Wednesday higher

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

• Wednesday higher, low confidence - Fed day.
• ES pivot 1785.42.  Holding above is bullish.
• Rest of week bias higher.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Tuesday's action played out picture-perfect just like a candlestick charting textbook.  We had an exponential run lower in the Dow ending with a spinning top bottom.  And that was confirmed with Tuesday's 91 point gain.  Bada bing!  Now let's see where Wednesday's headed.

The technicals (daily)

The Dow: The Dow's advance on Tuesday caused RSI to bottom from very oversold and moved the stochastic very close to a bullish crossover.  This chart now looks decidedly bullish.

The VIX:  Last night I wrote "this one still has more downside to go" and that's just where the VIX went on Tuesday, down nearly 10% on a tall red marubozu that took RWI off extreme overbought, caused a bearish stochastic crossover, and finally got us back below the upper BB.  So the outlook remains bearish for the VIX.

Market index futures: Tonight all three futures are higher at 12:33 AM EST with ES up by a solid 0.49%.  Tuesday's gains were a big bullish engulfing candle that bottomed out RSI and completed the stochastic's bullish crossover, getting ES off the lower BB.  This chart now looks solidly bullish.  

ES daily pivot: Tonight the pivot inches up from 1778.25  to 1785.42.  ES remains well above the new pivot so this indicator remains bullish.

Dollar index: Last night I wrote "I see more upside here" and we got just a tad, with the dollar up 0.06%.  The stochastic is just about to do a bullish crossover and RSI has begun moving higher so I'd say Wednesday looks higher for the dollar.

Euro: Last night I wrote "this chart looks like it's going to drift lower" and that's just what it did Tuesday, posting a small loss on a small hanging man.  RSI remains overbought, the stochastic just completed a bearish crossover, and the overnight is continuing the decline so I see more downside to come here.

Transportation: The trans had an excellent day on Tuesday gaining just over 1% on a tall green bullish engulfing marubozu over Monday's candle that touched the lower BB.  RSI remains just barely oversold and the stochastic remains low - its next move will have to be a bullish crossover.  So this chart looks positive now.

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.  I have updated last week's numbers here.  And the week before never did appear so it remains listed with "??".

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 37  9/9        35         30        +      +   1655   18/37  15/34

  28 9/16       40         28        +      +   1688   19/38  16/35

 39 9/23        52         36        +      +   1710   20/39  17/36

 40 9/30        39         43        +      -   1692   21/40  17/37

 41 10/7        30         33        +      -   1691   22/41  17/38

 42 10/14       48         22        +      +   1703   23/42  18/39

 43 10/21       57         30        +      +   1745   24/43  19/40

 44 10/28       59         19        +      +   1760   25/44  20/41

 45 11/4        42         25        +      +   1762   26/45  21/42

 46 11/11       39         39        +      x   1771   27/46  21/42

 47 11/18       52         30        +      +   1798   27/47  21/43

 48 11/25       58         29        +      +   1805   28/48  22/44

 49 12/2        56         26        +      +   1806   29/49  23/45

 50 12/9        55         30        +      +   1805   30/50  24/46

 51 12/16       30         43        +      -   1775   31/51  24/47

 52 12/23       38         29        +      +   1818   32/52  25/48

  2014

 01 12/30       50         23        +      +   1841     0/1    0/1

 02  1/6        40         44        +      -   1831 

 03  1/13       ??         ??        +      ?   1842

 04  1/21       36         41        -      -   1839

 05  1/27       35         43        -      -   1790

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that both I and the majority of the poll voted bullish four weeks ago so we were both right.  Therefore we can now finally close out the predictions for 2013:  the Night Owl ends with an accuracy of 32 for 52, or 62%.   And the poll as a whole rises a bit to 25 for 48 or 52%.  Not too shabby for a game where you're doing well to be batting .500.  Starting next week we'll drop the 2013 numbers and continue on with 2014.

We also see that our first prediction for 2014 was wrong.  This will no doubt improve as we go on.

This week we see that I voted bearish for the second week in a row, the first time I  changed from bullish since last September.  I'm seeing signs of bearish RTC exits and stochastic crossovers that concern me enough to vote a minus sign.  The failure of the 2014 January barometer is also of concern.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    4      9      5           0       0.308     144

     And the winner is...

