Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 2070.58.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Tuesday night's technicals played out nicely on Wednesday, despite the release of the Blah Book and another Speech of Nothing by the Empty Suit.  Net net, the Dow gained another 33 points which we'll take.  So on we go to Thursday with the reminder that this is the last post of the week as I have an unfortunate appointment that requires me to get up at the ungodly hour of 7 AM on Friday.

The technicals

The Dow: On Wednesday the Dow continued its march into record territory stopping just short of its upper BB at 17,940.  So modulo the RSI which stubbornly refuses to come off overbought for six weeks now, there's still really nothing bearish going on here.

The VIX: Last night I wrote "this one looks like more downside to come on Wednesday."  And sure enough, the VIX fell another 2.96%.  We're now near support and the lower BB both at 11.97 but with a fresh bearish stochastic crossover there still seems to be a bit more downside available here.

Market index futures: Tonight, all three futures are, like last night, just barely higher at 12: 15AM EST with ES up just two ticks. ES had a good day Wednesday but still could not break through resistance at 2075.  It did put in a bullish stochastic crossover but the overnight pin action isn't looking too hot.  In fact it's looking a bit tired.

ES daily pivot: Tonight the ES daily pivot rises from 2061.58 to 2070.58.   We're still above the new pivot so this indicator continues bullish.

Dollar index:  Tuesday's close above the upper BB did not faze the dollar which simply continued its march higher on Wednesday trading entirely above the BB.  We're now back to July 2010 for the last time we were at these levels and still no end in sight;  Heck we're still not even overbought yet so there's still more upside here.

Euro: And as the dollar rose the euro fell yet again giving up support at 1.2380 like it wasn't there to close under their lower BB.  We're now sitting right on multi-year support and the euro is way oversold so it's do or die here.  There's good reasons for the euro to find support here but the candles don't agree to that at all.  And pending that, I have to call this one lower yet again.

Transportation:  And finally on Wednesday the trans retraced more of Monday's big swoon to gain a decent 0.79% with a two white soldiers pattern.  With the stochastic positioning itself for a bullish crossover there now seems to be more upside potential than downside risk 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
July       6       4      4           3       0.692    639 
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376 
October    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38
December   2       0      0           1       1.000     84

     And the winner is...

A nice recent two day run has brought the market right back to record resistance levels and while all the charts continue to look fairly bullish, they're feeling a bit tired to me.  My impression is that there's still a bit more room to run higher but we're in for a pause while we regroup for another attack at further new highs.  So I'm a bit reluctantly calling Thursday higher though I'm not expecting much.

Reminder - there will be no post Thursday night, so I'll see you again next Sunday night as usual.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Wednesday higher

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

• Wednesday higher, low confidence.
• ES pivot 2061.58.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Monday night's conditional call  worked a treat on Tuesday.  ES noodled about its pivot in the wee hours of the day before finally breaking decisively above right at the open.  From there the outcome was never in doubt and we closed higher.  This trick doesn't always work but it works often enough to keep coming back to it.  So with that out of the way, let's move on to Wednesday.

The technicals

The Dow: On Tuesday the Dow short-circuited what had been looking a lot like an incipient collapse after a breakdown of week-long support.  But that was not to be as we clocked a handy dandy 103 point pop that took the Dow right back through last week's mean and close to its upper BB.  That keeps us in a month-long rising RTC and extends the crazy-long overbought streak another day.  And after this bullish engulfing candle I can only call this chart higher again from here.

The VIX: Last night I mentioedn an incipient bearish evening star in the VIX and wrote "this pattern is at least a warning that the VIX may be played out.".  And indeed it was as on Tuesday the VIX plunged 10% right back down through its 200 day MA on a tall red marubozu to complete the evening star.  That was enough to cock the stochastic around in preparation for a bearish crossover.  In all, this one looks like more downside to come on Wednesday.

Market index futures: Tonight, all three futures are just barely higher at 12:15 AM EST with ES up  all of one tick. On Tuesday ES retraced all of Monday's losses plus a bit to form a bullish engulfing pattern and just recapture the rising RTC thus canceling the bearish RTC setup.  The stochastic is also curving around for a bullish crossover and with no notable bearish presence in the overnight this chart looks continued higher.

ES daily pivot: Tonight the ES daily pivot rises from 2054.33 to 2061.58.   Even with that gain we remain above the new pivot so this indicator is now clearly bullish.

Dollar index:  On Tuesday the dollar completed a bullish morning star to close above its upper BB, its best close since July 2010.  But with the upper BB hit and in the absence of a trend, this chart remains too tough to call.  I'd guess the next move might be lower, but those counter-trend calls have been devilish all year.

Euro: The euro had a big tumble Tuesday to end right on some strong support at 1.2381.  THis is also very near the lower BB and indicators are close to oversold now.  Recent history would seem to suggest the next move is higher from here.

Transportation:  On Tuesday the trans retraced a third of Monday's losses.  That drop reset the indicators back off overbought so this chart now seems to have more room to run higher from 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
July       6       4      4           3       0.692    639 
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376 
October    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38
December   2       0      0           0       1.000     51   

     And the winner is...

Whereas last night the charts were looking fairly bearish while the futures and the VIX were suggesting otherwise, tonight everything seems to be in agreement that things are looking fairly positive.  Therefore, I'm going to call Wednesday higher.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

Tuesday depends on ES pivot

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

• Tuesday higher only if ES breaks above its pivot, else lower.
• ES pivot 2054.33.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

On Monday the Dow tried hard to rally off an early deficit but ultimately failed, starting off December with a 51 point loss.  The action may not have been a wild ride but the charts are interesting so let's take a gander at them and figure out whither Tuesday.

