Friday lower

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

• Friday lower, low confidence.
• ES pivot 1910.25.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias neutral.
• ES Fantasy Trader standing aside.

Recap

Well unlike The Who, I just got fooled again.  With a downtrend running now 10 straight sessions, we've seen six reversal candles in that time.  And not a single one of them has produced a reversal.  On Thursday it was more Putinoia or whatever - it hardly matters at this point.  What goes down must come up - the only question now is when.  So we go to the chart sin search of an answer for Friday.

The technicals

The Dow:  Thursday's 75 point loss finishing just off session lows non-confirmed Wednesday's narrow spinning top.  But there was something interesting here.  The Dow tested the 200 day MA and probed 10 points below before retreating higher,  I take this inability to push under the MA as a sign of weakness for the bears.  The 200 is sort of the Gothic Line of MA's.  The indicators continue to remain uselessly oversold and Wednesday's candle remains in the descending RTC so the only bullish sign right now is the 200 MA support.  We now need to see if the Dow can hold 16,343 on Friday.

The VIX:  The VIX has gone completely schizo, alternating between higher and lower for an entire week now, with a 1.77% gain the latest reversal on Thursday.  On that basis, I'd call it lower on Friday which is as good as anything because there is no trend here at all..

Market index futures: Tonight all three futures are lower at 12:12 AM EDT with ES down a non-trivial 0.52%.  ES remains stubbornly stuck in an unremitting downtrend, the indicators are all uselessly bottomed out at oversold and without any reversal candle, this chart looks just plain ugly.

ES daily pivot: Tonight the ES daily pivot drops again from 1913.75 to 1910.25.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  On Thursday the dollar formed a long-legged doji right in the middle of Wednesday's big decline.  But lacking confirmation, this means nothing and given the recent herky-jerky action of this chart, I'm not calling it.  I'll just note that we;re now sitting right on the edge of the rising RTC so a move lower looks more likely from here.

Euro: And of course the same thing with the euro which laughed at Wednesday's hammer and dropped to 1.3360 on Thursday.  That's the lowest close since last November and it solidifies the 200 week MA breakdown.  Though the indicators are highly oversold, there's no sign of a reversal here.  A rejection of the daily pivot in the overnight confirms that.

Transportation:  The trans remain mired in a now twelve session downtrend.  With a Pearson's of 0.979, this one is steep and straight.  Thursday's decline was stopped only by support at 7980.  The indicators remain ridiculously oversold.  Momentum for example is at its lowest level since August 2011 and the current slide is perhaps not coincidentally, the worst since that same month.  It's not clear what keeps this sell-off moving, but with no reversal signs in sight, all one can do is expect more downside 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       6       4      4           3       0.692    639
August     1       3      0           1       0.400   -209

     And the winner is...

Hmm - while there are a few reversal signs on the charts, the futures are looking decidedly negative tonight.  And I'm tired of catching the falling knife so with no confirmations apparently forthcoming, I guess there;s no point in fighting this tape,m so it's just Friday lower.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 1913.75.  Holding above is bullish.
• Friday bias higher technically.
• Monthly outlook: bias neutral.
• ES Fantasy Trader standing aside.

Recap

Wednesday's action was significant not so much because ti went up even by just a little as the fact that it simply didn't continue going lower.  And ES broke above its pivot just in my mid-morning timeframe and we closed higher.  This play doesn't always work, but it does often enough to be worth remembering.  Now let's figure out where Thursday is headed.  To the charts!

The technicals

The Dow: As per recent tradition of going down right out the gate, the Dow moved lower right out the gate on Wednesday.  But then something different happened.  Instead of continuing lower, it recovered enough to end the day up 14 points.  The net result was a perfectly symmetrical green spinning top that combined with oversold indicators of long-standing, is a good reversal warning.  But one that requires confirmation, especially in the current dismal environment.  So it looks like we're ready to move higher, but hte Missouri in me says "show me".

The VIX:  Once again the upper BB proved to be anathema to the VIX which bounced off it for a nearly 3% decline and a textbook dark cloud cover.  With indicators remaining quite oversold, this all suggests lower again on Thursday..

Market index futures: Tonight all three futures are higher at 12:19 AM EDT with ES up 0.09%.  On Wednesday, ES [rpduced a long-legged doji at the bottom of Tuesday's big dump, strongly suggesting a reversal.  And with indicators remaining extremely oversold, the overnight seems to be confirming that so far, so this chart now looks bullish for Thursday.

