Friday uncertain

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

• Friday uncertain.
• ES pivot 2044.58.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader closed.

Recap

The technicals have been working well so far this month.  Wednesday's reversal signs led to a nice gain on Thursday.  We now move on to wrap up the first full week of the new year.

The technicals

The Dow:  The Dow had an excellent day Thursday, retracing most of last week's nasty losses with a tall 323 point marubozu that popped it out of its descending RTC for a bullish setup.  We also now have a completed bullish stochastic crossover and indicators are still just rising off oversold.  So this chart remains bullish.

The VIX:  Last night I wrote "this one looks ready for lower again Thursday" and that's just where it went, gapping down 12% on a short red marubozu that fell out of a rising RTC for a bearish trigger.  We also got a completed bearish stochastic crossover and indicators that are only now coming off overbought so this chart remains bearish for Friday.

Market index futures: Tonight, all three futures are mixed at 1:14 AM EST with ES down 0.10% but NQ up 0.02%.  ES had a great day Thursday like everything else and also popped out of its descending RTC for a bullish setup.  I think we can say goodbye to last week's downtrend.  The overall look remains bullish but I do see a note of caution in momentum and money flow, which have turned back lower after rising for three days.

ES daily pivot: Tonight the ES daily pivot zooms from 2013.00 to 2044.58. And even with that big bump we're still above the new pivot so this indicator remains bullish.

Dollar index:  Last night I wrote "Let's just say the dollar's going to infinity" and by golly that seems to be just where it's headed, up another 0.53% on Thursday its fourth gap-up in five days.  So nothing's changed tonight - it's still up, up and away.

Euro:  And the poor euro just can't seem to catch a break, down again (yawn) on Thursday, now to 1.1790.  Last night I wrote "Last night I wrote "The 1.1763 I've been talking about isn't so far away now.""  And what was Thursday's low for the euro?  1.1761.  Bada bing!  And guess what?  The euro is now actually rising in the overnight, up 0.21% so far.  So with buyers coming in, my support level hit, and both money flow and OBV finally starting to  improve, we just might, just maybe might see an up day for the euro on Friday.

Transportation:  Last night I wrote "I'd say this one looks higher again Thursday" and was it ever - up 2.16% on a tall green marubozu that gapped up out of a descending RTC for a bullish setup and a completed bullish stochastic crossover.  So all signs are positive here.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    3      0       0           1       1.000    784

     And the winner is...

All the signs in the charts are clearly bullish tonight.  So why am I hesitating?  I don't like the little turn I see in the futures, for one.  Also, it's not uncommon to take a break after a good two day run.  We're pretty much re-running the middle of December here so I think that while there's still some upside left, it's likely to be limited on Friday and we might even get a doji day.  Therefore I'm just going to pop the escape hatch and call Friday uncertain.  That's all, she wrote.  See you again Sunday night!

Single Stock Trader
 
VZ did quite well on Thursday, like the entire rest of the Dow so I'm calling the all-clear here.  It once again looks like a buy to me.

Thursday higher

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

• Thursday higher.
• ES pivot 2013.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader closed.

Recap

Last night's conditional call worked textbook perfect.  After  noodling about its pivot for a while, around 4:30 AM ES took off and never looked back.  The result: plus 213 points for the Dow.  Like I say, this doesn't always work, but it's a high enough percentage to keep it i the repertoire.  So with that out of the way let's move on to Thursday.  But first ...

Political rant

In the wake of Wednesday's outrageous mass murder of the staff of the satirical magazine Charlie Hebdo in Paris, perhaps we ought to take a look at what all the fuss was about.  I simply cannot remain silent on this issue.

Make fun of Islam and die.

This is it.  The title says "If Mohammed came back...".  Mohammed is saying "I am the prophet, moron!" and the moron with the knife is saying "Up yours, infidel!".  This was worth killing 12 people over?  Are you kidding me?

If the Western world ever needed a wake-up call that the so-called "religion of peace" is just an excuse for mayhem of a sort that leaves me speechless, we've got it now.

We would do well to remember that the fundamental tenet of Islam is that all non-believers must either convert or die.  And it looks like these agents of Satan have a never-ending supply of lunatics eager to carry out their orders.

