Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1463.33.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remaining short at 1461.25.

Under Lenin's banner, Forward!

Photo Montage of the week

And looking to the left....

 

 
 
 







Recap

Well it was looking good for my call for a lower close Tuesday with a big dump out the gate, but then the Dow spent the rest of the day staggering back up to finally finish actually up 28 points.  The Dow continues to put in one day of small gains after another, for five straight now.  And interestingly enough, the SPX has basically been just treading water during the same time.  It's hardly a ringing endorsement for the bulls but it is curious that the bears have been unable to gain any traction at all lately.  I blew this one - maybe I can do better for Wednesday.

The technicals (daily)

The Dow: The Dow has been in a strange melt-up mode the past few days, putting in one hanging man after another, each one a bit higher than the one before.  Today's was the biggest yet.  And so we are still in a now six day rising RTC and the indicators are still very nearly overbought and we have a third reversal warning in a row.  And once again, I'm going to have to wait for an actual close lower before declaring a reversal.  In the meantime, with the upper BB at 13,623, it's up, up and away!

The VIX:  And the VIX chart is just as odd as the Dow.  The VIX has been moving higher for three days now, but doing it by taking backwards baby steps, with three red candles in a row, each with a higher top.  We did trade outside the descending RTC today for a bullish trigger though and the indicators now seem to have bottomed at oversold.  So I continue to believe the VIX will be moving higher and that has to be bad for stocks (though today's gain didn't seem to hurt anything - another unusual divergence).

Market index futures:Tonight all three futures are lower at 12:49 AM EST with ES down by 0.19%.  In another interesting bit of divergence, ES, which normally tracks the Dow very closely, has been slowly drifting lower even as the Dow has been drifting higher the past three days.  Today's long-legged doji keeps us inside a developing descending RTC and the developing new candle is a big bearish engulfing pattern.  I have to think this chart looks lower for Wednesday.

ES daily pivot: Tonight the pivot dips from 1465.25  to 1463.33.  ES made three vain attempts to break under this evening before finally succeeding in a dive right after midnight.  This turns the new pivot into resistance and is a bearish sign.

Dollar index:On Tuesday the dollar gained 0.37%, thereby negating yesterday's negation of Friday's star doji.  I know, I don't understand that myself.  At least the indicators appear to be acting a bit more reasonably, having now bottomed at oversold and the stochastic just forming a bullish crossover.  Today's action was also a bullish RTC trigger, so I'm feeling more confident in calling the dollar higher again on Wednesday.

Euro: A look at the euro seems to confirm that.  The euro took a big drop on Tuesday to close regular trading at 1.3304.  This move was enough to drop it out of its rising RTC for a bearish setup and it confirmed yesterday's spinning top doji.  Add in a freshly completed bearish stochastic crossover and further downward pressure  on it in the overnight, and all the signs seem to point to a lower euro on Wednesday.

Transportation:The trans remain on fire, extending their winning ways to five straight now (OK, four plus a doji).  Nothing much has changed here today.  We remain in a rising RTC, the indicators remain overbought.  There is still no indication of a top here.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      3      4           1       0.500     -28

     And the winner is...

I don't know - the charts are looking a bit more bearish to me than last night, and all the factors that were in play then remain so now.    Still not a screaming short, but I would really hesitate to pile in long right now.  I have to believe that we're due for at least a one-day pullback, so at the risk of turning from a Night Owl into a Chicken Little, I am once again going to call for Wednesday lower.

ES Fantasy Trader

Portfolio stats: the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we remain short at 1461.25.  In a classic case of "you snooze you lose", the time to exit this one was early Tuesday morning, but of course I was asleep.  However, one never knows -  this one may still pan out yet.

Tuesday lower

• Tuesday lower, low confidence.
• ES pivot 1465.25.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1461.25.

Recap

Yawn - another "uncertain" call and another uncertain day it was as the Dow gained 19 points while the SPX lost 1.37  I've heard of the summer doldrums but this looks like the January doldrums.  Even yet another long-winded chest-thumper of a speech by Comrade Stalibama this afternoon wasn't able to tank this market.. So we continue, with the Dow drifting aimlessly higher as the SPX drifts aimlessly lower.  When will it all end?  We bow down to the chart gods and pray for deliverance.  Or at least some direction.

