Tuesday maybe lower

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

• Tuesday lower, low confidence.
• ES pivot 1338.50.  Breaking under is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes short at 1338.75..

Recap

The market was mixed today with the Nasdaq up nicely, the SPX up a bit and the Dow down a bit.  But since my call was for the Dow, that's a miss.  Oddly enough, my DIA trade for the day (buy the open, sell the close) was a winner anyway.  Go figure.  Anyway, it was all pretty much a re-run of exactly a week ago when the Dow ended lower after a news-inspired rally in ES the night before.  I guess it was a case of "buy the news, sell the news".  We now resume the search for clues as to whether they'll be buying or selling on Tuesday.

The technicals

The Dow: Today's 0.2% drop formed a little hanging man at the top of Friday's big green candle and peeled away from the upper BB.  Also, RSI and momentum have peaked at overbought levels.  Last night I expected some Greece-fueled limited upside today adding "At some point, the recently overbought nature of the market will reassert itself and we'll go lower.".  That moment may now be at hand.

The VIX:  The VIX took a huge 13.22% plunge today which I found somewhat surprising given the limited moves in the market as a whole.  Normally, I'd have expected more market upside to accompany this sort of VIX action.  In any event, we now have a classic bearish three black crows pattern here.  Unfortunately, that last crow today flew right through the lower BB.  And the VIX usually spends no more than one or two days around its lower BB before heading higher again and that would be bad for stocks.  Now that I think of it, this drop in the VIX may simply reflect a lot of people sitting on their hands in advance of the Fed this week.

Market index futures: Today ES put in a pretty clear hanging man that just touched the upper BB.  And the indicators are all overbought.  In fact RSI and momentum have already started coming back down, portending lower on Tuesday.  At 1:20 AM EDT, we still have a mixed market with NQ up a bit and both ES and YM down.  ES is lower by 0.15% and has been trending down since 10:40 PM.  today's ES candle formed a gap-up hanging man right on the upper BB suggesting at least the chance of a continued move lower Tuesday.

ES daily pivot: Tonight the pivot moves up from 1333.50 to 1338.50.  This gain leaves ES precariously close to the pivot., just a point and a half above.  While remaining above is bullish, we need to watch this level for signs of breaking under in the morning.

Dollar index: Today the dollar exited a descending RTC from the first of this month for a bullish setup.  Its indicators are also all quite oversold and its stochastic just formed a bullish crossover.  Everything seems to be lining up here for a move higher on Tuesday, potentially bad for stocks.

Transportation:Here's another interesting divergence.  While the Dow actually lost 0.2% today, the trans jumped nearly 2%, advancing clear to their upper BB.  While this tall green candle is not a reversal indicator, the upper BB can be nominal resistance.  With overbought indicators now, I have to wonder how much short term upside is left here.

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.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398  12/15

 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353  16/20

 21  5/21       30         52        -     1295  16/21

 22  5/29       35         42        -     1318

 23  6/4        32         48        -     1278

 24  6/11       28         40        -     1326

 25  6/18       39         26        -     1343 

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.  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 my bearish call on 5/21 was wrong, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 16 for21 .  And of course that means that since I voted with the majority back then, the poll as a whole was also wrong that week.  So with almost half the year gone the poll's accuracy drops back to 76% YTD, still pretty good.

This week we finally got a reversal in sentiment with the bulls outnumbering the bears for the first time since April 30, and by a non-trivial 13 points.  This also marked the first time all year that I voted against the majority with a continued bearish call.  I'm afraid I just don't see the enthusiams for the 30 day market at this point.  The monthyl SPX has just exited a rising RTC, its indicators are all still jsut coming off overbought, and the stochastic just finis  I guess we'll see who was right in a month.hed a bearish crossover in April.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      3      4           1            .625        +52   +$98



     And the winner is...

It may be a bit early, but I'm seeing some signs that we've run into some resistance here in the form of several different BB's all at the same time as well as reversal candlestick patterns.  The Dow in particular acted especially weak today making me think that we could be in for at least one day of lower prices, so I'll go out on a limb and call for a lower close Tuesday.  I'll be buying DOG on the open.

ES Fantasy Trader

Portfolio stats: the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1  Tonight we finally enter a new trade, going short at 1338.75.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1333.50.  Holding above is bullish..
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

I'm not too proud to admit that I really could not figure out which way the market was going to go last Friday.  Turns out it was up, in decisive fashion with the Dow adding on another 115 points.  One more day like this and we'll be able to put in the "up-arrow" for the swing trend.  So apparently those who bet on a positive (for the market) outcome to the Greek elections were proven correct.  But will this carry over into Monday?  After all, it was just a week ago that we had the World's Shortest Rally on Spanish bank bailout news.  Let's run the charts.

The technicals

The Dow: On Friday the Dow put in the second of two consecutive strong candles.  It's always better to see a 150 and 100 point up day in a row than a 200 followed by a 50.  But particularly interesting is that the volume on Friday was huge - the greatest since March 16th.  Of course back then, the Dow had just hit its upper BB, just like this past session.  Hmmm...  Unfortunately, the indicators are all pegged at overbought now and so have lost their predictive power.  OTOH, the weekly chart actually looks quite positive, showing two consecutive solid green candles on increasing volume with a stochastic that just formed a bullish crossover last week.

The VIX:  On Friday the VIX dropped another 2.63% to complete a three candlestick pattern known as the three outside down, generally a good bearish reversal indicator.  And of course more VIX downside is good for stocks.