And there is historical precedent for the assertion that Islam is in fact out to conquer the world.  By the early 700's, Islam had overrun most of northern Africa.  The Islamic barbarians then set their sights on Europe, invading Spain.  They weren't happy with that so next they attacked France.  It wasn't until the Battle of Tours in north-central France in October 732 that they were finally stopped by Charles Martel, aka Charlie the Hammer.  Without Charlie's courage, we'd all be writing backwards and the Night Owl would be running around town in a Halloween get-up every day.  And certainly wouldn't be publishing tonight's post.

It looks like we are now faced with a new outbreak of this pestilence.  These bloodthirsty psychopaths need to be stopped and stopped soon before it is too late.  Where is Charlie when we need him?  My heart goes out to the families of the 12 victims of this brutal and profoundly senseless massacre.

The technicals

The Dow:  Wednesday's action was quite bullish for the Dow, let alone the big gain.  We got all the indicators to bottom, got a bullish stochastic crossover and a quasi-bullish piercing pattern for a candle.  This seems to put an end to the recent exponential run-down and this is just about the way they always end.  So I'm now bullish on this chart for Thursday.

The VIX:  Last night I wrote "I give it better than even odds of moving lower Wednesday."  Too bad I couldn't find any takers because the VIX fell 9% on Wednesday on a gap-down marubozu give up its BB midpoint and send the indicators off their overbought extremes.  With a solid bearish stochastic crossover now in place, this one looks ready for lower again Thursday.

Market index futures: Tonight, all three futures are higher at 12:33 AM EST with ES up  0.66%  Technically, ES had a great day on Wednesday, confirming a bottom last Friday with a bullish setup, indicators all rising off oversold, and a bullish stochastic crossover.  This chart gets the green light.

ES daily pivot: Tonight the ES daily pivot finally rises from 2000.75 to 2013.00.  We remain well above the new pivot so this indicators is now solidly bullish.

Dollar index:  Last night I speculated the dollar might take a pause Wednesday but instead it just kept going right on higher with another gap up candle.  I give up on analyzing the details.  Let's just say the dollar's going to infinity ... and beyond.

Euro:  Last nnight I wrote "The 1.1763 I've been talking about isn't so far away now.". Well after another leg down and a 1.1857 close Wednesday, it's even closer now.  And the overnight just keeps on falling.  Kick that nasty euro lower all you bots, go ahead kick it hard.

Transportation:  Last night I wrote "a reversal is at hand here, if not Wednesday then more likely Thursday." and that seems to have about covered it as the trans gained 0.71% Wednesday after bouncing off their lower BB.  RSI has bottomed now and the stochastic is gearing up for a bullish crossover.  Support at 8739 kicked in so I'd say this one looks higher again Thursday.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    2      0       0           1       1.000    461

     And the winner is...

Tonight we've gotten the bullish confirmation I was looking for last night so I'm just going to go ahead and call Thursday higher.

Single Stock Trader

Well it looked good on Tuesday but then Verizon broadsided us with an announcement about their purported deal with AOL and that was that - down to 46.19, one of only three losers on the Dow.  That move also screwed up the indicators and in the absence of a bullish RTC exit, I won't be adding anything here until I see some sort of reversal.

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 2000.75.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader closed.

Recap

Yep, I figured as much.  The Dow dumped another 130 points on Tuesday to make it five in a row lower for the broader market.  But the interesting thing is that the market is actually easier to call when it's moving up or down than when it's just drifting sideways.  So let's take a gander at how Tuesday's dive changes the picture.

The technicals

The Dow:  The Dow just kept on tumbling Tuesday, enough to drive its indicators extremely oversold.  Though we're not yet near the lower BB, the stochastic is in prime position to form a bullish crossover.  I'm over the catching the falling knife business so the most I'll say is that it looks like we're nearing a reversal here.

The VIX:  On Tuesday the VIX emitted what I believe to be a good reversal sign.  It gained 6% but did it on tall spinning top that just touched its upper BB along with quite overbought indicators and a stochastic that is ever so close to a bearish crossover.  I give it better than even odds of moving lower Wednesday.

Market index futures: Tonight, all three futures are higher at 12: AM EST with ES up  %  On Tuesday ES extended its losing streak to five, giving up 2000 in the process but also driving the indicators extremely oversold.  Meanwhile we're actually seeing an uptick in the overnight which has just caused a bullish stochastic crossover.  This is different from lately so perhaps the selling is about over for now.