The technicals (daily)

The Dow: Today's ho-hum 0.14% gain belies the fact that the Dow is now on a four day winning streak.  This now gives us a decent rising RTC with an excellent Pearson's coefficient of 0.990.  And so far the Dow shows no signs of breaking out of that.  With indicators remaining stubbornly just shy of overbought I still can't call this chart lower yet.

The VIX:  Meanwhile, the VIX finally managed to post a winning day, up 1.20%.  But it did it with a red spinning top, suggesting a lack of enthusiasm for pushing higher.  Still, today's close at 13.52 is just outside the descending RTC for a bullish setup, and the previous three candles suggest that a bottom has been put in.  I'm more comfortable tonight calling for more upside here on Tuesday.

Market index futures:Tonight all three futures are lower at 12:48 AM EST with ES down by 0.19%.  After a hanging man last Thursday and a spinning top on Monday, the overnight seems to be providing some direction, and the direction is down.  Today's close was just outside the rising RTC for a bearish setup.  We' need to close above 1470.25 on Tuesday to cancel that, and I don't think that's going to happen.  With indicators now finally looking to have topped at overbought, this chart is now looking officially bearish to me.

ES daily pivot: Tonight the pivot inches up from 1467.00 to 1465.25..  We were below the old number all day and with a downward drift this evening, we're still below, so that's bearish.

Dollar index:Today's 0.09% drop in the dollar canceled Friday's morning star, all the while driving it to oversold levels.There's support after a fashion nearby at 54.69 but with the stochastic still falling, I'd say there's at least a bit of room to run lower again on Tuesday.

Euro: And the euro seems to be ;lagging the dollar by a day.  It put in its own spinning top today, closing on its upper BB again at 1.3385.  However, it is moving decidedly lower in the overnight, down 0.18% already and that is' so far at least, confirming the spinning top as a bearish sign for Tuesday.

Transportation:And the trans continue to roll on with a four day winning streak of their own, up an impressive half a percent on Monday.  The indicators remain overbought-broken and we remain in a rising RTC, so still no signs of a top here yet.

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 final cumulative list for 2012.
 

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  16/22

 23  6/4        32         48        -     1278  16/23

 24  6/11       28         40        -     1326  16/24

 25  6/18       39         26        -     1343  16/25

 26  6/25       38         46        -     1335  16/26

 27  7/2        41         40        -     1362  16/27

 28  7/9        42         38        -     1355  16/28

 29  7/16       44         32        -     1357  16/29

 30  7/23       33         42        -     1363  16/30

 31  7/30       43         22        +     1386  17/31

 32  8/6        52         28        +     1391  18/32

 33  8/13       43         21        +     1406  19/33

 34  8/20       46         31        +     1418  20/34

 35  8/27       39         29        +     1411  21/35

 36  9/4        31         38        +     1407  22/36

 37  9/10       54         29        +     1438  23/37

 38  9/17       63         22        +     1466  23/38

 39  9/24       52         30        +     1460  23/39

 40  10/1       39         39        -     1441  24/40

 41  10/8       52         34        +     1461  24/41

 42  10/15      41         32        -     1429  25/42

 43  10/22      38         41        -     1433  26/43

 44  10/29      36         43        -     1412  27/44

 45  11/5       44         33        -     1414  27/45

 46  11/12      38         46        -     1380  27/46

 47  11/19      52         34        +     1360  28/47

 48  11/26      48         26        +     1409  29/48

 49  12/3       57         21        N     1416  29/49

 50  12/10      46         29        N     1418  29/50

 51  12/17      52         28        -     1414  29/51

 52  12/26      52         26        +     1430

 

  1  12/31      40         48        - -   1402 

  2  1/7        47         30        + +   1466

  3  1/14       52         15        + +   1472

  

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 I voted bearish four weeks ago, so that was a miss.  Therefore, as we fill in the last few calls for 2012, I am now 29 for 51 or 57%.  I will remove all the 2012 entries after next week when we have a complete chart for the year.

