Wednesday higher only if ES pivot holds

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

• Wednesday higher only if ES stays above pivot by mid-AM, else lower.
  
• ES pivot 1685.67.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains long at 1695.00.

Recap

Hey Mikey!  He likes it!  Go figure - Mr. Market apparently approves of the government shutdown (actually just a partial shutdown) with a nice 62 point bounce in the Dow on Tuesday.  And while we're talking about government shutdowns, why is it that the venal clowns on Capitol Hill continue to collect their paychecks for not doing their jobs, while thousands of ordinary citizens are now going without?  Something's not right here.  So upon that jolly note, let's move on to the charts once again.  But first...

Southwest Airlines Goes Down

Is this any way to run an airline?

I just heard from the credit card dispute department.  You may recall how the Night Owl got suckered into paying a business class fare for steerage class service on Southwest Airlines (LUV, 14.73 +0.17)  back in June.  When I asked them for a refund of the difference, their whole attitude was basically "tough luck, sucker".  Well it seems that karma has intervened and after reviewing the evidence I presented describing Southwest's deceptive advertising practices, the credit card company agreed with me and Southwest has now officially thrown in the towel on this whole unfortunate matter.  Night Owl 1, Southwest zilch, zero, nothing, nada.

The technicals (daily)

The Dow: After  a politically induced drop on Monday, the Dow rebounded on Tuesday with a bullish  inside harami worth 62 points.  While we remain inside the descending RTC, the indicators have now clearly bottomed and begun rising off oversold.  So this chart is now looking bullish.

The VIX: On Tuesday, the VIX dropped 6.39% on a highly unusual bearish kicking pattern.  It also came off its upper BB after just one day, as is its custom.  Indicators remain overbought but have now peaked so this one looks ready to move lower again on Wednesday.

Market index futures: Tonight all three futures are lower at 12:36 AM EDT with ES down by 0.16%.  After a strong showing Monday that caused a bullish RTC trigger the new candle is developing as a dark cloud cover.  Still, we have a freshly completed bullish stochastic crossover and rising indicators just now off oversold, so the general gestalt of this chart remains bullish.

ES daily pivot: Tonight the pivot jumps from 1674.00  to 1685.67.  With a slow drift lower in ES since Tuesday's close, that still leaves us above the new pivot, but just barely.  It's bullish, but only as long as ES can avoid falling through.

Dollar index: The dollar remains in a strange downtrend, putting in the third of three successively larger green candles that are moving steadily lower.. So the trend wins out and you have to imagine that there's more downside to come here.

Euro: The euro put in a giant inverted hammer on Tuesday in a failed attempt to escape the gravitational attraction of 1.3529.  That leaves us at the upper end of an almost two week long trading range now.  The indicators are kind of wandering around in no-man's land between oversold and overbought, so no guidance there.

Transportation: Dow Theorists take note - on a day the Dow was up 0.41%, the trans jumped 1.36% on Tuesday with a jolly green marubozu that popped right out of a descending RTC for a good bullish setup.  The stochastic also formed a bullish crossover and the indicators have now clearly bottomed at oversold.  So everything is pointing to more upside here on Wednesday.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

  1  12/31      40         48        -      -   1402   0/1

  2  1/7        47         30        +      +   1466   1/2

  3  1/14       52         15        +      +   1472   2/3

  4  1/22       50         21        +      +   1486   3/4

  5  1/28       44         26        +      +   1503   4/5

  6  2/5        40         36        +      +   1513   5/6

  7  2/11       43         25        +      +   1518   6/7

  8  2/19       21         43        -      -   1520   6/8

  9  2/25       30         52        -      -   1516   6/9

 10  3/4        29         39        -      -   1518   6/10

 11  3/11       41         26        +      +   1551   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643   13/24  11/21

 25  6/17       32         40        +      -   1627   14/25  11/22

 26  6/24       13         46        -      -   1592   14/26  11/23

 27  7/1        25         42        -      -   1606   14/27  11/24

 28  7/8        42         29        +      +   1632   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692   16/30  13/27

 31  7/29       39         17        +      +   1692   16/31  13/28

 32  8/5        46         27        +      +   1710   16/32  13/29

 33  8/12       32         41        -      -   1691   17/33  14/30

 34  8/19       23         54        -      -   1656   17/34  14/31

 35  8/26       23         50        -      -   1664   17/35  14/32

 36  9/3        21         54        -      -   1633   17/36  14/33

 37  9/9        35         30        +      +   1655

 38  9/16       40         28        +      +   1688

 39 9/23        52         36        +      +   1710  

 40 9/30        39         43        +      -   1692

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that both I and the majority of the poll voted bearish four weeks ago, so for the fourth week in a row we were both wrong.  Therefore we continue the year with an accuracy of 17  for 36, or 47%.   The poll as a whole drops to 14 for 32 or 42% - it continues to be a tough year for the poll so far.