Market index futures: Wait - we've seen this movie before.  Wasn't it exactly one week ago that the futures spiked on Sunday evening on news of a Spanish bank bailout?  Well only this time it's not quite the same.  While all three futures are indeed up at 1:20 AM EDT, this time ES is up only 0.36%, not the giant 1%+ pop we saw this time last week.  ES was higher earlier this evening though, up to 1347.50 initially, which was right up to its upper BB.  I actually prefer to see this than the sort of irrational exuberance we got last time around.  There may be less buyer's remorse come Monday.

ES daily pivot: Tonight the pivot jumps from 1319.75 to 1333.50.  But after the big pop on the open Sunday evening, we're still comfortably above the pivot, but not too far above (which would be a negative sign).

Dollar index: My dollar chart ($USDUPX) is only available during regular trading hours, so instead I'll comment on the euro, (6E#F in eSignal) which is trading Sunday night.  Here obviously we've got the Greek pop that took the euro clear to its upper BB at 1.2765 for a huge 0.6% gain.  This will surely drive the dollar lower on Monday and that's generally good for stocks.

Transportation: This chart is similar to the Dow although Friday's gain was noticeably weaker than Thursday's, striking a note of caution.  Add to this the fact that RSI peaked on Thursday and the rest of the indicators are overbought, and I would not be surprised to see the trans move lower on Monday, which could bode ill for stocks later this week.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      2      4           1            .667        +77   +$66
     And the winner is...

Another tough call with the charts once again being distorted by an exceptional news event.  True, the futures are all up right now, but they were up a week ago too and last Monday turned out badly.  Fool me once, etc.  With the Dow already at its upper BB, I think there might still be some Greek-driven upside on Monday but will be limited.  At some point, the recently overbought nature of the market will reassert itself and we'll go lower.  The only question is if it will be Tuesday or mid-day Monday.  But the market does seem to have some momentum behind it at the moment, so I'll go for a higher close Monday.  I'll be buying DIA at the open.

ES Fantasy Trader

Portfolio stats: the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1  Once again there's no trade tonight, this time because, as like a week ago, I feel that the train left the station before we got there.  And one of my rules is to never chase.  I look at this instead as an opportunity to exercise my patience.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Friday uncertain

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

• Friday uncertain.
• ES pivot 1319.75.  Holding above is bullish..
• Next week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Because of a lack of clarity last night, I appealed to the ES pivot, figuring that we'd go higher if we could stay above it in the morning.  Well we did and the Dow delivered a handy 156 point gain.  Now we have to face Friday with the prospect of upcoming elections in Greece over the weekend.  Will today's rally inspire follow-through or profit-taking?  Let's figure it out.

The technicals

The Dow: Today the Dow continued its alternating up/down pattern for the fifth straight day.  However, its 1.24% gain did finally break the consolidation to the upside.  In fact the Dow nearly hit its upper BB before retreating a bit to close at 12,652.  So resistance is now at 12,727 which leaves a bit more room to run higher, but the up/down pattern would suggest that tomorrow goes lower.  There's been some talk of today's action as a breakout, but the Dow has had so much trouble getting a multi-day rally going lately, it's just going to have to show me before I believe that.

The VIX:  The VIX bounced off its 200 day MA resistance and took a big 10.67% drop today.  This was enough to turn the indicators back down again.  But I'd be cautious about that because they were just coming off oversold and large one day moves tend to induce distortions in the patterns.  Although technically, this is basically a bearish engulfing candle, I'm a bit cautious about it.  However, the futures do support a move lower on Friday, and that would be good for stocks.

Market index futures: All three futures are just barely hanging on to gains at 1:33 AM EDT with ES up a scant 0.04%.  Apparently, the enthusiasm of recent nights has slowed somewhat.  ES has this same yo-yo pattern going as the Dow, but if we back off to the weekly chart, we see that candle (which is almost completely baked now) is forming a distinct hanging man, a bearish sign for next week.

ES daily pivot: Tonight the pivot rises from 1311.17 to 1319.75.  This still leaves ES above the new number but the spread has been cut in half.  Even so, a seven point gap is pretty positive - if it can be maintained.  Wit no real trend since 11 PM, it's hard to say where it may go next or what those pesky Europeans will do to it when they start trading around 2 AM our time.

Dollar index: The dollar continued lower today, losing another 0.12% and restoring its inverse relationship to stocks.  This moved it into oversold territory but without a reversal candle or support line nearby, it could go lower again on Friday.

Transportation: Last night the trans were really not looking so hot, but they delivered an upside surprise (to me anyway) in the form of a 1% gain on the day.  Unfortunately, they remain range-bound, with support at the 200 day MA and resistance at 5060.  But now they're at the upper end and with indicators that are even more overbought than yesterday it is put up or shut up time for the trans.  If they can't break the 5060 resistance line (and they're 0 for 6 here), they're going lower on Friday.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      2      3           1            .667        +77   +$66
   And the winner is...  
 
A very tricky situation tonight.  Friday is a triple-witching with all the volatility that implies.  But also it's the last trading day before the weekend Greek elections.  A leftist win there would hurt the markets.  However, the banks have signaled an intention to put out any resulting Greece fire with big gobs of cash.  So what to do?  Personally, I believe the Greeks will not choose to exit the euro.  But I'm not sure enough about that to be putting on any big bets right now and I'm definitely not going to be wanting to hold any futures positions going into the weekend.  In addition, the TLT appears to have put in a short-term bottom suggesting more money flowing into bonds.