This week we're getting a very large bull-bear sentiment spread, as bearish sentiment has now dipped to the lowest level in over a year while bullish sentiment continues to rise.  This is beginning to look contrarian bearish to me, and I say that admitting that I voted bullish in this week's poll.  I'll revisit my stance in a week.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      2      4           1       0.600     0

     And the winner is...

The charts are not screamingly bearish tonight, but I'm going to go with the futures, the pivot, and the VIX, all of which seem to be suggesting a move lower.  Also the SPX Hi-Lo index has now been stuck on 100 since January 4th and that's starting to get old.  It's usually a good sign that a move lower is coming soon.  And I think we have on our side the fact that according to The Stock Trader's Almanac, op-ex week in January is historically weak.  So therefore I am calling Tuesday lower.

ES Fantasy Trader

Portfolio stats:  tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we go short at 1461.25.  I think that we're finally seeing some sort of direction and while this one may not be a big money-maker, there are a few points to capture here.

Monday uncertain

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

• Monday uncertain.
• ES pivot 1467.00.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I called Friday uncertain as a possible topping day.  It is of course too soon to say if we've topped or not but we did get a pretty mixed session with the Dow gaining all of 17 points and the SPX down just 0.07.  Which all leaves us at an interesting juncture for the coming week.  Let's see what the charts have to say about it.

The technicals (daily)

The Dow: Friday's 0.3% gain came in the form of a hanging man.  This of course requires confirmation but with the indicators still overbought and RSI apparently having already topped, I'd say the odds here are at least even for a move lower Monday.

The VIX:  Just when it seemed the VIX couldn't go any lower, it did, dropping another 0.96% on Friday to close at 13.36.  We have to go back to June 2007 to find the last time we were at these levels.  Of course, that was shortly before the VIX exploded, hitting nearly 90 by October 2008.  Can the VIX still go lower?  Sure.  It's lower BB is falling away rapidly, now at a crazy 7.31.  And let's not forget that for four entire years, between 2003 and 2007, the VIX regularly found support down around 10.  We're not quite that low yet, but the longer term view of the VIX is that it has only one way to go, and that's higher.

As for Monday, hard to tell.  We're in a sort of congestion area now between 13.2 and 13.7.  I've been calling for it to move higher for a week now and it hasn't happened, so I'm just going to shut up for a while.

Market index futures:Tonight all three futures are higher at 12:50 AM EST with ES up by 0.12%.  This gives us a green candle for the moment but we're still below the level of the red hanging mannish thing on Friday.  I note that 1471 has proven to be strong resistance three days running now.  Can we break that on Monday?  I'm not so sure.  We had a decent run last week and that put ES at overbought.  People have been calling for 1475 and even 1500 lately, and while I agree we'll see that by springtime, I don't think we'll get there on Monday.

ES daily pivot: Tonight the pivot rises from 1464.00  to 1467.00 even.  With a rise in the Sunday overnight, we remain above the new pivot, so that's bullish.

Dollar index:And what of the dollar?  On Friday, it gave us yet another doji, this one a gap down bullish morning star.  Indicators are still not quite yet overbought and we still have aways to go til the lower BB so some caution is required, but overall I'd say we're at least setting up for a move higher soon.

Euro: Meanwhile, in Euroland, the currency continued its winning ways on Friday, closing at 1.3346, just above its upper BB.  And in the Sunday overnight, it's actually moving higher still, now at 1.3398, entirely above the BB.  This has moved it into overbought territory  but in the absence of a reversal candle, I still can't call the euro lower just yet.

Transportation:Like the hanging man in the Dow, the trans on Friday gave us a reversal candle in the form of a nice star.  Indicators here remain overbought so the next logical move is down.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      2      3           1       0.600     0

     And the winner is...

The SPX Hi-Lo index has been stuck on 100 for three days now.  It's unusual for it to go that long without seeing some sort of pullback.  The charts have bestowed a bunch of dojis on us, but they all require confirmation, so they're not much help.  With no major economic news coming out on Monday and no fake political "crises" looming, it's hard to see what will move the markets.  Maybe some good earnings could power another leg higher.  I just don't know and I'm just not seeing any good direction from these dang charts tonight.  And we're once again entering op-ex week with all the gyrations that generally brings.  So once again, it's Monday uncertain.  But that's OK - our time will come.