This week, for the fourth time this year we find that I diverge from the majority.  While they have now shifted to bearish, I remain bullish.  We'll see.

Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July      10      2      4           4        0.875    486
August    11      3      6           2        0.813    687
September  8      3      3           3        0.800    485
October    0      0      1           0        0.000      0

     And the winner is...

The first week of October is historically pretty weak, however we currently have a bit of positive momentum going in tonight's charts.  That said, the futures do seem to be guiding lower.  Therefore, I'm going to make a conditional call - if ES can stay above its pivot by mid-morning Wednesday, we'll close higher, if not, then lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we remain at 1695.00.

Wednesday uncertain

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

• Wednesday uncertain.
  
• ES pivot 1688.17..  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader remains short at 1643.00.

Recap

Blogspot's spell-checker seems to be on strike tonight, so I apologize in advance for any typos in this post.

Last night the market was indicating that it wanted to go higher and despite an early morning sag, that's what ended up happening on Tuesday.  With just small gains though, the dog days of summer roll on.  So let's see now if we can sniff out Wednesday's direction - woof woof!

Southwest Airlines: Round 2

You may recall that back in June, the Night Owl got suckered by Southwest Airlines which advertised Business class service but delivered steerage class.  I disputed the charge with Visa and requested a partial refund, which Visa granted.  Just as I was about to declare victory, one day before the deadline, Southwest filed a response with Visa to my complaint about their deceptive practice of advertising a fare called "Business Select", which in fact is nothing but the same old Coach class.  One would have thought that they'd have had enough sense to leave well enough alone.

The documentation they provided to Visa was two fuzzy copies of their internal journal ledger that showed that the ticket had been used (I never disputed that) and that the fare class was "Standard", which itself is a non-standard term but which in any case was not disclosed at any point during the ticketing process.

But Visa left the door open and allowed me to file a rebuttal, which I did.  So it's not over yet.  We'll just have to see if Southwest can get away with their phony monkey Business Class scam or not.  In any case, I welcome Southwest to my short but growing list of airlines I'm boycotting and will never ever set foot on again as long as I live.  (The others are United and US Air).

The technicals (daily)

The Dow: So anyway, on Monday the Dow presented us with a doji and on Tuesday we got the confirmation with a 31 point gain in the form of a spinning top, itself another reversal candle.  This one also traded outside the descending RTC for a bullish setup  RSI is now oversol and the stochastic is flat like pancake.  So while it still isn't a raging bull, this chart is now looking more positive than last night.

The VIX:  Last night I wrote "I have to think the VIX will be moving lower on Tuesday."  And sure enough, the VIX fell another 3.90% - gotta love that bearish engulfing pattern.  It also exited its rising RTC for a bearish setup and the stochastic formed a bearish crossover.  With VVIX hitting its upper BB and looking toppy, and no VIX support until 11.83, odds seem good that the VIX is going lower again on Wednesday.

Market index futures: Tonight all three futures are lower at 1:07 AM EDT with ES down by 0.13%.  After two days of small gains on long-legged dojis, the new candle is forming as a dark cloud cover.  Going back a week, the trading is pretty directionless as ES continues to move about the 1690 area.  So this chart is conflicted, with an oversold RSI and bullish stochastic crossover, but no overnight follow-through and no RTC exit.  This one is too tough to call tonight.

ES daily pivot: Tonight the pivot steps up from 1683.58  to 1688.17.  After being above hte old number most of Tuesday, this rise made ES run smack into the new pivot right at midnight as it drifted lower.  As I write, ES is threading about the pivot, trying to decide which side of this fence it wants to come down on.  So there's no guidance here at the moment, but the ultimate decision will be important for Wednesday.

Dollar index: Lsdt night I wrote "all signs are pointing to higher again on Tuesday" and indeed the dollar gapped up again for the second day in a row, gaining 0.54% and just touching its 200 day MA intraday before retreating a bit at the close..  We now have two competing forces: the 200 MA resistance line and the bullish indicators, inlcuing a bullish stochastic crossover.  The dollar doesn't seem to respect its 200 MA very well, so I'm going to guess it might move higher again on Wednesday.

Euro: I also called for a lower euro last night and got that too, as it fell out of its rising RTC on accelerating losses for a bearish trigger.  And the overnight seems to be confirming that, down another 0.04% so far.  With no support until 1.3211 and indicators still not oversold, I'd say the euro's going down again on Wednesday.

Transportation: On Tuesday the trans remained stuck in neutral, continuing to find support round 6452.  However, they traded outside the descending RTC for a bullish trigger but  the candle was bearish engulfing - go figure.  RTC exits aren't 100%, so I'm a bit skpetical that the trans are moving higher on Wednesday.


Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July      10      2      4           4        0.875    486
August     8      0      1           0        1.000    410

     And the winner is...

Tonight the charts seem rather conflicted and I'm just not getting a clear reading.  Perhaps this reflects uncertainty over the  PPI numbers and more Fed speak coming on Wednesday.  So much as I don't like doing it, without a good feel for either the bull or bear case the only logical call is Wednesday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we remain short at 1643.00.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1622.08 .  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside..

Recap

Friday's action, if it is to be believed, busted clear out of a five day trading range to close at 15,136 on the Dow.  Sure it was a low-volume post-holiday, pre-weekend session, but you can be sure everyone is looking at the resulting candles.  So let's see how that changes the picture.  But first...

Southwest Airlines goes down

Over the weekend, the Nightowl heard back from Visa about the complaint she filed last month over the fact that Southwest Airlines was advertising a fare that costs as much as a business class fare, offers the same perks as a business class fare, is called a "Business Select" fare, for a flight formerly operated by Airtran as business class, but is actually only steerage class.  Well Visa, which has been getting more and more hard-nosed about disputes in recent years, decided they agreed with me, that if it looks like a duck and quacks like a duck, but is in fact just a decoy, then that's fowl play, and they gave me the refund I requested.  So round one goes to the Night Owl.  Of course, SW has the right to appeal.  I'll be curious to see if they really want to make an issue out of this.  But for now anyway, fraud doesn't pay.  Moving right along...

The technicals (daily)

The Dow: All of the daily charts for Friday have to be taken with a large grain of salt, considering the lower volume.  Nevertheless, after an early false breakout, the Dow did grind steadily higher for the rest of the day closing at sessions highs with a nice green marubozu that finally got us off top-dead-center after five days of indecision.  There is now some minor resistance at 15,177 but by and large this chart is now looking bullish, even with indicators having gone overbought.

The VIX:  Last Thursday night I noted a big unfilled gap hanging below the VIX and posited that we were going to continue lower down to 16.0.  Well 16 cam and went so fast on Friday I literally missed it with the VIX ending down 8.09% at 14.09, breaking through its 200 day MA at 15.06 in the process.  While the indicators are very oversold here, there is now considerable downside momentum going and with a lower BB at 14.22, I'd not be at all surprised to see the VIX want to check it out on Monday.  But we could be in for a bounce in a few days - VVIX did hit its lower BB on Friday, which was also five month support.

Market index futures: Tonight all three futures are modestly higher at 1:04 AM EDT with ES up by 0.06%.  Friday's ES chart reflected the others with a big congestion-breaking move.  I peg the next resistance at 1635 so in the absence of any bearish reversal signs, it seems reasonable that we'll check out that level next.

ES daily pivot: Tonight the pivot jumps from 1605.33 to 1622.08   With ES pretty much steady in the overnight, we're still comfortably above the new pivot, so that's a positive for Monday.

Dollar index: The dollar took off like a Fourth of July skyrocket one day late on Friday, gapping up big time for a 1.49% pop that closed above its upper BB and brought it back into its last rising RTC.  It also just formed a bullish stochastic crossover from a high level and those are often good for one or two days of further gains..

Euro: And of course in mirror image fashion, the euro tanked on Friday, crashing right through support at 1.2987, more support at 1.2846, and its lower BB to close at 1.2833.  The 200 day MA is now just a distant memory and the overnight is guiding lower still, down another 0.13% already.  With no more support until 1.2785, I think the euro still has more downside available on Monday.

Transportation: Pretty much the same story as the Dow on Friday, only more so with an outsized 1.54% gain here.  I think we go higher on Monday.


Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85
June       6      5      6           0        0.545    543
July       1      1      0           1        0.667    104

     And the winner is...

Monday is historically quite bullish and with the VIX now back below 15, no particularly bearish signs on the charts, and no major economic news coming out, the most logical call is for Monday higher.  There are however, some developing signs of a possible turnaround soon, so Monday might be a short-term topping day.  That's all, she wrote.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we stand aside again because I'm not really seeing an ideal setup for going long here.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1637.75.  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

OK, the Night Owl has been travelling and I took a week off, so there's not much point in doing a recap.  I will simply point out that I was right about last Tuesday going higher and we all know the rest of the week was stinkola.   You know the drill so without further ado, let's move on to another week.  We're back, baby!

The Night Owl Gets Taken

But first - yes, the Night Owl fell victim to a scam last week, so I thought I'd share the experience with you.  Now normally I pride myself on being pretty world-wise and savvy.  When I get emails from the Chief of Police of Nigeria promising me $10,000,000, I just click Delete.  But last week I got scammed and I'm still steaming.  How did this happen?