ES daily pivot: Tonight the ES daily pivot drops again from 1917.92  to 1913.75.  This time though it was finally enough to bring ES above the new pivot for the first time in a while.  That now turns this indicator bullish.

Dollar index:  Last night I mentioned an incipient evening star here.  Well on Wednesday the dollar did move lower by 0.13%, though it was more bearish engulfing than gap-down evening star.  Either way, with indicators still overbought this one looks ready to move lower again on Thursday.

Euro: And on Wednesday the euro put in a classic hammer at the lower end of Tuesday's meltdown.  This also traded outside the descending RTC for a bullish setup.  And the overnight is moving higher still for a bullish trigger that confirms the candle.  So I'd venture to say that the euro is going higher on Thursday.

Transportation: In a bit of bearish divergence, the trans continued lower on Wednesday even as everything else moved higher, dropping another 0.62% to remain firmly in a long-running descending RTC.  The only hope here is nearby support at 7986.  But with a fat hammer on Wednesday, there's at least a hint of a reversal for Thursday, but one which requires confirmation.

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       6       4      4           3       0.692    639 August     1       2      0           1       0.500   -134

     And the winner is...

Tonight is one of those "dojis galore" nights.  There are reversal warnings aplenty across the charts.  And after a brief two day rise the SPX Hi-Lo index has dropped back down to 33 which is well within reversal territory.  Given the overwhelming negativity of the recent action over the past two weeks, I almost hesitate to go contrarian, but there are enough reversal signs on the charts tonight for me to call Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

Wednesday depends on ES pivot

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

• Wednesday higher only if ES breaks above its pivot, else lower.
• ES pivot 1917.92.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias neutral.
• ES Fantasy Trader standing aside.

Recap

Something just didn't feel quite right last night when I made my call for a higher close Tuesday.  I never like it when the charts are saying one thing but the futures another.  You generally ignore that at your own peril.  And Tuesday we paid the price as the Dow dumped another 140 points.  This is starting to change the picture so we will sift through the rubble in search of clues to Wednesday.

The technicals

The Dow:  The Dow surprised me on Tuesday with a 140 point loss.  More importantly, it broke through the first of two long-running monthly regression trend channels I've had going for several years now.  That is a bearish monthly setup.  The Dow needs to recapture 16,500 pronto to avoid a bearish trigger.  And equally concerning is that the 200 day MA is now at 16,333, less than 100 points away and easily breachable from where we are right now.  Of course, it could also serve as support, just as it did the last time we were in a similar situation back in January.  n fact, this market looks a lot like January right now - a period of teetering about new highs, followed by a big dump, then a week of vacillation and finally a touch of the 200 MA.  If that plays out, the selling could be near an end.  But if we break under the 200 MA, then look out below!

The VIX:  On Tuesday the VIX popped right back up over its upper BB with an 11.57% gain stopped only by resistance at 17. This actually looks like January too and if so, it may be one of those instance where the VIX takes its time in coming back down.  Right now the technicals are in disarray here, so no call.

Market index futures: Tonight the futures are mixed at 12:49 AM EDT with ES up 0.01% but YM down 0.04%.  So much for Monday's bullish pattern - on Tuesday ES reversed course and broke support at 1917 for another leg down.  The indicators are pretty much stuck on oversold now and we remain in a descending RTC.

ES daily pivot: Tonight the ES daily pivot drops again from 1928.08 to 1917.92.  Despite this, we remain below the new pivot so this indicator remains bearish.

Dollar index:  On Tuesday the dollar confirmed Monday's lopsided spinning top with a big 0.25% gap up inverted hammer that twisted the stochastic around into position for a bullish crossover.  But with 2/3 of an evening star now in place and sitting just below resistance at 55.50, it seems like the dollar is more likely to go lower on Wednesday.

Euro: The euro took a big hit on Tuesday, giving up all its recent gains and breaking support at 1.3390 to close at 1.3374.  That also brings it right back into the descending RTC, the recent breakout attempt having now failed.  With the overnight below the pivot and moving lower, this chart  just looks bearish.