Tonight I'm feeling cautious.  I see more downside risk than upside potential from here.  And hey, every move up for the last six days has been followed by another one down, so on that basis alone, we're going lower on Friday.  But with so much riding on news from Europe, I am once again just going to declare that Friday is uncertain and take the day off.  Not that I'm not trading - today I sold some OMEX and ZTR, and bought NCZ and NCV.  But ES trades - no thanks.

One other note of caution - today my account hit a new high for the year - always an ominous sign :-)  And a final note that supports the indecision in the market I'm seeing - J-Trader is reporting that one of his systems is going long and the other is short.  Go figure.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1  With no obvious edge once again, there's still no trade tonight.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Thursday higher unless pivot broken

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

• Thursday higher unless ES breaks under pivot, low confidence.
• ES pivot 1311.17.  Holding above is bullish.
• Friday bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Last night's call was "uncertain with a bias lower" and I think that's a pretty good description of what happened today, as the Dow crossed the unchanged line eight times before finally moving decisively lower just before 2 PM - and then making a valiant rally attempt in the closing minutes that took us off the lows of the day but still left a 77 point loss.  So we remain in consolidation mode.  What will it take to get a break?  Let's peruse the charts for an answer.

The technicals

The Dow: The Dow meandered about today until some ratings agency decided that Spanish bonds weren't just plain junk, they were really junk.  That should have come as a total surprise to absolutely no one, but it nonetheless tanked the index and that was that.  So we continue stuck in a trading range with now four alternating up/down days and no real way to gain any meaningful insights from each succeeding candle.  However, we did trade outside the rising RTC today and that's a bearish trigger.  These are usually pretty reliable.  Add to that the indicators which are all overbought, and a stochastic that seems to be trying to form a bearish crossover but is for the moment basically just tangled up in itself.  Overall though, this chart seems to have more downside risk than upside potential.

The VIX:  Meanwhile the VIX does seem to have established an uptrend, gaining nearly 10% today to close just above 24, an advance that was basically stymied by the 200 day MA at 24.55.  Last night I mentioned the bullish RTC trigger here, and whadaya know, today we got the pay-off.  But with indicators still just coming off oversold, I would not be surprised to see the VIX move higher again on Thursday, bad for stocks.

Market index futures: All three futures are up at 1:12 AM EDT, with ES gaining 0.42%.  There's still no clear trend in sight on this chart and the indicators are just as confused.  Money flow is way down and just took an upward hook but RSI is just coming off overbought - I never saw that combination before.  Then we have the stochastic which is just executing a bullish crossover but doing it form a level where normally a bearish crossover would occur.

Backing out to the weekly chart again, the current candle, though only half-cooked, is starting to look like a dark cloud cover, which is a strong bearish sign for next week.  However, I think what's really going to drive the market early next week is the Greek elections this weekend.

ES daily pivot: Tonight the pivot ticks down from 1312.50 to 1311.17.  With the overnight gains in ES, we actually broke above the old number at 11:05 PM and are now a bit higher above the new pivot, a positive development.

Dollar index: The dollar today continued its wayward ways, falling 0.47% (contrary to my expectations) even as the Dow lost 0.62%.  The long-standing inverse dollar/stock correlation seems to be breaking down here reducing the utility of this chart as a predictor.  I think it's basically all about the euro here.

Transportation:The trans continued to be supported by their 200 day MA at 4976 but nonetheless posted a 0.57% loss today on a spinning top.  This candle also adds to a developing symmetrical triangle.  Since these usually exit in the direction from which they were entered, in this case from below, this portends poorly for this chart.  Supporting this idea are the indicators, now quite oversold, along with a stochastic that just completed a bearish crossover.  I'm not liking this one.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      2      3           0            .667        +77   +$66




     And the winner is...

This market just keeps getting more and more opaque.  I'm seeing a whole bunch of bearish signs in the charts, including the TLT which is starting to come off oversold, and yet the futures are all rising in the overnight.  This makes no sense to me.  So I'm going to make a conditional call for Thursday.  If ES stays above its daily pivot, 1311.17, then we're going to close higher on Thursday.  But if ES breaks below the pivot convincingly in the morning, then we're going lower.  That's about the only way I can reconcile the divergence between the futures and the charts.  We've already seen one night this week where the futures were up big time in the overnight but the following day closed lower.  I'm open to alternative interpretations.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1  With no obvious edge once again, there's still no trade tonight.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Wednesday uncertain but bias lower

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

• Wednesday uncertain, bias lower.
• ES pivot 1312.50.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Quote of the Day

 "Once you sell an asset (or 4% of an asset), what you sold is gone."

                  - David van Knapp, on dividend growth investing at Seeking Alpha

Recap

Last night I didn't really know what to make of the market today so we just reviewed the weekly charts.  With a strong triple digit gain today that erased yesterday's triple digit loss, it's still not clear which way this market wants to go.  But we're back to the daily charts hunting for clues.

The technicals

The Dow: The Dow's 163 point gain today established a trading range bounded by 12,550 on top and 12,410 below.  After three days of alternating big gains and losses, you'd expect Wednesday to go lower on that basis alone.  The indicators support this, to the extent they can be trusted, being as they're all at overbought levels now.  Other than that, there's no real pattern here.

The VIX:  Hmm - here's a clue.  While the Dow regained all of yesterday's losses today, the VIX dropped by less than half of its gains on Monday.  It is also now officially oversold.  And yesterday's pop took it outside its descending RTC for a bullish setup.  Today's action was entirely outside the RTC, so there's the bullish trigger.  This pattern is usually very good so that would imply a higher VIX for Wednesday which would be bad for stocks.

