, else lower.
• ES pivot 1964.58.  Breaking above is bullish, below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

It looks like last night's conditional call worked again.  It doesn't always, but it's a pretty good percentage.  The market defied what was looking like a pretty grim candlestick setup with the Dow gaining a decent 79 points.  So onward as always, this time to tackle Thursday.

The technicals

The Dow: Last night the Dow put in a bearish RTC trigger.  But that's not a 100% guarantee and indeed on Wednesday despite a bearish stochastic crossover, the Dow managed a bullish inside harami.  Just recently off overbought, one now has to wonder if the next leg isn't upwards.

The VIX: One could be excused for being skeptical of an evening star on Monday, and with good reason, since Tuesday just gapped higher again.  But the pattern asserted itself on Wednesday with a 2.75% drop int eh VIX, thus finally giving us a valid evening star.  With indicators almost overbought, that's good enough, so this chart looks like it has ample room to run lower..

Market index futures: Tonight all three futures are lower at 12: 13 AM EDT with ES down  0.14%.  On Wednesday ES gave us something of a bullish piercing line but in the context of a descending RTC and falling indicators.  The negative overnight pin action so far seems to support the idea that this vague downtrend may have more downside left to it.

ES daily pivot: Tonight the ES daily pivot ticks up from 1961.33 to 1964.58.  That leaves ES sitting exactly on top of the new pivot.  So we may glean some information from whichever direction ES decides to come down on overnight.  For now, it's a toss-up.

Dollar index:  Last night I wrote "I have to think there's more downside available here" - and it was good thinking too because the dollar lost  0.22% on Wednesday to trigger a bearish stochastic crossover.  With indicators continuing to move off overbought, this chart looks lower again.

Euro: Last night I wrote "this chart just looks higher still on Wednesday.".  'Nuff said as the euro posted its biggest gain in two weeks to close at 1.3649.  The prior descending RTC is now officially kaput and a new rising RTC is in effect.

Transportation: Last night there was a clear bullish reversal hammer - but also bearish indicators, so I refused to get involved.  Turns out the charts won as the hammer was confirmed on Wednesday with a nice 0.54% gain, thus canceling the bearish RTC trigger.  So this chart once again 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       8      10      3           2       0.500    132 July       1       0      0           1       1.000     44

     And the winner is...

Tonight the charts are as vague as I've seen them in quite a while, epitomized by ES sitting smack dab on top of its pivot.  This situation simply cries out for another conditional call.  Wednesday's worked out well, though it's definitely never a sure thing.  But we'll go ahead and say that if ES decides to move above the pivot and stays there by mid-morning Thursday, we close higher.  And conversely, if it moves under the pivot, we close lower.

ES Fantasy Trader

xxx

Wednesday depends on ES pivot

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

• Wednesday higher if ES breaks above pivot, else lower.
• ES pivot 1971.92.  Breaking above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Its nice when the technicals play out and Tuesday was definitely one of those days.  Last night's bearish signs all came to pass with a big 118 point dump in the Dow.  It doesn't even matter why - all that counts is that it did.  So now let's move on and see what Wednesday is going to do.

The technicals

The Dow:  The Dow just fell out of bed on Tuesday, plunging out of its rising RTC for a bullish setup that might as well be a trigger, sending RSI conclusively off overbought, giving up the 17K level like it wasn't there, and forming a bearish stochastic crossover all in one.  The only thing about this chart that might be construed as bullish is the possibility of a DCB on Wednesday.

The VIX: Last night I remarked that the VIX looked like 2/3 of an evening star but I refused to call it lower until I saw some confirmation.  And it's good that I did because on Tuesday the VIX simply continued on another 5.74% higher with a gap-up inverted hammer.  Now this one, having nearly touched its upper BB, looks more like a possible reversal.  The indicators suggest there's still room to run but the candles are a clear reversal warning.  So that's a push - and once again I demand some confirmation so we 'll just wait and see how this plays out.