Well, I always flew between New York and Florida in Business Class on Airtran.  Last year Airtran was acquired by Southwest Airlines.  I went to the Airtran website last week and was redirected to Southwest.  I looked up my favorite flight there and found a range of fares, from $198, which presumably entitled you to travel in the hold, to $463 which was advertised as "Business Select".  So naturally, that's what I chose.  The price was about $20 higher that my last trip on Airtran but I figured, it's inflation.

So you probably already know what's coming.  I get to the gate, I get on the plane. I look around the corner, and I'm like "Uh, where's Business Class?"  There isn't any.  It's simply Steerage Class from row 1 to infinity.  And of course by this point it's too late to do anything about it.  I wasn't going to get back off the plane after getting up extra early to catch this flight.

So after spending 2 1/2 hours with my knees up against my chin seated next to a disturbing assortment of Twelfth Night characters, I'm done.  I called Southwest "Customer Relations" and their attitude was basically "tough luck pal, we delivered everything we advertised".  Well I beg to differ - offering a fare called "Business Select" sure sounds like Business Class to me.  Last I looked, the word "select" meant "choose" or "choice", not "non-existent".  So realizing that it was a lost cause arguing with someone who obviously couldn't care less, I hung up and proceeded to file a dispute with Visa.  We'll see where that leads.

In the meantime, I am apparently the last person on the planet who did not know that Southwest operates nothing but Steerage Class on all their flights.  Given that, it strikes me as fraudulent advertising to promote something called "Business Select" when all it does it give you a free drink coupon and the same tiny cramped seating everyone else gets.  That was the most expensive drink I ever had in my life, and it's not sitting well.  Needless to say, my first flight on Southwest was also my last.  Stay tuned for updates.

The technicals (daily)

The Dow: Uh OK so anyway back to the markets.  Last Friday's ugly 209 point rout in the Dow on high volume drove the indicators oversold for the first time since April 22nd.  (And that day proved to be a bottom).  OTOH, the weekly chart is looking just plain ugly.  It' still quite overbought and features an inverted hammer for a bearish RTC trigger.  Ugh.  So with that, no daily reversal candle, and no support til the lower BB at 14,946 I have to say this ain't looking good for Monday.  The only thing that might help is the recent pattern where big one day drops have been followed by something like a 50% retracement.

The VIX:  On the other hand, the VIX on Friday took a giant leap, not for mankind but for the bulls, by blasting right through its 200 day MA and its upper BB in one fell swoop to close at 16.30, the highest level since April.  And once again, as I always say, the VIX rarely spends more than a day or two above its upper BB before falling back.  So with that number at 15.38, I'm looking for a lower VIX on Monday.  Especially given how overbought its indicators are now.

Market index futures: Tonight all three futures are higher at 1:29 AM EDT with ES up by 0.18%.  Big one-day drops in ES have tended to be followed by gains, cf. April 15/16. And along those lines we note that Friday's close of 1629 left ES quite extended below the pivot.  Whenever that happens, look for a retracement of some sort.  The failure of any negative pin action to appear at this late hour of the night is encouraging.

ES daily pivot: Tonight the pivot crashes from 1651.75  to 1637.75.  . We were way below the old number, and even with this big drop we remain below, so that's a bearish sign.

Dollar index: The dollar has been zig-zagging its way lower for a week now until Friday's bullish harami, also in thte form of a spinning top.  Momentum and RSI have now turned higher and the stochastic is fairly oversold, so I'd say there's a chance (though not a certainty) of the dollar moving higher Monday.

Euro: Late last week the euro tried and failed to cross its 200 day MA.  It's trying again as I write but with the indicators now overbought it's not clear how much gas is left in the tank, particularly given Friday's dark cloud cover-ish candle.  If the euro cannot crack the 200 MA, it's going lower on Monday.  I realize that's not a prediction, but this chart isn't crystal clear tonight

Transportation: Friday saw a 0.82% drop in the trans, notably less than the Dow's 1.36%.  This drove them quite oversold (RSI=9.67) on a bullish inverted hammer.  That said, we fell through the pivot on Friday afternoon and remain well inside a descending RTC.  And with the lower BB still not until 6231, I think there may be a bit more downside left here before moving higher.


Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121 
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85

     And the winner is...

There are some signs, though not a lot, of a reversal coming over the next few days.  But one thing I think is that the late-day sell-off on Friday made the charts look worse technically than they would otherwise be, and this was complicated by the fact that Friday was the end of the month.  So for all the triple digit loss on the Dow, the SPX Hi-Lo index hasn't budged and remains on 100 - check it out at stockcharts.com here.  And of course, Monday is the first trading day of June, and that's historically pretty good.  So call me crazy, or maybe I've been out in the roasting Florida sun too much, but I'm going to call Monday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside because after being away for four days I want to take a day or two to get back into the swing of things before putting on any new trades.