I normally call Fed days as "uncertain" just as a matter of policy because there's never any way of being sure just what odd things will come out of their mouths.  But tonight the charts are looking rather strong technically and the futures are up significantly, much more than they usually are on a Tuesday pre-Fed evening.  That makes me think that "they" know something I don't, so I'm going to break my policy go out on a limb and call Wednesday higher.  That could all go south if Uncle Ben says something Mr. Market doesn't want to hear.

ES Fantasy Trader

Well it's nice that we had a successful first trade of the year as we made a quick six points on last night's trade.  Not bad for ten hours of work (most of which I slept through).  And since I get asked this - I entered the trade because I saw a collection of reversal signs, particularly the bullish stochastic crossover that suggested a high probability trade.  And I exited because it looked like the short-term momentum had been exhausted.  While this one might run further, the ESFT is about trading not investing, so if a trade is profitable the next day, I'll book it and live to trade again.

Portfolio stats:  the account rises to $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside, having missed the next big upside move earlier this evening.

SLD    10    false    ES    MAR14 Futures     1787.25    USD    GLOBEX    11:05:35
BOT    10    false    ES    MAR14 Futures     1781.25    USD    GLOBEX    00:49:06
 

Tuesday higher

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

• Tuesday higher, low confidence.
• ES pivot 1778.25.  Holding above is bullish.
• Rest of week bias higher.
• Monthly outlook: bias lower.
• ES Fantasy Trader goes long at 1781.25.

Recap

Well we were close.  I thought the Dow was going to end its slide on Monday and indeed it actually did start to move higher around noon until a late wave of selling blew in just 45 minutes before the close to ruin my call.  But I think the primary thesis remains intact so let's see where Tuesday may lead us.

The technicals (daily)

The Dow: Monday saw another 41 points down in the Dow but it came in the form of a spinning top at the bottom of Friday's big dump  While these generally require confirmation, with RSI now extremely oversold, the stochastic moving into position for a bullish crossover, and the fact that the entire candle was under the lower BB, I'm even more optimistic for a reversal now.

The VIX:  And the VIX put in a doji of its own, dropping 3.97% on Monday.  But even that left the entire candle above its upper BB - highly unusual.  And with the indicators remaining way overbought, I'm thinking this one still has more downside to go.

Market index futures: Tonight the futures are mixed at 12:45 AM EST with ES up by a nice 0.31%, YM up even more, but NQ down a big 0.66%. ES gave us a classic spinning top on Monday and RSI looks to have bottomed now.  THe stochastic is flattening out in preparation for a bullish crossover.  The developing candle is bullish engulfing and the move so far is already enough to qualify as a bullish RTC setup.  OBV has also bottomed, so this chart is definitely looking bullish now.

ES daily pivot: Tonight the pivot falls from 1796.67  to 1778.25.  Unlike last night, this drop was enough to put ES above the new pivot so this indicator now turns bullish.

Dollar index: On Monday the dollar gave us a small gain on a bullish engulfing candle that confirmed Friday's spinning top reversal.  Indicators are now just about oversold and the stochastic is nicely set up to form a bullish crossover in a day or two so I see more upside here..

Euro: After a big jump last week the euro has been consolidating in the upper part of that move around 1.3684.  After two doji days we're seeing a small gain in the overnight, but we're also getting a bearish stochastic crossover, so this chart looks like it's going to drift lower.

Transportation: On Monday the trans dropped another 0.82% on a stubby spinning top that bounced off their lower BB and drove the indicators oversold.  The last five times the trans have hit their lower BB, they've reversed the next day.  I see no reason why Tuesday should be any different.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    3      9      5           0       0.273      53

     And the winner is...

Monday had the characteristics of a bottoming day .  All of the bullish technical signs in the charts last night are still there tonight but even more so, so I'm just going to claim that we'll close Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $100,000 as we go long tonight at 1781.25 for our first trade of 2014.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1796.67.  Holding below is bearish.
• Rest of week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

Several times a year, the stock market holds a sale.  Last Friday was one of those times as the Dow cratered 318 points.  I'm awfully glad I called Friday lower as that erased all of my January prediction losses in just two days.  Now we get to the tricky part - calling the bottom.  Is it over yet?  The charts now speak.