ES Fantasy Trader

Portfolio stats:  tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we stand aside once again in the face of a lack of good guidance.

Friday uncertain, topping possible

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

• Friday uncertain, topping day possible.
• ES pivot 1464.00.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

 Signature of the week

Does the J stand for "joke"?

Will someone please tell me Emperor Nerobama's not hiring a guy who signs his name as a doodle to be the Secretary of Treasury.  Actually, that can't really be his signature.  Even doctors write better than that.  My German Shepherd writes better than that.  I think he was simply trying to get his pen to start putting down ink and by the time he finally realized it was in fact going, it was too late and then he couldn't find the WhiteOut.  Yeah, that must be it.  What the heck.

Recap

With an 81 point gain on Thursday, the Dow finally broke out of a five day trading range.  But very little has changed in that time, indicator-wise.  Which kind of leaves us in a pickle because the longer this goes on, the harder it becomes to tell if this move is for real or just another fakeout.  Maybe a review of the charts will help shine some light on this conundrum.  Or maybe we're just drawing curli-ques.

The technicals (daily)

The Dow: After starting the week off with a fakeout breakdown, the Dow has rebounded and now broken above the upper end of its recent range with a close at 13,471.  In addition, both money flow and OBV have put in a bottom and turned upward.  However, the upper BB lies just overhead at 13,532 and we remain quite overbought.  So given that we've finally broken out of the range, I'm thinking there's fairly clear sailing now at least until the upper BB but we may get a pullback after hitting that.

The VIX:  The VIX has fallen and it can't get up.  It's trying awfully hard, but keeps moving lower, this time by 2.32% even though it put in two consecutive green candles. The indicators are all lower than I've seen them since October 2011 and the VIX has been cut nearly in half in just eight sessions.  With today's inverted hammer, you've just got to think a reversal is coming, but then again so's Christmas.  I'll believe it when I see it.

Market index futures:Tonight all three futures are basically flat at 1:04 AM EST with ES dead even and both NQ and YM down all of 0.01%.  After posting an impressive 0.89% gain on Wednesday, ES has actually been drifting lower since around 6 PM giving the new candle a developing dark cloud cover appearance.  RSI has also peaked at overbought and is now headed lower.  I don't know if this is the start of a larger reversal, but we may be in for a pause or a move lower here on Friday.

ES daily pivot: Tonight the pivot bounces from 1455.50 to 1464.00. We were above before and remain so now but the distance has narrowed to just three points.  While this is de facto bullish, the pivot is now in play and we'll want to watch for attempts to break below it.

Dollar index:After a bunch of directionless trading, the dollar absolutely cratered today, with the $USDUPX dropping a whopping 1.07%, it's biggest one-day decline since August 3, 2012, probably after traders got a look at Jacob Lew's signature.  This move is driving the indicators off overbought and it looks like further downside is possible Friday.

Euro: And similarly, the euro put in a huge green candle today to bring it to 1.3259, right at the resistance that stopped it last month.  Despite this, the indicators are not yet overbought and we're inching higher still in the overnight.  But we'll have to wait and see if the euro can break above this strong resistance line or if it's going to try to retrace Thursday's big jump.  It's too risky to predict from here.

Transportation:I commented last night that this chart no longer looked very bearish and today we got another advance, this time for 0.51%.  We're now at levels not seen since July 2011 and are now quite overbought.  And like the Dow, the upper BB is nearby at 5608.  So with two green candles no signaling any reversal, I'd say we're going to have a look at the upper BB and then maybe reverse.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      2      2           1       0.600     0

     And the winner is...

With charts still looking fairly bullish but also near various resistance lines, I think Friday may be a topping day, possibly a doji.  I'm definitely not expecting another big move higher.  And it's too soon to tell if today's move was a breakout or a fakeout.  Accordingly, I'm going to just call Friday uncertain.  The ES pivot should be illuminating.  IF we break below it by mid-morning, that increases the odds for a lower close.