ES daily pivot: Tonight the ES daily pivot falls again from 2024.58 to 2000.75.  This time that was just enough to leave ES sitting right below the new pivot.  And it is knocking on the door as I write,  A break above would be bullish.

Dollar index:  After a big gap-up red candle Monday the dollar gained more on Tuesday but with a doji sitting right on the upper BB.  Considering how overbought the dollar is short-term, this just might be a sign that the dollar will take a rare break on Wednesday though the overall trend is still inexorably higher.

Euro:  And nothing new in euro-land as we closed down again Tuesday, this time to 1.1921.  The bots are shorting the euro hard in a "kick 'em while they're down" effect with OBV now running an amazing -3 million.  And the new overnight is, surprise, still lower, now 1.1883.  The 1.1763 I've been talking about isn't so far away now.

Transportation:  What is it with the trans?  You'd think that of any sector, lower oil would help this one.  But nooo, the trans continued to underperform in a big way on Tuesday down a big 1.65% to break supprot at 8747.  Indicators are now quite oversold but we remain in a steep descending RTC.  However, it's encouraging that we bounced off the lower BB.  I'd say that a reversal is at hand here, if not Wednesday then more likely Thursday.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    2      0       0           0       1.000    461

     And the winner is...

We're getting a bunch of reversal signs in the charts   However, oil continues to move lower in the overnight and the SPX Hi-Lo index is only down to 68 - not the level from which reversals come.  The Morningstar Market Fair Value Index has though come way down from a year-long high of 1.06 on 12/26 to 1.02 but I think we still need to wring out another tick or two here before turning bullish.  So the picture is mixed.  And because of the proximity of ES to its pivot I'm going to try a conditional call: if ES can break above its pivot by mid-morning Wednesday we'll close higher, else lower.

Single Stock Trader

Recall that we're watching Verizon here now, and only Verizon.  And interestingly, VZ was one of the few Dow components that rose on Tuesday.  And in fact it triggered all my classic indicators.  So at Tuesday's close of 47.18, I am now officially calling VZ a swing buy.

Tuesday lower

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

• Tuesday lower.
• ES pivot 2024.58.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader closed.

Recap

It's always nice to have my first call of the year be correct and while I would have been happier if the market had been up 331 points instead of down, my analysis proved correct.  Oil apparently is back to ruling the market s the black liquid took another dive on Monday.  So let's take a look at the charts and see where we're going next.

The technicals

The Dow:  It's looking a lot like a re-run of last month as the Dow tanked 1.86% on Monday.  I was right to be cautious about the reversal tar here.   But tonight we're now quite oversold though the stochastic has yet to start curving around for a bullish crossover.  So I'd say the reversal is near, but maybe not Tuesday.

The VIX:  The VIX similarly ignored its own reversal sign Friday with a 12% pop on Monday.  It's now gone overbought and the candle is an inverted hammer so there's more of a chance the next move could be lower from here - but it isn't a slam-dunk.

Market index futures: Tonight, all three futures are lower once again at 12:45 AM EST with ES down 0.06%  On Monday ES took another big leg lower and that was finally enough to drive all the indicators quite oversold.  Notably, the stochastic has begun that characteristic curve-around that signals its intent to form a bullish crossover though we're not quite there yet.  Meanwhile we're still in a descending RTC so it's too soon to call the all-clear.

ES daily pivot: Tonight the ES daily pivot falls again from 2050.75 to 2024.58. After a disastrous day Monday we remain well below the new pivot so this indicator remains bearish.

Dollar index:  Last night I thought the dollar might take a rest after a big gap up.  Nope!  Instead it took another gap up to levels not seen since July 2010.  And on the monthly chart, the current candle looks nothing like the inverted hammer that marked the 2010 top.  So it continues to look like there's more upside left here.

Euro:  Meanwhile the beleaguered euro just kept doing what it does best - digging itself a hole.  A very very deep hole. Last night I wrote "there's still no sign of an end to the current slide" (not a very hard call to make) and wouldn't you know, we gapped down to close this time at 1.1947.  I also wrote "Next support is 1.1763, a number I'd not be surprised to see fairly soon." and I'm sticking by that.