Market index futures: At 1:35 AM EDT all three futures are in the red with ES leading the way lower, down 0.19%.  Of more concern is that we seem to have some strong resistance at 1323, just above the current price of 1317.75.  And the indicators are all overbought, with the stochastic finishing a bearish crossover.

ES daily pivot: Tonight the pivot drops from 1314.00 to 1312.50.  With ES drifting aimlessly in the overnight so far, we were above the old number and are still above the new pivot, and by a bit more now so that's a positive sign.

Dollar index: The dollar traded outside its descending RTC today for a 0.12% loss and a bullish setup.  Its stochastic also finished a bullish crossover and the other indicators are very nearly oversold.  I'd say a move higher is not out of the question here on Wednesday.  If the inverse correlation holds, that would be bad for stocks.

Transportation: The trans almost hit their 200 day MA today before recovering nicely for a 0.86% gain.  But that's still just half of Monday's loss.  With the alternating up/down pattern in force here too, there's no clear trend - just more consolidation.

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.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398  12/15

 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353  16/19

 21  5/21       30         52        -     1295

 22  5/29       35         42        -     1318

 23  6/4        32         48        -     1278

 24  6/11       28         40        -     1326

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.  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 my bearish call on 5/14 was right, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 19.  And of course that means that since I voted with the majority back then, the poll as a whole was also wrong that week.  So closing in on half the year gone the poll's accuracy edges up to 84 % YTD.  Not bad.

This week we note that both bullish and bearish sentiment declined from last week.  I believe this reflects the overall uncertainty and instability in the market that I've mentioned a few times recently.  But these are still not contrarian extreme readings.  And for the record, this week I voted bearish again which keeps me in step with the majority of the poll.


Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      2      2           0            .667        +77   +$66
     And the winner is...

Technically, I'd call this market lower Wednesday.  But with the current instability in the system, every little jitter gets magnified and can send stocks on a tear one way or the other on a whim.  And on top of that it's a triple witching week which is often jittery by itself.  So let's just say I see a bias lower Wednesday, but there's no official call once again tonight.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1  With no obvious edge, there's no trade again tonight.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Tuesday uncertain

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

• Tuesday uncertain.
• ES pivot (switching to the "U" contract)  1314.00.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Well that had to be the World's Shortest Rally.  If you blinked, you missed it.  After some overnight gains last night in the futures suggesting a big move up today we got just that - once again for all of 90 seconds.  This open was pretty much a carbon copy of last Thursday.  Only this time all the gains evaporated and then turned very ugly to end with a 143 point loss.  All because, um, well, who really knows why.  Just as last night's big jump up was overdone, I think so was today's dive.

What's strange is that the VIX is still in the low 20's, but the market is behaving more like it's in the low 40's.  With all this herky-jerky action motivated mainly by random news items and rumors from Europe, technical analysis pretty much falls by the wayside.  So as alert reader Daniel suggested in a comment this evening, tonight we're going to move out to the weekly charts to see if we can filter out some of this random noise and nonsense.  Even that may not be much help, but since I don't happen to have Angela Merkel's unlisted cell phone number it's going to have to do.

The technicals

The Dow: It really is pointless to look at the daily charts tonight.  Today's oddball move completely confused the indicators and they're temporarily unreliable.  So instead we look at the weekly chart, including only up to last week (the last fully formed candle).  And here we see, somewhat surprisingly, a nice bullish engulfing pattern.  In addition, last week's close was just outside the descending weekly RTC for a bullish setup.  If this week can close above 12,358, we'll have a bullish trigger.

The VIX:  Part of the market confusion is evident in the weekly VIX.  After a doji the week of 5/7, we got four consecutive weeks of big up-down-up-down moves that left us exactly where we started on 5/14.  Of particular interest though is that all four weeks played through the upper BB.  Just as it is unusual for the VIX to spend more than a day or two at its upper daily BB, it's very unusual to find it spending more than two weeks at the upper weekly BB.  The last time we saw this was last summer during the same old European soap opera.  Then we spent five weeks at the upper BB from July through August before moving lower.

And today's VIX action seems to play into this because even with today's 11% pop, we're now well below the weekly BB and only to the middle of the range of the past month.

ES weekly

Market index futures: Before looking at the weekly chart here, I'll just note that right now at 1:25 AM EDT, all three futures are higher by identical 0.35% margins.  OK, now look at the weekly chart.  I see, holy moly, another megaphone!  Such an unusual pattern and this is now the second one in two weeks?  I mentioned the first one in this post on May 31st.  It was in the Dow and if you look at that chart it looks an awful lot like this one.  And we all know how that one ended - badly, with the Dow tanking on June 1st.

Anyway, this pattern is so rare, I don't have a lot of experience with it.  It is possible that this is a bullish megaphone.  There was a situation like this with the weekly VIX in the second half of 2009 and it resolved lower.  Or this one could be bearish like the Dow at the end of May.  One thing's for sure - there is a lot of instability in the market and it's increasing.  This pattern suggests a big break is coming soon.  Best I can tell, if ES ends the week around 1258, look for a big break lower next week.  If we can move above today's open at 1337, look for a move higher.  I guess it all depends on what kind of news comes out of Europe this week.  Perhaps the Greek elections will provide the catalyst?

And now that I look at it, there's another megaphone developing in the daily VIX too!

ES daily pivot: Tonight the pivot ticks down from 1314.58 to 1314.00 (reminder - tonight we're switching to the "U" contract).  Despite ES's overnight gains so far, we're still below this, a negative sign.