Transportation: On Tuesday the trans negated Monday's nice hammer, breaking support at 8125 to close just under their lower BB for a 1.10% loss to continue a descending RTC that began July 2rd.  Momentum, money flow, and OBV continue to fall so this chart now just 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        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132 July       6       4      4           3       0.692    639
August     1       2      0           0       0.333   -134

     And the winner is...

Having been burned, I believe by some noise about Russia and the Ukraine on Tuesday, I'm now reluctant to make an outright call.  But given the proximity of ES to its new pivot, I'll make a conditional call: if ES can manage to break above its pivot and stay there by mid-morning Wednesday, we close higher.  Otherwise, it's just more of the same grind lower.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  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 1928.08.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias neutral.
• ES Fantasy Trader standing aside.

Recap

Huh - when I got up Monday morning at the crack of 11 AM I was shocked, shocked I say to see the market so badly in the red and wondering how all my favorite technical indicators could have been so wrong.  But patience paid off in the end and that turned out to be the low of the day as Mr. Market crawled out of his hole and the Dow finished the day with a decent 76 point gain.  I told you right here last night - that SPX Hi-Lo indicator is awesome - it's better than sonar for finding bottoms.  So with all that excitement now out of the way, we turn our sights to Tuesday.

The technicals

The Dow:  On a purely candlestick basis, on Monday the Dow confirmed Friday's stubby hammer with a .vaguely bullish engulfing pattern..  It also caused RSI to begin coming off oversold and continued squeezing the stochastic for an imminent bullish crossover.  Bottom line - this one is looking bullish for Tuesday.  Also of interest - support on the lower edge of a long-running rising RTC held, so we dodged a bullet there.

The VIX:  Last night I wrote "this chart is looking to me ready to come down on Monday" and come down it did with an 11.22% thud that confirmed Friday's big spinning top and brought us back under the upper BB.  Once again, the upper BB was key here.  So now we have indicators just coming off overbought, a completed bearish stochastic crossover and a bearish candle - that all spells lower Tuesday in my book.

Market index futures: Tonight all three futures are lower at 12:22 AM EDT with ES down  0.10%.  On Monday ES confirmed Friday's spinning top with a nice advance that solidified a bullish stochastic crossover and kept the indicators rising slowly off extreme oversold.  We also closed above the lower BB for the first time in three days.  However, the overnight trading seems to suggest that ES may be taking a breather on Tuesday.

ES daily pivot: Tonight the ES daily pivot rises from 1920.33 to 1928.08.  We're still above the new pivot though only by two points now.  But this indicator still remains nominally bullish.

Dollar index:  While I was expecting a lower dollar Monday and the eventual spinning top did trade in the lower end of Friday's tall red candle, it ended gaining 0.03%.  But with a completed bearish stochastic crossover, indicators still just coming off overbought, and a three day downtrend going, I'm going to guess that the dollar goes lower on Tuesday - this time for sure.

Euro: And so of course the euro was down just a bit on Monday but the trade was entirely outside the descending RTC for a bullish trigger.  With all the indicators now rising smartly off oversold, I still have to think this chart looks bullish.

Transportation: And finally, the trans on Monday confirmed Friday's spinning top with a 0.35% green hammer that successfully tested the lower BB. Like the other charts, this was enough to start the indicators moving back up from oversold and off the BB.  We don't quite have an all-clear yet as we remain in a descending RTC but any move above 8155 on Tuesday will be bullish - and we're real close to that 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        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       6       4      4           3       0.692    639 August     1       1      0           0       0.500      6

     And the winner is...

All the positive signs that were in place last night are still there tonight, along with a bunch of confirmations.  I don't like the fact that the futures are all lower in the overnight but everything else looks bullish so I guess I just have to go ahead with that and call Tuesday higher.

ES Fantasy Trader

People ask how I get in and out of these trades.  To recap, I have no targets or stops.  The idea is just to get in late at night and then back out before the close the next day.  Last night I saw what seemed to be a good opportunity with all of my favorite signals, especially the SPX Hi-Lo index lining up, so I got in.  I was kicking myself Monday morning and wondering how I could have been so wrong.  But patience paid off in the end and we turned a respectable 2.5 point profit, all the better considering the hole we had to climb out of to get it.  I even left some on the table but I had to go out and couldn't sit in front of my screen all afternoon.  I figured it was best not to get too greedy and risk seeing my profit evaporate in the hopes of grabbing some extras points.  And that's how that worked.  Here's the trade:

SLD    10    false    ES    SEP14 Futures     1927.50    USD    GLOBEX    14:26:12   
BOT    10    false    ES    SEP14 Futures     1925.00    USD    GLOBEX    00:37:59 

Portfolio stats:  the account now rises to $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

Monday higher

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

• Monday higher, medium confidence..
• ES pivot 1920.33.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias neutral.
• ES Fantasy Trader going long at 1925.00.