The technicals (daily)

Dow daily

The Dow: OK, this one is definitely worth a picture.  Friday's big 2% drop is a classic, and I do mean classic example of an exponential run, and in this case a run-down.  Just the way bubbles end in explosive exponential run-ups, the opposite direction moves also finish the same way.  Just look at how these accelerating daily losses absolutely fall off the cliff.  Friday's move crashed through the 16K level like it wasn't there, it began lower than the upper BB and closed way under the lower BB.  You don't see that very often.

The three parallel lines are the rising and then descending RTC's.  The green bar at the bottom  shows how RSI is now oversold and the lowest chart is the stochastic which is now down to levels from which reversals come.  I think Friday's sell-off was way overdone and we can expect a DCB on Monday, if not the inevitable end of the exponential breakdown.


The VIX:  Wow, this is the night for charts.  Check out this one of the daily VIX (and by the way I called this one wrong in a big way last Thursday).  On Friday the VIX blasted up for a 31.74% moonshot, gapping right up past its 200 day MA (dotted orange line), then on through its upper BB (narrow blue line), and then through resistance at 16.66 for its biggest one day gain since last April.  Holy moly!

VIX daily

That was enough to drive RSI (first chart below the VIX) to nearly 100 and bring the stochastic to overbought levels (though not yet a bearish crossover).  As I always say, the VIX rarely spends more than a day or two above its upper BB, and we're there now in a big way.  The last eight times the VIX went on a one-day gap-up rampage (that's where I stopped counting), it went lower the next day.  Eight for eight.  So I'm looking for a lower VIX on Monday.

Market index futures: Tonight all three futures are higher at 12:30 AM EST with ES up by 0.20%.  ES of course got crushed on Friday like everything else, crashing through multiple levels of support at 1820, then 1813, then the lower BB at 1804, then the 1800 level itself, then 1787 before finally coming to rest at 1782.  That was enough to send RSI very oversold and bring the stochastic down to levels from which reversals have come in the past.  The new overnight candle is forming as a decent hammer, so that's encouraging for Monday.

ES daily pivot: Tonight the pivot dives from 1827.33  to 1796.67.  Friday's dump was so big we're still below the new pivot and by a good 10 points so this indicator has to be considered bearish.

Dollar index: Somewhat surprisingly, the dollar moved hardly at all on Friday, up just 0.02% on a little doji.  The stochastic is turning around for a bullish crossover so I'd be looking for a move higher in the next day or two..

Euro: And the euro of course had its big upward move last Thursday, giving us on Friday a small inverted hammer at the higher end of that run.  Indicators are near, but not yet overbought so there's at least a suggestion here of a move lower on Monday.

Transportation: On Friday the trans got absolutely crushed, down a breath-taking 4.11% and traveling almost the entire way from upper BB to lower BB in just one day.  But even at that, the stochastic only just began a bearish crossover, though this may be more a case of being slow to react.  In any event, the trans are usually pretty good at recovering from sharp one-day sell-offs so I'd not be surprised to see at least modest gains here on Monday.

Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    3      8      5           0       0.273      94

     And the winner is...

It's easy to get spooked when you see the Dow down 318 in one day but the technicals are actually looking somewhat encouraging at the moment.  The SPX Hi-Lo index took a big spike down to 45 on Friday.  Whenever you see that, that's usually a good sign a reversal is near.  Also, the NYSE A/D line hit -2252, its lowest level in six months.  Extreme low reading here are also bullish.  Then we have the Dow going pure negative exponential and we know how those always end.  And we have a classic VIX blow-off top that augers a move lower in a day or two.  And finally the futures aren't continuing to sell off in the overnight so all things considered as spooky as it may feel, I'm going to call Monday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $100,000 as we wait for the right moment to enter our first trade of the year.  While I do think we're going lower on Friday, I still don't have a good enough edge to warrant going short just yet, so we'll just stand aside again.  There's no rush.

Friday lower

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

• Friday lower, low confidence.
• ES pivot 1827.33.  Holding below is bearish.
• Next week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

Finally, I got one right. My call for Thursday lower played out, as well as my reading of every individual chart I looked at.  But we will avoid committing too much hubris here and simply move on to Friday.