Dollar index: The dollar finally traded out of its rising weekly RTC from 4./30 last week for a bearish setup.  The action so far today suggests the bearish trigger is coming.  However, with the dollar decoupling its relationship to stocks lately, I'm not sure one can read too much into a lower dollar.  The dollar/euro relationship is probably the most politically influenced of all the charts anyway.

Transportation: The last four weeks of trans looks just like the VIX in reverse - down-up-down-up.  The interesting thing here is that the trans have been putting in higher lows.  With a resistance line around 5080, this give us an ascending triangle which would be a bullish reversal to the downturn that began the week of 4/30.  Today's action fits into this pattern.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      2      1           0            .667        +77   +$66
     And the winner is...

Well that's the weekly chart analysis.  And what did we learn, class?  Um, not a whole heck of a lot, I'm afraid.  A hint of positive signs and a big warning sign.  These periods of increasing instability tend not to end well and my personal feeling right now is that we may be in for a lot lower in a week or so, but officially, the current environment is far too difficult to make a daily call on a technical basis, so we'll just leave it at that - Tuesday uncertain.  But I'd be paying close attention and be ready for a big move coming sometime this week.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1  No trade again tonight.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Monday higher

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

• Monday higher, high confidence.
• ES pivot 1321.25.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Last Friday was quite interesting for me because some fool with a backhoe dug up the local fiber cable and knocked out Internet service in our entire neighborhood.  Service wasn't restored until about 5 PM, so I basically had the day off.  I used the time to rethink the idea of installing a dual WAN router and subscribing to a wireless ISP like Clearwire.  That would prevent these sorts of problems.

Anyway, by watching CNBC I was able to see my call for a lower close go down the drain as the market relentlessly trended up the entire day for an impressive 93 point gain to close out its best week  this year so far (and my best week also).  But with some new wrinkles over the weekend from Spain and China, where are we likely to go this coming week?  We turn to the charts for the answer.

The technicals

The Dow: Thursday's shooting star reversal warning was shot down by Friday's strong green candle.  With indicators still not yet at overbought levels, the only thing in our way now is a small resistance shelf at 12,580, give or take.  After that, there's another line at 12,700 and then the psychological 13K again.  Right now, there's nothing on this chart to suggest anything but continued higher on Monday - and that was before the weekend news.

The VIX:  And on Friday the VIX formed a classic dark cloud cover, one of the most powerful bearish reversal patterns around.  With its indicators still not oversold yet, there's no reason to believe the VIX can't go lower still on Monday.

Nobody expects the Spanish Inquisition!

Market index futures: Tonight all three futures are up sharply, of course on the news from Spain.  I sure wasn't expecting that.  ES is up a monster 1.22% at 1:10 AM EDT - the biggest gain at this time of night I've ever seen.  This big gap up handily cleared resistance at 1332 and brought us right to the upper BB at 1350 which coincidentally is another resistance line.  So I'd say futures-wise, we've probably already seen most of the gains, but the markets as a whole should follow suit on the open Monday morning.

ES daily pivot: Tonight the pivot ticks up from 1319.42 to 1321.25.  We moved above the old number on Friday and of course now we're way above the pivot, always a good sign (initially at least - getting too extended from the pivot eventually starts to bring a reversionary pull into play).

Dollar index: The dollar on Friday completed sort of a morning doji star, except for the fact that Friday's candle was red instead of green.  But its stochastic just barely squeaked out a bullish stochastic crossover and the candle itself landed right on the edge of the descending RTC for a bullish setup.  This seems to suggest a move higher by the dollar on Monday.  But - and this a a big but, the euro gapped up big time in Sunday night trading on the news from Spain, so I wouldn't be surprised to see the dollar move lower on Monday.  Canonically, that should be good for stocks.

Transportation: Dow theorists take note - the trans gave us a 1.06% gain on Friday, better once again than any of the major averages.  And this move negated Thursday's gravestone doji so here too we have a chart that looks like it still has more upside potential.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      1      1           0            .800        +220  +$211
     And the winner is...

Well tonight is pretty clear I'd say.  While the charts already looked mildly bullish at the end of last week, right now the futures are pointing to a higher close Monday.  I'll be a buyer of DIA at the open.

ES Fantasy Trader

Earlier this evening we covered last Thursday night's trade at 1343.50 for an ugly 29.75 point loss, a victim of the (unexpected) news from Spain and last Friday's network outage that kept me from closing the position when I wanted to in the face of steadily rising prices. Tonight we are regrettably standing aside.  I'm pretty sure most of tomorrow's gains have already occurred.  This one was simply not tradeable.

Portfolio stats:  the account falls back to $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1

BOT    10    ES    false    JUN12 Futures     1343.50    USD    GLOBEX    19:53:26   

SLD    10    ES    false    JUN12 Futures     1313.75    USD    GLOBEX    JUN 7 20:21:18 

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Friday lower

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

• Friday lower, medium confidence.
• ES pivot 1319.42.  Holding under is bearish..
• Next week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going short at 1313.75.

Recap

Last night I was sufficiently uncertain about today as to not make any official call on market direction.  As it turns out, the market was somewhat ambivalent too, with the Dow gaining 46 points but both the SPX and Nasdaq trading lower.  One good thing - today's action cleared the air a bit as we shall see in reviewing the charts for Friday.  Read on, McDuff!

The technicals

The Dow: On Thursday the Dow gave us a classic inverted hammer.  This is a reversal signal but one that requires confirmation.  Meanwhile all the indicators continue to rise from oversold levels with the exception of RSI, which declined a bit today leaving us with sort of a mixed picture.  I didn't like the way the action played out today, with all of the gains coming literally in the first two minutes of trading, and then going mostly downhill from there.  This chart gives me the impression that the Dow is running low on gas.