Transportation:  Last night I wrote "This is a fairly bearish chart".  That proved to be the case indeed as the trans cratered 2.66% on Monday in a move I feel is overdone.  It was enough to drive the indicators oversold but not set up the stochastic for a bullish crossover.  But this chart now has the look  of a reverse exponential and that always means the end is near.  Always.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      0       0           0       1.000    331

     And the winner is...

I think we're getting near a reversal point but it doesn't look like the selling is done quite yet.  Oil in particular seems to have no support at all.  I do think we'll see a move higher later this week but not right away.  Accordingly, I call Tuesday lower.  I'll be happy to be proven wrong.

Single Stock Trader

OK, in 2015 I'm going to try something new - I call it the Single Stock Trader".  I pick a stock and makes buy/sell calls on it.  And the stock I pick is ... Verizon (VZ).  Why Verizon?  Well I'm a customer of Verizon, so I know something about the company.  I also think they're overcharging me so I'd like to get some of my money back - from them.  Right now we're on the sidelines waiting for an entry point.  VZ has just gone oversold but I don't see my favorite reversal signs (bullish stochastic crossover and RTC exit) yet.  So we wait.

Monday lower

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

• Monday lower, low confidence
• ES pivot 2050.75.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader closed.

Recap

Well 2014 is in the books, all the confetti has been swept up, and I hope everyone had a happy New Year holiday.  Now it's time to get back to work as we start the first full week of 2015.  So let's get right to it.

The technicals

The Dow:  The Dow snapped a four day losing streak on Friday to start off the new year with a doji star.  Indicators are still falling though and have not yet hit oversold so this warning requires confirmation.  Absent that we remain in a downtrend.

The VIX:  The VIX put in a similar star on Friday, down over 7% but its own indicators are frustratingly not yet overbought  so there's no clear reversal here either.

Market index futures: Tonight, all three futures are lower at 1:01 AM EST with ES down 0.06%  ES now has a three black crows pattern going, and while RSI has gone oversold, the indicators continue falling so this chart looks rather bearish tonight.

ES daily pivot: Tonight the ES daily pivot falls from 2062.00 to 2050.75.  We're under that number and drifting lower in the overnight so this indicator looks bearish.

Dollar index:  On Friday the dollar broke out of its holiday week doldrums with a big pop clear to its upper BB and its highest close since July 2010.  We might get a pause here on Monday but the larger uptrend remains very much intact.

Euro:  Meanwhile the euro resumed its march to the basement with another big leg lower Friday to close at 1.2043.  And it's already gapping down almost as much as that loss in the overnight, blasting right through 1.2000 and now to 1.1945.  Four years of monthly support are now gone.  The last month that closed this low was February 2006!  And there's still no sign of an end to the current slide.  Next support is 1.1763, a number I'd not be surprised to see fairly soon.

Transportation:  And on Friday we got a tall red spinning top  here for a 0.45% loss.  This is a fairly bearish chart having just completed a bearish RTC trigger and with indicators that are falling but still overbought.

 Performance:  My trading account ended 2014 up 11.91%.  This beat my benchmark of the Dow which gained only 7.52% but was not as good as my results in 2013 when I gained 22.94%.  Part of this was due to the fact that I traded less in 2014 due to other time commitments.  Still, I can't really complain about a 12% gain.
 

Accuracy:  

Here are the final numbers for 2014.  You can see that on my daily calls for a higher or lower close, I was right about 60% of the time.  I had only one losing month and captured a total of 2795 Dow points

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   5       3      6           2       0.700    241

Mean       7       5.4    4.4         1       0.597
Total                                                 2795

     And the winner is...

Hmmm, I don't know.  Sunday nights are always the hardest to call, and the Sunday after a holiday even harder due to the lack of fresh data.  I will say that I have put a new chart on my radar this year - ZQ, the 30 day Fed funds interest rate futures.  They've been in a descending RTC since October 15th but just last Friday broke barely above for a bullish setup.  And the market has been in a very high inverse correlation with this chart for a year now.

So this chart has me concerned.  And given that we don't have any solid reversal signs other than some dojis that aren't backed up by indicators, I'm just going to have to go out on a limb and call Monday lower.

ES Fantasy Trader

I'm not going to do the ES Fantasy Trader in 2015.  I'm thinking of tracking a single stock instead.  We'll see.