ES Fantasy Trader

Portfolio stats:  tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we stand aside again in the face of a lack of good guidance.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1455.50.  HOlding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Oops.  I was really thinking we'd go lower today.  Instead the Dow surprised me by gaining 62 points.  So we are right back to the 13,390 level that's been either the open or the close for the last six straight sessions.  There's probably some day trading money to be made here, but for a swing trader we're just spinning our wheels.  Let's call AAA and see if we can get towed out of these doldrums on Thursday.

The technicals (daily)

The Dow: After a short descending RTC, today the DOw closed outside it for a bullish setup and an approximation of a bullish engulfing pattern.  With the indicators now completely broken at overbought, this chart's not looking anywhere near as bad as it did last night.

The VIX:  After setting a multi-year low on Tuesday, the VIX moved even lower today, hitting 13.22 intraday before recovering to close at 13.81 for a 1.40% gain, so at least I guessed this one right.  With RSI in the basement at 2.04 and the stochastic joining it, I'd have to  think we're more likely to move higher from here than lower.

Market index futures:Tonight all three futures are higher at 1:00 AM EST with ES up by 0.22%.  ES is now, like the Dow, in a channel between 1451 and 1460.  After opening at the bottom of that range on Wednesday, the overnight has brought us to the top.  We'll break out eventually, but right now I'm not even going to venture a guess which way that will be.  The recent past suggests a move lower though.

ES daily pivot: Tonight the pivot inches up from 1451.08  to 1455.50.  With a mini-rally around 9 PM we remain above the new pivot so that's bullish.

Dollar index:The dollar has been bouncing around lately with no particular pattern.  I'm happy to admit I have absolutely no clue where it may be headed next. .Maybe the euro has a clue.

Euro: Nope.  After expecting once again to see the euro move higher, it moved lower on Wednesday.  But it continues to find support right around 1.3050.  The candles look bearish, the indicators look bullish, and I'm stumped.

Transportation:After looking like they'd put in a top, today the trans handily erased two days of losses and closed above 5530 resistance.  Broken indicators here too and yesterday's hanging man is now looking more like a hammer, so this chart's no longer particularly bearish.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      2      1           1       0.600     0

     And the winner is...

Tonight the charts are being particularly coy.  I'm afraid I don't have a particularly good feel for the whole environment here so I think the most prudent course of action is to simply sit back and wait for the break.  Until then, I think we'll see some more of this nervous channeling action and because of that, all I can say is that Thursday is uncertain.  Sorry folks, wish I had something more profound to say, but sometimes that's just how it is.

ES Fantasy Trader

Portfolio stats:  tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we stand aside again in the face of a lack of good guidance.

Wednesday lower again

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

• Wednesday lower, low confidence.
• ES pivot 1451.75.  Breaking below is bearish..
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I called the Dow lower today and was rewarded with a morning-long decline into negative territory.  But the bears must have had one martini too many at lunch because we recovered a bit in later trading to end down just 55 points.  Still, last week's uptrend is now clearly over, so what's next?  You may not need a weatherman to tell which way the wind is blowing, but do you need a Night Owl to tell which way the market's heading.  Read on!

The technicals (daily)

The Dow: We can dispatch this one quickly.  With two nearly identical red candles in a row, the Dow is now totally out of its rising RTC for a bearish trigger and has just completed a bearish stochastic crossover.   And while the indicators are not entirely overbought, they do look to have peaked.  So in general, there's no signs of a move higher here.

The VIX:  In an interesting bit of divergence, the VIX moved lower on Tuesday as well as the major averages, dropping another 1.23%.  At 13.62, it's now at the bottom of its support range and quite oversold.  I actually had to go to the monthly chart to find the last time the VIX was this low.  Know when it was?  Try June of 2007!  Ad although we traded outside the last descending RTC today for a bullish trigger, it sure doesn't feel like it.  I'd say there's some evidence for a move higher from here but it's not particularly compelling, not when the lower BB has fallen to 12.30.