The VIX:  While the VIX dropped 2% today, it did it on a green gap-down candle.  Unfortunately, there's not much I can make of this chart tonight.  There's no real reversal indicators yet and we're stuck in that gray area midways between the BB's.  The futures look pretty much the same, so not much help there either.

Market index futures: All three futures are in the red at 1:30 M EDT with ES leading the way lower, down 0.53%.  Today's inverted tomahawk pattern warned of a reversal and the overnight seems to be confirming that so far.  This is a bit of a concern considering that the indicators have not yet reached overbought levels.

ES daily pivot: Tonight the pivot jumps from 1304.75 to 1319.42.  Add in that ES has been drifting lower in the overnight and we broke under the new number right at midnight by a non-trivial amount - a bearish sign.

Dollar index: The dollar gapped down 0.33% today to form 2/3 of a morning star.  If it moves higher tomorrow, that will be a good indication of a bullish reversal and that would be bad for stocks, assuming the dollar resumes its inverse correlation here.

Transportation: The trans meanwhile dropped just 0.13% today but did it on a tall gravestone doji that caused RSI, momentum, and OBV to move lower.  I would not be surprised to see more downside here on Friday.

History: Reminder: I am no longer quoting the daily historical assessment from The Stock Traders Almanac. I'll still factor their numbers into my forecasts, but I can't continue to print their data on a daily basis. 

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      0      1           0           1.000        +313  +$249
     And the winner is...

I don't know - I'm afraid that tonight I'm just not feeling the love.  I think yesterday's enthusiasm was sort of overdone and we may be in for a bit of a retracement here, so I'm calling Friday lower and will be buying some DOG at the market open.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $144,125 after 42 trades (33 wins, 9 losses) starting from $100,000 on 1/1.  Tonight we go short at 1313.75, again in an early evening time frame.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1304.75.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Wow - speaking of "to the moon, Alice", today the Dow rocketed up 287 points giving it its best day of the year (and my best day too).  But I do have to wonder if a move of this magnitude was justified.  George Soros did not announce that he was paying off all of Greece's debts.  Obama did not make a speech where he finally admitted he was unqualified for the job and so was resigning.  No, this rally seems to have been based mostly on hopes and expectations, neither of which is an investment strategy.  So it's back to the charts to do some lie-detecting tonight.

The technicals

The Dow: I did a quick count of the number of times we had a big up day in the Dow back to the end of 2009.  I found 20 of them.  14 times, the next day was either a doji or lower.  The other six were higher.  None of those six were more than a third of the previous day's big move.  So on that basis alone, I'd say we're more likely to see a move lower tomorrow than continued higher.  That said, today's jolly giant green candle blew right back through the 200 day MA and set off a bullish RTC trigger, a powerful combination.

The VIX:  After poking back under its 200 day MA yesterday, it was lookout below for the VIX today, dropping a whopping 10.21%.  The VIX indicators are active again and moving down from overbought levels so that suggests more downside to come

Market index futures: The caution I spoke of in the Dow section above is reflected in the futures tonight.  All three are still up at 1 AM EDT but not by as much as last night.  ES is up just 0.15% and is actually onw trending down after peaking at 10:30 PM.  This isn't the sort of pin action that inspires a lot of confidence for the next day.

ES daily pivot: Tonight the pivot jumps from 1279.75 to 1304.75.  With ES almost flat in the overnight so far, we're still above the new number but less than half as much as before.  So it's still postive but, uh, less than half as much.

Dollar index: After a doji yesterday, today the dollar resumed its inverse correlation with stocks, dropping 0.64%.  The bearish RTC trigger played out textbook perfect and there's still more downside to come.  If the correlation holds up that should be a good sign for stocks.

Transportation: Again today the trans outperformed the majot averages with a smokin' 3.02% pop.  This monster candle took out the 200 day MA here too and also broke the descending RTC for a bullish setup.  And for the icing on the cake, we've got a bullish stochastic crossover  And the rest of the indicators have now clearly bottomed at oversold levels.  All very good signs indeed.

History: I'm making another change tonight.  Effective immediately, I will no longer quote the daily historical assessment from The Stock Traders Almanac. I'll still factor their numbers into my forecasts, but I can't continue to print their data on a daily basis.  I'll just urge you to go out and buy a copy of TSTA.  It's not expensive and it's chock full of all sorts of fascinating, useful information.  Every serious trader should have this.  And the disclaimer is that I have no connection with this publication and I don't get any commissions on their sales or anything like that.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    4      0      0           0           1.000        +313  +$249
     And the winner is...

This is a tough one.  There still really aren't any negative signs on the charts tonight  However, historically the market pauses or even reverses after big one day gains and that's what I'm expecting Thursday.  Since I'm looking for a doji day it's hard to call the close as either higher or lower, so officially, there's no call tonight.  Intuitively, I don't expect any major moves Thursday.  I don't think the bull case is necessarily out of gas at this point, but I do think it needs a day to regroup.

ES Fantasy Trader

Once again an early evening entry proved to be more profitable than my usual 1 to 2 AM time frame.  This morning we sold our long for a healthy 18.5 point profit just before lunch.  Reminder - these trades are posted live on Twitter @nightowltrader.

Portfolio stats: the account goes to $144,125 after 42 trades (33 wins, 9 losses) starting from $100,000 on 1/1.  Tonight we are standing aside due to the uncertainty associated with follow-ups to big up days.