Recap

Oh well - last Thursday night I figured Mr. Market would come to his senses on Friday and realize Thursday's big dump was overdone, but it was not to be  In retrospect I think the big problem with that thesis was that it was in fact a Friday.  No one wanted to be long with the ongoing geopolitical uncertainty, PIGS, interest rate fears, etc. making headlines today.  But that was then, this is now.  Like the 7-year old in the back seat, we can now ask "Are we there yet?"  Don't make me stop this blog!

The technicals

The Dow:  So after a classic inverted exponential rundown last week, the Dow ... kept right on going lower on Friday, losing another 70 points.  Of note and of concern here is that we stopped just short of the lower trend line of a monthly rising RTC dating all the way back to February 2013.  So far, despite last week's action the bull market remains intact but if this line gives way, I'm going to have to reassess the situation.  For now at least the stubby hammer we got on Friday plus extreme oversold indicators suggests a reversal may (finally) be at hand.

The VIX: After last Thursday's gap-up rocket ship, the VIX had enough momentum left over to gain another 0.47% with a green spinning top sitting nearly entirely above its upper BB.  And like I always say, the VIX rarely spends more than a day or two above its upper BB before falling back.  And with the indicators extremely overbought and the stochastic just about to form a nice bearish crossover, this chart is looking to me ready to come down on Monday..

Market index futures: Tonight all three futures are higher at 12:36 AM EDT with ES up a not inconsiderable 0.34%.  Like the Dow, last Friday ES put in a stubby spinning top playing out entirely below the lower BB.  The indicators are now extremely oversold and the stochastic is  in perfect position for a bullish crossover (though not quite there yet).  With the Sunday overnight looking positive, I think we have the pieces in place for a move higher on Monday.

ES daily pivot: Tonight the ES daily pivot falls again from 1937.92 to 1920.33.  That drop combined with ES's gain in the overnight finally puts us back above the new pivot so this indicator now turns bullish.

Dollar index:  After a spinning toppish inverted hammer on Thursday the dollar lost 0.18% on Friday making it look a lot like the top is in. Nevertheless, even after that we remain inside a rising RTC.  But with indicators having topped at overbought and now moving lower, my money's on a lower dollar Monday.

Euro: On Friday the euro spiked up to close at 1.3430, enough to pop out of a long-running descending RTC for a bullish setup.  That also moved indicators off their extreme oversold trough and with the overnight showing no interest in moving lower again, I'd say the euro looks higher on Monday.

Transportation: Maybe a good indication that the selling is done came form the trans last Friday as they put in a long-legged spinning top that hit the lower BB before rebounding. That also gave us a completed bullish stochastic crossover - always a good sign.  Along with the other indicators, now extremely oversold, this chart looks ready to reverse course and move 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        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132 July       6       4      4           3       0.692    639
August     0       1      0           0       0.000    -70

     And the winner is...

$RHSPX, daily

Tonight we have some rather positive technicals in place in both the futures and the VIX.  I also want to share with you this chart of the SPX Hi-Lo index, courtesy of stockcharts.com (click the image to enlarge).  Notice the three big spikes down, on June 10th, April 11, and February 5th.  That's it for 2014, so far.  Until last Friday when we got another similar spike (on the very right edge of the chart).

Now the thing is, is that the day after every one of these three preceding spikes down, the market was higher.  Note also the MACD in the lower panel tells a similar story.  I find this chart to be very useful as a bottom-finder.

And the NYSE A/D line hit its lowest level since February last Thursday.  Also, the Morningstar Market Fair Value Index, which had been running at a YTD high of 1.05 at the start of last month, came back down to just 1.01 last Friday, the same level it hit on April 11th - one of those Hi-Lo chart spikes.

I think that this is enough evidence for me to call Monday higher.

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 go long at 1925.00.