Friday higher

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

• Friday higher, low confidence.
• ES pivot 2001.33.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Ho ho ho!  Looks like Santa showed up, right on schedule, delivering the Dow's best one day performance since the late Mesozoic with a whopping 421 point moonshot, the biggest gain I remember since I started doing this.  And the last two days have erased almost all of last week's sickening declines.

The technicals

The Dow:  I figured we were going higher on Thursday but after Wednesday's nice rally I didn't think Mr. Market still had that much gas in the tank.  But Thursday's action rocketed us right out of the recent ugly descending RTC for a bullish trigger, solidified the bullish stochastic crossover, and kept the indicators rising off oversold.  So with two big white soldiers on the march, this chart looks like Santa's not done delivering presents to all the good little traders.

VIX daily

The VIX:  This is quite extraordinary.  Last night I wrote "The pattern looks amazingly similar to what we saw back in October. ...If this holds up, we should be in for more declines on Thursday."  Now look at how it turned out on Thursday.  On October15th we had a long-legged star trading above the upper BB, just like December 16th.  On October 16th, we got a tall red marubozu dropping back under the upper BB, just like yesterday.  And on October 17th, we got a gap-down doji star, just like today (Thursday)!  Even the indicators are all in the same relative positions.  This is how the VIX trades.  I hate to say never, but I've never seen this fail.  In any case, this chart looks good for some more downside on Friday.

Market index futures: Tonight, all three futures are higher at 1:09 AM EST with ES up  0.53%  On Thursday ES put in the best one day gain I've ever seento leaves its descending RTC in the dust for a bullish trigger and sent the indicators steadily marching away from oversold.  You'd think Mr. Market would be kind of pooped after such a massive two day run, but no, not only are we up significantly in the overnight, we're back to flirting with record highs just under 2079, a level that looked like ancient history just a few days ago.  We've now retraced the entire week-long oil induced tumble.  And it appears that this rally isn't done yet.

ES daily pivot: Tonight the ES daily pivot zooms from 2001.33 to 2047.92.  And even with that massive gain we're still well above the new pivot so this indicator continues bullish.

Dollar index:  Even the dollar managed a 0.17% gain on Thursday with a little gap-up star that came close to its upper bB.  That's a reversal hint but one which requires confirmation, especially with indicators still not yet overbought.

Euro:  And the euro lost again on Thursday for a bearish RTC trigger along with falling indicators.  I'd say we're headed to the lower BB at 1.2257 on Friday.

Transportation:  On Thursday, the trans, like everything else had a great day gapping up out of their descending RTC for a bullish setup and confirming Wednesday's hammer.  Indicators all rising off oversold make this chart look 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       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   4       2      5           1       0.714    229
     And the winner is...

I really think Mr. Market deserves a rest after rallying furiously for two days but it looks like there's just no stopping him.  With the Dow and SPX back near record highs, I think he's going to want to take another look at those levels.  We could see a topping day but since I don't see any bearish signs anywhere, I've got to call Friday higher.

That's all she wrote.  Reminder - I'm taking all of next week off due to the extended major holiday for Christmas.  See you again Sunday the 28th.

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.

Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 2001.33.  Holding above is bullish.
• Friday bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I was seeing a lot of indications that we were due for a reversal but I wasn't willing to commit to it because it had been such a losing play recently and of course because Wednesday was a Fed day and I always call those uncertain.  Too bad too because the Dow put in a big 288 point pop and that changes the picture.  So let's take a look at how as we continue to count down the waning days of 2014.

The technicals

The Dow:  The Dow was already on a decent technical rally on Wednesday when the Fed announcement hit and after that it was up up and away to finish the day with  a 1.69% gain, the first in four days and the biggest in over a year.  This had the eff3ect of finally forcing a bullish stochastic crossover, causing a bottom in RSI (though it's still oversold) and finally unsticking us form the lower BB - all bullish signs.  We're still in the descending RTC but just barely.  Everything else being equal (which it rarely is) this chart now looks bullish.