SLD    10    ES    false    JUN12 Futures     1307.00    USD    GLOBEX    11:30:53   

BOT    10    ES    false    JUN12 Futures     1288.50    USD    GLOBEX    JUN 5 20:07:40

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Wednesday higher

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

• Wednesday higher, medium confidence.
• ES pivot 1279.75.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes long at 1288.50..

Recap

Yesterday's turnaround clues paid off today as all three major averages moved higher.  I've given up trying to understand if this move was somehow related to Europe or not.  I'd rather just look at the charts, so let's do it again tonight.

One note of a new feature here.  I've been asked more than once what good my daily calls are and how they could be monetized.  So beginning today, I'm now trading the Dow ETF's based on these calls and posting the results in my "Accuracy" section.  See the details below.

The technicals

The Dow: Today's 26 point gain was good for a fat little doji, the second in two days.  This does indicate support of sorts around 12,100.  And it carried us very nearly to the edge of the latest steep descending RTC.  More action like this on Wednesday will give us a bullish setup, reinforced by a stochastic that's closing in on a bullish crossover.  Even better, today's candle formed a bullish engulfing pattern, which is high reliability.  I'm liking this chart.

The VIX:  There was more encouraging news from the VIX today which not only dropped 5.5% but did it on a solid red candle that cut right back down through the 200 day MA, negating any support it might have provided.  With indicators that remain quite overbought, I'd say there's still room to run lower here which would be good for stocks.

Market index futures: At 1:36 AM EDT, all three futures are in the green with ES up 0.58%.  Today's green candle brought ES right back up over its 200 day MA, canceling the threat everyone was so worried about on Friday.  And the follow-through in the overnight so far is quite encouraging.  And finally, the stochastic has now completed a nice-looking bullish crossover along with the rest of the indicators just coming off oversold.  Technically, this chart looks a lot healthier than just two days ago.

ES daily pivot: Tonight the pivot rises from 1272.17 to 1279.75.  We remain comfortably above the new level, so that's a positive sign.

Dollar index: The dollar continued its decoupling today, gaining 0.3% on a day when the major averages were also up.  This is the third time I've noticed this recently, so I'm going to decrease the importance I attach to this chart in forming my market opinions until I either see the dollar resume its inverse correlation to stocks or establish a solid positive correlation.

Transportation: After two nasty down days, the trans today finally managed to score a decent 0.43% gain on a spinning top.  But that's not a particularly good reversal indicator and they're still stuck in the descending RTC.  At least the recent pullback has brought us to oversold levels, so a turnaround may be coming in the next few days here.

History: According to The Stock Traders Almanac, Thursday is historically bearish.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632
June    3      0      0           0           1.000        +26   +$47

Starting today, there are two new columns  in this section.  "Points" means how many Dow points I captured with my call.  If the Dow is up 10 points and I called for a higher close, this column would get a +10, and the "right" column would get a +1.  The "trade" column represents how the call would play out in actual trading.  Every day, I take on a 100 share long position with a MOO (Market On Open) order for DIA, the Dow long ETF, if I'm calling for a higher close.

If I'm calling for a lower close, I open a long position in DOG, the Dow short ETF.  All positions are closed when the market closes at 4 PM with a MOC (Market On Close) order.  The resulting P/L is added to the "trade" column.  If I don't make a call for a given day, then obviously I make no trade here.  I think this is the fairest way to do it (actually it was the only way I could think of doing it).

     And the winner is...

Last night I called for a higher market based on the possibility of a reversal.  Tonight, we have more evidence favoring a continuation of the action that started today so I'm going to call for a higher close Wednesday.

ES Fantasy Trader

Today we didn't get quite the move I was expecting, but it's always nice to take a profit even if it's only 1.75 points.

Portfolio stats: the account goes to $134,875 after 41 trades (32 wins, 9 losses) starting from $100,000 on 1/1.  Tonight we go long at 1288.50 on another early evening entry.  One of the things about trading is that when markets change or patterns change, you have to be ready react and change with them.

SLD    10    ES    false    JUN12 Futures     1278.25    USD    GLOBEX    11:01:14   
BOT    10    ES    false    JUN12 Futures     1276.50    USD    GLOBEX    JUN 4 20:05:19 

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.

Tuesday higher

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

• Tuesday higher, medium confidence.
• ES pivot 1272.17.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes long at 1276.50..

Recap

It was looking pretty gloomy until a post-lunch rally brought the Dow briefly into positive territory for the day, but they knocked 'em back down into the close thus saving my bearish call.  The S&P admittedly did squeeze out a tiny gain, but my calls are based on the Dow, so that's what counts.

The technicals

The Dow: Although the Dow lost 17 points today, the action wasn't all that bad.  That late afternoon fade fizzled and was unable to move us below the earlier lows.  The net result was a tomahawk pattern.  Don't bother looking it up, it's my own invention.  A tomahawk is simply a hammer with a short upper wick sticking out.  It is a bullish reversal indicator and a sign the bulls may be getting ready to go on the warpath.  I am encouraged too by the fact that there was essentially no follow-through lower after piercing the 200 day MA on Friday.

The pattern in the S&P is similar, but with a doji star.  Recall that last night I said that 5 out of the last 6 times when the S&P broke under the 200 day MA, the next day was lower.  The fact that that did not happen today is noteworthy.