Market index futures: Tonight the futures are mixed at 1:11 AM EDT with ES deaf even but YM down 0.04%.  ES on Tuesday ended up putting in a sort of heavy hammer.  It remains in a descending RTC and the indicators are all marching lower off overbought but that candlestick tail seems to suggest that the bears were unable to keep the day's lows.  And the overnight pin action suggests that the selling may be abating.

ES daily pivot: Tonight the ES daily pivot dives from 1971.92 to 161.33.  And even after all that, we're still below the new pivot, though now by less than one point.  So it's still bearish, but a test of the pivot is definitely not out of the question at this point.

Dollar index:  Last night I took a pass on this chart and it's just as well since the action was nothing to write home about with a meager 0.06% drop.  But that still makes three days of lower lows and that was enough to short-circuit the indicators lower before even reaching overbought.  So now I have to think there's more downside available here.

Euro: Well one I did not equivocate on last night was the euro when I said that I "claim the euro goes higher on Tuesday."  And so it was with the euro finishing up nicely to 1.3625 for three wins in a row.  That gives us a new rising RTC, a bullish stochastic crossover, and indicators now officially oversold.  SO this chart just looks higher still on Wednesday.

Transportation: Last night this chart was looking bearish but I held out some chance of a possible DCB.  But it was not to be, though interestingly while the Dow was just down, the trans put in a classic hammer, off just 0.10% to the Dow's 0.69%.  So now we have a conflict between a bearish RTC trigger and a bullish reversal candle.  That's also a push so no call here - though if I had to guess, I'd say we might go 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132 July       2       0      0           0       1.000    162

     And the winner is...

There's considerable uncertainty in the charts tonight.  The VIX looks like it might head lower on Wednesday and the futures look like the selling might be done, but all of that requires confirmation.  So this looks like a good night for a conditional call: if ES manages to break above its pivot by mid-morning Wednesday, then we close higher.  If not, we close lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Tuesday lower

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

• Tuesday lower, low confidence
• ES pivot 1971.92.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Well things played out about as I expected on Monday.  The popular reason for the decline was interest rate fears, but you could see it coming when the Dow hit its upper BB after crossing 17K last week.  In any event, this gives us a fresh data point to work on, so let's see how the charts have changed as we look towards Tuesday.

The technicals

The Dow: On Monday the Dow clearly did not have the requisite mojo to consolidate last week's gains.  But just keeping the 17K mark was an impressive accomplishment in its own right.  But with indicators seeming to have peaked on overbought and a bearish stochastic crossover in the offing, Monday's red candle looks decidedly bearish for Tuesday..

The VIX: Holy moly - this one caught me by surprise.  I sure didn't see a 10% gap-up pop in the VIX coming Monday..  That move blew the VIX clear out of its descending RTC for a bullish setup, and squeaked out a bullish stochastic crossover, and sent the other indicators higher off oversold.  But -- this is now 2/3 of a bearish evening star.  So we now have to wait and see how this plays out on Tuesday.  There is much uncertainty here.

Market index futures: Tonight all three futures are lower at 12:16 AM EDT with ES down  0.09%.  ES now looks pretty conclusively to have topped with two red candles in a row.  Monday's action gave us a bearish stochastic crossover and the new overnight is trading outside the rising RTC for a bearish setup.  And with indicators now clearly having topped at overbought and heading lower, this chart just looks bearish.

ES daily pivot: Tonight the ES daily pivot drops from 1975.83 to 1971.92.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  Despite the bullish signs last ngiht the dollar managed to drop 0.02% on Monday.  Still, it traded outside the descending RTC so that's a bullish trigger and the indicators continue to rise off oversold.  But the candles aren't looking bullish at all, so I'm going to defer on this chart tonight.

Euro: Sigh - and of course I was wrong about the euro for Monday also, as it put in a decent green hammer that closed right on the edge of its descending RTC for a bullish setup.  The stochastic is also curving around for a bullish crossover any moment now.  So I'm going to switch sides , go with that and claim the euro goes higher on Tuesday.