Market index futures:Tonight all three futures are just a tad higher at 1:04 AM EST with ES up by 0.05%.  Call it basically flat. Today's candle traded entirely outside the rising RTC for a bearish setup and gives us now four bearish warnings in a row: two spinning tops followed by two hanging men.  With an inverted hammer in the overnight so far  and the indicators remaining very overbought, I'm not feeling the love.

ES daily pivot: Tonight the pivot inches down from 1455.75  to 1451.75. This drop combined with tonight's slight gains were just enough to send us above the new pivot for a bullish indication.  It's just a bit more than one point mind you, so we'll need to watch for any attempts to break under before morning.

Dollar index:The dollar put in a little red harami today (sounds like sushi, doesn't it?) but that was good for a 0.09% rise.  Still, we remain overbought and with a just-completed bearish stochastic crossover, there could be further downside here.

Euro: The euro's two day rally was abruptly cut off on Tuesday with a close at 1.3091 basically wiping out yesterday's gains.  But we're basically flat in the overnight suggesting that there may be some support around this level.  While it did not go higher today as I had expected, I still think the upside is looking more promising that any move lower.

Transportation:On Tuesday the trans dropped 0.38% putting in a second hanging man suggesting that the bulls have not quite given up this fight yet.  However the indicators remain quite overbought and the stochastic is dead-even on forming a bearish crossover (the %K and %D lines are virtually equal).  And we traded entirely outside the rising RTC so that's a bearish trigger.  I don't see any suggestion here of a gain on Wednesday.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    2      1      1           1       0.750     62

     And the winner is...

I know some people are calling for a rally from here and bandying about number like SPX 1475.  That may yet happen in a month or two, but it's not happening tomorrow.  One might think that the failure of the bears to drag the market down in one quick swoop is a sign of weakness on their part, but one would be wrong. There is the death by a thousand cuts too.  I'm really only seeing one bullish sign tonight, the ES pivot.  But that's pretty weak, just one point over.  So I'm going to officially call Wednesday lower, though I'll admit I'm keeping an eye on the pivot.  I'd really want to see more bullish signs though to turn my call to bullish.

ES Fantasy Trader

Well we made our goal of having the first trade of the year be a profitable one as last night's short yielded a respectable 7.5 points.  Not bad for eleven hours worth of work (most of which I spent sleeping). 
Portfolio stats:  tonight the account rises to $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short).  Tonight we stand aside.  Although I believe the market has lower to go, I'm not seeing any good momentum in that direction in the overnight so far so I'd rather just watch and wait.  Getting on a bus that's standing still with its motor off and the driver on coffee break usually isn't the best tactic for going somewhere fast.

BOT    10    false    ES    MAR13 Futures     1447.25    USD    GLOBEX    11:29:38   
SLD    10    false    ES    MAR13 Futures     1454.75    USD    GLOBEX    00:36:14     

Tuesday lower

• Tuesday lower, medium confidence.
• ES pivot 1455.75.  Holding below is bearish..
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1454.75.

Recap

Last night I said that ES needed to break above its pivot in order to close higher.  Well the ES commandos made a valiant effort to take Hill 1457.33 at 2 AM and again at 3:30 AM but were repulsed both times by the Bear defenders.  It was all over after that and while the Dow did recover somewhat from its intraday lows, we still finished down 0.38% on the day.  As we're finally getting a full week of trading going with full participation, the charts should settle down and give us some more reliable clues.  So let's bring out the magnifying glass, Holmes, and start the search.

The technicals (daily)

The Dow: We got some clarity from today's 51 point decline which solidified a congestion range of 13,390 - 13,435.  The indicators are also just about at overbought and the stochastic is now very close to forming a bearish crossover.  My best guess is that the break out of this range is going to be to the downside.

The VIX:  Last night I talked about some support around here for the VIX and it basically held on Monday as the VIX lost just 0.29% to close at 13.79, just under Friday's close.  This leaves us just outside the descending RTC for a bullish setup.  The stochastic is lying on the floor with nowhere to go but up and the other indicators are now oversold.  I take the failure of the VIX to push substantially lower today as a sign it may be getting ready to move higher.