The VIX:  Way back last Saturday I wrote "the VIX rarely spends more than a day or two above its upper BB before retreating".  Well there you have it - after popping to nearly 28 intraday today, the VIX retreated and closed down 2.03% on a Franken-candle that was part doji, part harami, part spinning top.  Add in a stochastic that just made a bearish crossover and that spells lower VIX on Tuesday, good for stocks.

Market index futures: Tonight all three futures are solidly in the green for a change, with ES up 0.41% at 1:13 AM EDT.  Of particular interest is that ES did not tank following Friday's break under the 200 day MA, giving us instead a long doji on the day.  And the overnight action is quite bullish, having taken us right back over the 200 MA at 1276.82.  Clearly the futures traders are liking the news out of Europe today.  I'm not sure that the announcement that you're going to have a conference call is worth a half percent move in the futures but what the heck, I'll take it.

ES daily pivot: Tonight the pivot takes another big step down from 1285.00 to 1272.17.  But that combined with a rising ES in the overnight broke us cleanly above the new number right at midnight.  And ES has continued to drift higher to this point, so that's a positive sign.

Dollar index: And also last Saturday I wrote "the dollar has more downside coming".  And indeed, today the dollar dropped 0.38% on the dark cloud cover payoff.  And significantly, it traded entirely outside the rising RTC for a bearish trigger.  This portends lower again and is also good for stocks on Tuesday.

Transportation: Today the trans extended their losses from Friday , closing down another 1.31% following the 200 MA break.  But this served to reach the lower BB, and enter oversold territory on a hammer.  It's not a great reversal indicator, but the odds are definitely starting to lean that way.  On 5/18, the trans also broke under the 200 day MA from a similar position, and the next day was up big time.

TLT: Today, the TLT had its first losing day in four sessions, dropping 0.79% to form a bearish harami cross.  Not only that, but the indicators started coming off highly overbought levels and the stochastic just formed a bearish crossover.  Remember what I said on Saturday about the TLT going exponential?  This chart is just begging to go lower and that would be good for stocks.

History: According to The Stock Traders Almanac, Tuesday is historically slightly bearish.

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.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398  12/15

 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353

 21  5/21       30         52        -     1295

 22  5/29       35         42        -     1318

 23  6/4        32         48        -     1278

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.  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 my bearish call on 4/30 was right, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 15 for 19.  And of course that means that since I voted with the majority back then, the poll as a whole was also wrong that week.  So with over one third of the year gone the poll's accuracy edges up to 79% YTD. Still pretty good.

This week we see a small drop in bullish sentiment combined with a corresponding increase in bearish sentiment causing the spread to increase to 16 points. So there are still no extreme readings here that might cause us to be contrarian bullish.  For my part, I voted bearish for the fifth week in a row.  However, I am now beginning to see at least a glimmer of light at the end of the tunnel (and hopefully it isn't the headlight of an oncoming train).  I'm thinking the monthly SPX chart may start giving a bullish indication in a month or so.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average
April   7      9      2                       .438
May    10      7      3           2           .632
June    2      0      0           0          1.000
     And the winner is...

Tonight the stars seem to be aligning in favor of the bulls.  With some good bullish signs in the charts plus positive news from Europe today, I'm ready to call Tuesday's close higher.

ES Fantasy Trader

Portfolio stats: the account remains at $134,000 after 40 trades (31 wins, 9 losses) starting from $100,000 on 1/1.  Tonight we go long at 1276.50.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Monday lower

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

• Monday lower, medium confidence.
• ES pivot 1285.00.  Holding under is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

This weekend we have a split edition of the Night Owl.  See yesterday's post for the main chart analysis.  This post contains only the updates since then.  Monday night we'll resume the usual daily format.

The technicals

Market index futures: Tonight all three futures are, once again, significantly in the red.  ES is down 0.67% at 12:50 AM, although all of that drop happened in the opening hour Sunday evening.  Since then ES has found some support around 1265.  What's really bad though is that while Friday's trading stopped right on the 200 day MA at 1275.92, this evening pretty much just continued lower from there.

Since 2010, the SPX has broken below the 200 day MA from above six times.  Five of those times, there was continued movement lower in the following days.  And although ES is now at oversold levels, there's no sign of a reversal yet.  Its stochastic seems to be trying to set up a bullish crossover, but that's looking still a few days away.

But I would be remiss if I didn't add that on the hourly chart, ES has just exited its descending RTC and that's a bullish setup.  It might be that we've got a bottom around 1265.

ES daily pivot: Tonight the pivot takes a big drop from 1308.50 to 1285.00.  This has the effect of cutting the distance to the new pivot in half, even though ES has moved lower some more.  Of course, that still leaves us 20 points under, which is pretty awful.

     And the winner is...

I was waiting all weekend for some European byg wyg to make a grand announcement about how they'd seen the light over there and had a plan to solve their mess, but I guess I waited in vain.  The silence from that direction was matched only by the lack of leadership from Washington, where Emperor Nerobama seems to be more interested in getting re-elected than in saving the global financial system.  I guess somehow I had expected more.  Oh well - everybody back on the elevator.  Going down!  Next stop, the bargain basement.  Monday's going lower again.

ES Fantasy Trader

Portfolio stats: the account remains at $134,000 after 40 trades (31 wins, 9 losses) starting from $100,000 on 1/1.

Because I believe the recent short-term selling has been somewhat overdone, and because the Greeks aren't going to pack up their euro-tents and steal away on a weekday, and everything's looking so oversold, I am hesitant to go short tonight.  On the other hand, there's still no real indication of a turnaround yet so that pretty much leaves me just sitting on the sidelines.

Reminder - you can follow the entries and exits for these trades live on Twitter @NightOwlTrader.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date