Transportation: And finally there was no seeing Monday's reversal in the trans either as they dropped a full percent to fall right out of their rising RTC for a bearish setup.  And a bearish stochastic crossover.  And indicators peaked on overbought.  The only hope here is for a DCB on Tuesday but that's by no means a given.

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       8      10      3           2       0.500    132
July       1       0      0           0       1.000     44

     And the winner is...

Tonight we're seeing a bunch of reversal signs, particularly WRT regression trend channels.  Meaning something's afoot.  It's looking like the uptrend that began June 26th may now be kaput.  Also, I note that Dr. Copper put in a hanging man on Monday after an exponential run-up, always a good sign of a reversal.  And the Morningstar Market Fair Value Index is back to 1.05, as high as its been all year so far.  And the NYSE A/D line has been putting in lower highs and lower lows lately.  And the TLT looks ready to move higher.  So all in all, I think I'm just going to call Tuesday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  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 1975.83.  Breaking below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Well I hope everyone had a happy Fourth of July and enjoyed a good barbeque.  Turns out the market provided the fireworks as the Dow cracked the historic 17,000 level for the first time last Thursday while we were on vacation.  Now that all the big players are coming back to work, what's this going to mean for Monday?  We carefully scour the charts, as always, for clues.

The technicals

The Dow: It was what I call the "knock knock" effect.  The Dow made two attempts to crack 17K earlier last month and both were rebuffed.  But I've noticed that often when you see a chart make two big pushes at a resistance level but fail, the third time is the charm.  And so it was last Thursday with a .nifty 92 point gain to get July off to a rousing start.  So we've now hit the upper BB and indicators have gone quite overbought.  But we remain in a rising RTC and in the absence of any bearish signals, I'm not calling this chart lower just yet.

The VIX: Wow - while we were gone the VIX just fell off a big cliff.  After dropping out of its rising RTC a week ago, it's gone from 11.57 to 10.32 in a reverse exponential waterfall.  I had to back out to the monthly chart to find the last time we were this low.  It was way back in February of 2007.  So with major support broken the lower BB now not til 10.06 and falling away, a solid descending RTC going, and indicators only just now entering oversold, I see nothing at all bullish about this chart.

Market index futures: Tonight all three futures are lower at 12:29 AM EDT with ES down  0.09%.  Tonight, this chart gives us something of an early warning because it did trade for a while on the fourth.  And didn't do so well unable to push past Thursday's highs.  The indicators are now quite overbought and the stochastic looks about ready to form a bearish crossover.  And the Sunday overnight continues to sag, giving this chart an overall bearish impression.

ES daily pivot: Tonight the ES daily pivot rises from 1973.92 to 1975.83.  After a late evening dip, ES is making an attempt as I write to break under the new pivot.  So at the moment, this indicator is up for grabs.

Dollar index:  After putting in a star last Tuesday the dollar took off with two consecutive gap-up days to blast out of a long-running descending RTC for a bullish setup.  We also got a bullish stochastic crossover and all the indicators are rising off oversold so this chart looks bullish for Monday.

Euro: The euro fell out of its rising RTC last Thursday for a bearish setup and then traded lower again on Friday for a bearish trigger.  The Sunday overnight is confirming that so with indicators still not yet oversold, this chart looks lower on Monday.

Transportation: The trans just barely broke resistance at 8295 intraday last Thursday before falling back for nonetheless a record close.  The tall green marubozu keeps us well within a rising RTC and we've yet to touch the upper BB, so while indicators are now moderately overbought, I see no immediate reversal signs here.

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       8      10      3           2       0.500    132

     And the winner is...

Most of the charts are fairly old at this point and the ones that aren't are now looking vaguely bearish technically.  My general thought is that when traders come back on Monday and look over their gains from last week they may be inclined to take some money off the table.  I think Mr. Market may need a day to digest this all so I'm going to call Monday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.