VIX daily

The VIX:  Last night I wrote "I still have to think that the VIX is going lower on Wednesday" and hey presto so it did, down a big 17.52% off highly overbought indicators with a big red marubozu.  We now have a bearish stochastic crossover in place andwe've finally broken away from the rising upper BB.  The pattern looks amazingly similar to what we saw back in October.  See if you don't agree:  Compare the action on the left side of this chart to the right.  If this holds up, we should be in for more declines on Thursday.

Market index futures: Tonight, all three futures are lower at 12: AM EST with ES down 0.16%. ES had a spectacular day on Wednesday with a giant green marubozu that broke away from the lower BB and managed to just exit the descending RTC for a bullish setup and confirm Tuesday's inverted hammer.  The bullish stochastic crossover is now complete and all the indicators have started to rise (finally) off oversold so technically this chart now looks bullish


ES daily pivot: Tonight the ES daily pivot jumps from 1985.92 to 2001.33.   That puts us back above the new pivot for the first time in a while so this indicator now turns bullish.

Dollar index: The dollar had its best day since June 2013 with a 1.17%  green marubozu that confirmed a bullish stochastic crossover, brought the indicators off oversold and formed something of a big morning star,.  This all looks bullish to me.

Euro: Meanwhile the euro had its biggest drop since September 4th, to close at 1.2337.  That ends its recent rally, confirms the bearish stochastic crossover and send all the indicators down off overbought.  The euro though has shown a propensity for DCB's following big losses though so I'm not touching this one tonight.

Transportation: The story was pretty much the same on Wednesday with the trans which put in a 0.84^ gain on a big hammer that caused a bullish stochastic crossover and bottomed all the indicators on increased volume.  Now this looks like a reversal to me.

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   3       2      5           1       0.667   -192

     And the winner is...

Technically the charts all suddenly look bullish.  My only concerns at this point are that this is an op-ex week and Friday is quadruple witching.  And we're not seeing any positive pin action in the overnight futures.  It's also not uncommon to see the market take a pause after such a big one day gain.  But all in all, I think it's not unreasonable to call Thursday higher.  Of course if there's more chicanery around oil on Thursday all bets are off.  But I'm not expecting a triple digit loss.

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 uncertain

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

• Wednesday uncertain.
• ES pivot 1985.92.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Holy moly - I think "uncertain" was absolutely the right call for Tuesday after a triple digit roller coast ride both up and down.  But in the end, the selling just continued.  Will Santa Claus come to the rescue?  It's getting to be about time to ask that.  Maybe the charts have the answer (or maybe not).

The technicals

The Dow:  The Dow just continued its sell-off Tuesday down another 112 points, this time on a big inverted hammer.  But reversal candles are meaningless lately so what else have we got?  Well there's RSI which at 6.21 is now extremely oversold.  And the stochastic's %K line is 2.54 - doesn't get much lower than that.  But also the 200 day MA is now moving into view at 16,861.  This whole pattern is now looking a lot like early October and that didn't end til we'd broken under the 200 MA with a couple of big dojis.  So for now we continue riding the lower BB down locked in a steep descending RTC.  No bullish signs here.

The VIX:  The VIX is looking even more like October than the Dow with a big 15% gap up long-legged doji star on Tuesday.  Back in October (10/15 to be exact) that marked the beginning of the end.  The next day saw a big blow-off top and then down we went.  And interestingly, oil had begun a steep leg lower at exactly the same time, just like now.  We actually have a completed bearish stochastic crossover in the VIX and VVIX already peaked two days ago..  I know this market has really gone off the rails but I still have to think that the VIX is going lower on Wednesday.