Also, the Night Owl will not be publishing Thursday night as I have to get up at the ungodly hour of 7 AM on Friday so I'm going to have to turn in much earlier than usual on Thursday.  But we'll be back next Sunday night as usual.

The technicals

The Dow: After a week-of-nothing, the Dow broke to the downside on Monday with a stubby hanging man that tested but rejected the lower bounds of its rising RTC.  This leaves the indicators still overbought.  I started scrolling back to find the last time were were this overbought this long.  I got as far back as 2002 before giving up.  This is really quite extraordinary and makes one think that Monday's drop may be a warning that there's lower ahead.

The VIX: The VIX did indeed follow on to last Friday's big jump with an impressive7.20% pop on Monday.  The result was a gap-up spinning top that blasted right through the 200 day MA to finish in evening star position and nearly touch its upper BB.  Though indicators are still not yet overbought, this pattern is at least a warning that the VIX may be played out.

Market index futures: Tonight, all three futures are higher at 12:25 AM EST with ES up  0.13%.  On Monday ES had its biggest move in a month to the downside with a gap-down marubozu that fell right out of the latest rising RTC for a bearish setup.  It was also enough to finally take the indicators off the overbought levels they've been at since October 22nd.  The stochastic is now in full-on bearish mode too.  But thr lack of bearish pin action in the overnight  suggests at least a possibility of a reversal Tuesday.

ES daily pivot: Tonight the ES daily pivot drops from 2068.17 to 2054.33.   We're still below the new pivot but just barely.  It's bearish for the moment but that could change soon since as I write ES seems to be drifting slowly higher.

Dollar index:  Last night I wrote "I'd look for a lower dollar Monday" and I didn't have far to look as the dollar fell 0.49% on a nice doji star.  But with the indicators jittering about all over the place and no real trend here, I'm not going to call this one tonight.

Euro:  O Monday the euro posted a small gain on a stubby spinning top.  This chart is as indecisive as the dollar so no call here either.

Transportation: On Monday the trans just fell out of bed with a giant 2.71% drop on a red marubozu that exited their rising RTC in a big way for a bearish trigger and confirmed the bearish stochastic crossover.  There are bearish consequences, Dow Theory-wise here for the Dow and this chart just looks flat-out 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     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376 
October    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38
December   1       0      0           0       1.000     51   

     And the winner is...

Though most of the charts now look fairly bearish after Monday's action, the overnight futures are acting like the selling is about washed up.  And after all this is December.  The VIX also seems poised for a move lower.  But it's enough of a mixed picture that I'm going to try a conditional call: if ES can break above its pivot by mi-morning Tuesday, we'll close higher.  If it can't then we close lower.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 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, medium confidence.
• ES pivot 2068.17.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I hope everyone had a happy Thanksgiving and got to take some well-deserved time off.  Here's why I took all of last week off: last Monday the Dow opened at 17,812.63 and last Friday it closed at 17,828.24.  After a whole week, that was a change of just 17 points.  Sure, there were a few day trading opportunities here and there but as far as swing trading goes, my time was much better spent relaxing, eating turkey and thinking about other things besides the market.

And I expect the same thing next month during Christmas week which I also intend to take off.  But for now it's back to work so with a new month on tap let's see what December might have in store and in particular if Santa Claus is going to show up this year.

The technicals

The Dow: Tee Dow basically spent a whole week going nowhere last week, putting on one meaningless doji after another.  The proximate takeaway is that we've got some strong resistance around 17,830 and with indicators crazy overbought right now the next move could be lower.

The VIX: In an interesting bit of bullish divergence last Friday the VIX popped 10.44% on a day the Dow went nowhere, possibly inspired by news of OPEC's policy problems.  Oh boo hoo hoo - poor OPEC.  Good riddance to ya, you money grubbing cartelistas.  Nevertheless, technically, the VIX put in a quite bullish candle, exiting its descending RTC is a big way for a bullish RTC exit and a bullish stochastic crossover.  So this chart really looks higher for Monday.

Market index futures: Tonight, all three futures are lower at 12: 28 AM EST with ES down 0.41%. On Friday ES put in a class bearish engulfing candle to the extent that that means anything in a low volume holiday shortened week.  But the indicators continue falling off extreme overbought and the gap down in the Sunday overnight seems to suggest some weakness coming into Monday.

ES daily pivot: Tonight the ES daily pivot drops from 2070.92 to 2068.17.   We're over 10 points under the new pivot now so this indicator is now bearish.

Dollar index:  The dollar continues to find resistance at 60 (on the $USDUPX) just touching its upper BB on Friday.  So given recent history I'd look for a lower dollar Monday on that basis alone.

Euro:  The euro chart is somewhat more confused with a drop on Friday negating the previous two daily gains.  With indicators halfway between extremes and trending nowhere, there's nothing to say about this chart.

Transportation:  Last Friday, such as it was, the trans put in a classic inverted hammer that just touched their upper BB on extremely overbought indicators.  And gave us a bearish stochastic crossover.  That makes this chart looks bearish for 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     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376 
October    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

     And the winner is...

December is historically the best month of the year for the SPX and second best for the Dow, but that's not generally true of its first day.  And with a number of bearish signs on the charts tonight it's not looking good for Monday.  So even keeping in mind the holiday induced  trading distortions last week, I think the only reasonable call I can make tonight is for Monday lower.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.