Market index futures:Tonight all three futures are lower at 12:45 AM EST with ES down by 0.09%.  Like the Dow, ES gave us a hanging man today.  Following two days of spinning tops, it looks like we may finally be getting ready to roll over.  The drift lower in the overnight seems to support this.  It's also dragging us out of the rising RTC for a bearish setup and the stochastic has just eked out a bearish crossover.  This chart definitely looks ready to go lower on Tuesday. 

ES daily pivot: Tonight the pivot drops from 1457.33 to 1455.75.  With ES mounting yet another unsuccessful assault on the pivot around 3 PM Monday, we remain below the new number tonight, so that's bearish.

Dollar index:I was right about the dollar moving lower on Monday as we lost 0.30% on the $USDUPX.  This also formed a bearish evening star pattern and peaked the indicators at overbought.  This chart looks likely to continue lower on Tuesday.

Euro: I also called the euro correctly today as it closed up to 1.3120 on a nice green candle.  In the overnight tonight it's sort of bouncing around but seems inclined to continue higher.  With a complete bullish stochastic crossover and indicators now bottomed at oversold, that seems likely.

Transportation:Last night I was talking about what a great run the trans were having.  Tonight it looks like that may be over as we got our first loss in five days, dropping 0.37%.  More telling was the candle, a hanging man.  The indicators are also starting to turn lower from overbought and today's close was just outside the rising RTC for a bearish setup.  That all spells lower for Tuesday.
 

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 final cumulative list for 2012.
 

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  16/22

 23  6/4        32         48        -     1278  16/23

 24  6/11       28         40        -     1326  16/24

 25  6/18       39         26        -     1343  16/25

 26  6/25       38         46        -     1335  16/26

 27  7/2        41         40        -     1362  16/27

 28  7/9        42         38        -     1355  16/28

 29  7/16       44         32        -     1357  16/29

 30  7/23       33         42        -     1363  16/30

 31  7/30       43         22        +     1386  17/31

 32  8/6        52         28        +     1391  18/32

 33  8/13       43         21        +     1406  19/33

 34  8/20       46         31        +     1418  20/34

 35  8/27       39         29        +     1411  21/35

 36  9/4        31         38        +     1407  22/36

 37  9/10       54         29        +     1438  23/37

 38  9/17       63         22        +     1466  23/38

 39  9/24       52         30        +     1460  23/39

 40  10/1       39         39        -     1441  24/40

 41  10/8       52         34        +     1461  24/41

 42  10/15      41         32        -     1429  25/42

 43  10/22      38         41        -     1433  26/43

 44  10/29      36         43        -     1412  27/44

 45  11/5       44         33        -     1414  27/45

 46  11/12      38         46        -     1380  27/46

 47  11/19      52         34        +     1360  28/47

 48  11/26      48         26        +     1409  29/48

 49  12/3       57         21        N     1416  29/49

 50  12/10      46         29        N     1418  29/50

 51  12/17      52         28        -     1414

 52  12/26      52         26        +     1430

 

  1  12/31      40         48        - -   1402 

  2  1/7        47         30        + +   1466

  

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 I voted "Neutral" four weeks ago (because I felt I had no way to predict the outcome of the Fiscal Cliff), so that counts as neither right nor wrong.  Therefore, as we fill in the last few calls for 2012, I remain 29 for 50 or 60%.  I will remove all the 2012 entries in two weeks when we have a complete chart for the year.

In the meantime, I note that I changed my vote from bearish to bullish along with the majority of voters.  I'm not sure why they did, but I'm seeing a bullish trigger on both the weekly and monthly SPX RTC.  We're also in a period of strong seasonality anyway.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    1      1      1           1       0.667     7

     And the winner is...

After two days of vaguely bearish charts, tonight the bear case seems to be strengthening as I'm seeing more signs of tops.  I'll add that the TLT looks ready to move higher too - always a bad sign for stocks.  And the SPX Hi-Lo index hit 100 again on Monday, also a good sign a top is coming.  So all in all, I'm going to just say that things are looking good for a move lower Tuesday.

ES Fantasy Trader


Portfolio stats:  tonight the account remains at $100,000 as we enter our first trade of the year by going short at 1454.75.