Market index futures: Tonight, all three futures are higher at 12:43 AM EST with ES up  0.28%.  ES had yet another lousy day Tuesday, ho hum, and seems to be trying to rally in the overnight, just like last night and we all know how that ended.  I can't rely on overnight moves anymore  the way I used to.  But RSI appears to have bottomed at extreme oversold and OBV took a turn higher   So there might be good news here but with the VIX pushing 24 we need some real confirmation before calling a rally.

ES daily pivot: Tonight the ES daily pivot falls again from 1996.92 to 1985.92.  And we once again remain below the new pivot so this indicator remains bearish.

Dollar index:  Interestingly, the dollar took a big gap down, off 0.43% on Tuesday breaking support at 59.86. to hit oversold and just north of its next support at 59.40.  Does this mean a move higher?  Not in this Kafkaesque market.  Who knows.

Euro:  The euro meanwhile continued its recent rally to end at 1.2495 on an inverted hammer that just touched its upper BB and hit overbought.   It still might be able to push higher from here, but the euro is looking a bit tired to me right now.

Transportation:  The trans just laughed at Monday's doji and resumed their march lower, down 1.32% in a move I just do not understand.  You'd think lower oil prices would help this sector.  But anyway down we go with no end in sight despite way oversold indicators.

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   3       2      4           1       0.667   -192

     And the winner is...

Well once again we're seeing a lot of good reversal signs, especially from the VIX.  I'll note too that the Morningstar Market Fair Value index has now gone below 1 - to 0.99.  And the SPC Hi-Lo indicator has now gone to a very low reading - 15.22.  The last time we were around these levels was in mid-October and that marked the end of the early October slide.  And we also had falling oil back then too.  And a VIX above 25.

So what I'm thinking is that Wednesday will be a blow-off top in the VIX and then he market will begin to move higher, perhaps on a hammer.  That would time nicely for Santa Claus and his rally - assuming he bothers to show up this year.  But then we've still got that pesky oil problem so once again I'm calling Wednesday uncertain until things calm down a bit.

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 uncertain

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

• Tuesday uncertain.
• ES pivot 1996.92.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Ugh - I picked another bad day to be wrong - a really bad day.  It is now apparent, even to me that this market is entirely oil-driven.  The technicals did appear to be going my way out the gate but then some noise about Libyan oil tankers or something appeared and it was back to the same old same old.  We'll take a quick look at the charts but mostly for entertainment value - it's not clear that you can do much predicting in the current bizarro market environment.

The technicals

The Dow: The aforementioned Dow looked like it was headed higher on Monday but then everything went off the rails quickly enough for yet another loss.  This is now looking just like the middle of October, minus the 200 day MA breakdown.  That one ended with a star, a hammer, and then another still lower star.  We've yet to see anything comparable, so with my hands dripping with blood from catching the falling knife, I now claim there's no end in sight to the slaughter.  Perhaps the 200 day MA at 16,858 can save us.

The VIX:   This is weird.  It felt really bad on Monday and yet the VIX was actually down 3.13%, on a giant spinning top, and green of all things.  But finally, after two big reversal warnings, we have a bearish stochastic crossover.  So I will once again (sight) claim that the VIX is ready to move lower.

Market index futures: Tonight, all three futures are higher at 12:38 AM EST with ES up  0.20%. ES put in a good spinning top reversal candle on Monday but we've now seen three god such candles in the past week and each one was followed by another nasty leg down.  So I'm done playing that game regardless of the advance in the overnighit.

ES daily pivot: Tonight the ES daily pivot ticks up from 2008.67 to 1996.92.   That still leaves ES just barely below the new pivot, though it just made a failed attempt to break above just after midnight.  Until we see a definite move on this, this indicator remains bearish.

Dollar index: On Monday the mighty dollar gained another 0.1% to arrest what looked like a swan dive off the first of the month.  Never mind that the dollar used to be worth 360 yen when I was little (and I'm not that old).  The dollar's recent uptrend remains intact.  The buck is also quite oversold and on the verge of a bullish crossover so I'd say it's looking higher on Tuesday.

Euro:  Meanwhile the euro put in a classic dark cloud cover on Monday and traded outside the rising RTC for a bearish trigger.  The stochastic is quite close to a bearish crossover the indicators remains quite overbought, and so this chart looks lower on Tuesday.

Transportation:  Well here's an interesting bit of bullish divergence.  With the Dow down 100 points, on Monday the trans gained a non-trivial 0.23% on a really big doji star.  And more importantly, it traded outside the descending RTC for a bullish setup.  This is my best clue that a reversal is at hand.  Oh, and with a highly oversold stochastic just about to form a bullish crossover.

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   3       3      3           1       0.571   -292

     And the winner is...

I think I'm pretty much done for the year.  I'm ready to take my 9.59% YTD profit, declare victory, and go home.  While there are technical reversal signs on the charts, I don't think they're going to matter as much as what oil does on Tuesday.  And that chart has been putting in a series of waterfall lows for days now.  Until we see a reversal in oil, this market will just keep going lower.  And yet I'm concerned about getting whipsawed now so I'm just going to call Tuesday uncertain

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 higher

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

• Monday higher, low confidence.
• ES pivot 2008.67.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Several times a year the stock market holds a sale.  After a 316 point cliff dive in the Dow on Friday, this is one of those times.  Of course the question now is how long the sale will go on?  Are these the best prices of the year or will there be even better bargains in the week ahead?  Let's go right to the charts for some answers.

This is a good time to note that we're looking at another big holiday week next week and accordingly the Night Owl will be taking the entire week off.

The technicals

The Dow:  Is the selling over?  Well one glance at the Dow's chart clearly shows a negative exponential curve and that's always a good sign that we're nearing the end.  Whenever something goes exponential, it's about done.  The indicators are now a quite oversold levels and we're way below the lower BB.  All we're missing now is a reversal candle.  That could come Monday.

The VIX:  Well hey now - speaking of reversal signs, on a day the Dow absolutely cratered, the VIX was up just 5% with a tall spinning top in perfect evening star position.  Indicators are now crazy overbought and the stochastic has flattened out in preparation for a bearish crossover.  This is a good sign we're getting ready to move lower.  If not Monday, then Tuesday.

Market index futures: Tonight, all three futures are higher at 12:31 AM EST with ES up  0.43%. ES had another ugly day last Friday, closing well under its lower BB and driving the indicators quite oversold.  Tonight we note the stochastic is getting very close to a bullish crossover and we're seeing a bounce in the overnight trade.  It's not clear if it's a bottom, a DCB, or just an echo of the trade we saw last Thursday after Wednesday's big decline.  But in any case, it looks like the selling's about done, at least for now.

ES daily pivot: Tonight the ES daily pivot dives from 2037.08 to 2008.67.   Amazingly, even after that massive drop and a substantial overnight gain in ES, we're still below the new pivot, though not by much.  So this indicator remains bearish but the possibility exists for an assault on the pivot.  A break above would turn things bullish.

Dollar index:  On Friday the dollar put in an odd little green spinning top that was nonetheless a 0.38% decline.  But with RSI looking to have bottomed and the stochastic real close to a bullish crossover, I'd say the buck is telegraphing a move higher on Monday here.

Euro:  And of course the euro did the opposite on Friday, stymied now for three days at 1.2450 resistance.  The overnight is gapping up but fading as we leave the rising RTC for a bearish crossover.  Can the euro make another move higher Monday?  I'm not at all sure about that.

Transportation: On Friday the trans retracted all of Thursday's gains and then some to continue dribbling down the lower BB and remain in a descending RTC.  But despite oversold indicators, I still don't see any 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
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   3       2      3           1       0.667   -192

     And the winner is...

The Friday charts all look pretty ugly but the extent of the sell-off, the reversal hint in the VIX, and the overnight futures all seem to be suggesting a move higher Monday.  And I'll take that suggestion and call for a close Monday 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.