[Note: the Blogspot spell checker is on strike again tonight, so I apologize in advance for any typos.]

The technicals (daily)

The Dow: Last night I wrote "there's more downside to come on Thursday." and did it ever come - down 176 points for its worst one-day loss since last August.  That broke support at 16,263, completed the bearish stochastic crossover, and busted through the lower BB but did not drive the indicators oversold yet.  So we might still see some more selling on Friday.

The VIX:  Last night I wrote that the VIX "now at least seems to be wanting to move higher" and on Thursday it put in an unusal gap-up gravestone doji that just touched its 200 day MA before retreating.  Although the indicators ar enot yet overbought, this is bearish for Friday.

Market index futures: Tonight all three futures are lower at 12:42 AM EST with ES down by 0.14%. Last night I noted congestion in ES and wrote "we may be setting up for a move lower out of this range" and that's just what happened on Thursday with ES taking a decsive dump to send the indicators lower.  And with some negative pin action in the overnight, the selling may not be over yet.

ES daily pivot: Tonight the pivot drops from 1838.83  to 1827.33.  We remain below, so this indicator remains bearish.

Dollar index: I didn't call the dollar last night, which was good because I sure didn't see a one percent drop coming on Thursday.  This big gap-down marubozu took the indicators off overbought and broke a couple of support levels.  But with this big gap, a DCB isn't out of the question on Friday..

Euro: Last night I wrote "the euro is ready to move higher" and boy did it ever, up a whopping 1.11% on Thursday to blast right out of its descending RTC and clear past resistance at 1.3515.  And even that wasn't enough to drive the indicators overbought.  But after such a big move, I'd expect a pause on Friday.

Transportation: Last night I wrote "more upside is not out of the question" here and indeed we got another 0.28% out of the trans on Thursday as the bullish divergence continued.  But now it's hard to say.  With the indicators pretty overbought and the trans clinging to their upper BB, we don't have a reversal candle, but a move lower could come at any time.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    2      8      5           0       0.200     -224

     And the winner is...

I don't know - after such a big move down, it's tempting to call for a DCB, but with all the charts continuing to look bearish, I'm afraid I'm just going to have to call Friday lower.  See you again Sunday night.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Thursday lower

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

• Thursday lower, low confidence.
• ES pivot 1838.83.  Holding below is bearish.
• Friday bias lower.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

The mysterious 2014 market sea change continued on Wednesday.  I called the Dow higher, but while the Nasdaq and SPX both did rise, the Dow moved lower once again.  I am now seriously considering abandoning the Dow as my benchmark.  In nine years of doing this I have never seen such a disconnect between the Dow and the SPX.  And another odd thing - my REITs, which had underperformed most of 2013 are suddenly roaring ahead.  I'm now up 2.47% YTD after just three weeks into the new year.  I guess you just have to love that about the market - just when you think you've got it down, it throws you a new curve.  So let's see if we can wind up and get the signals straight for Thursday.

The technicals (daily)

The Dow: Last night I wrote "this chart favors the downside for Wednesday" and that proved to be correct.  But I called the close bullish anyway based on the other charts that looked bullish.  So we're left with this strange situaiton where the Dow seems to be getting decoupled from the rest of the market.  And the odd thing is that it isn't the same players yanking it around every day.  It's pretty strange.  In any case, on Wednesday we got a fat spinning top that provided us with a bearish RTC trigger and a bearish stochastic crossover so I'd say there's more downside to come on Thursday.

The VIX:  We now have two inverted hammer in a row here, rising indicators and a rising, though choppy, RTC.  So although the VIX actually lost 0.23% on Wednesday, it now at least seems to be wanting to move higher.

Market index futures: Tonight all three futures are lower at 12:49 AM EST with ES down by 0.30%.  ES has now put in four dojis in a row.  It has attacked the 1844 level five days in a row and failed every time.  The net result has been congestion between 1832 and 1844.  We're now right on the lower end of that range again.  With RSI overbought and momentum, money flow, and OBV moving lower, we may be setting up for a move lower out of this range.

ES daily pivot: Tonight the pivot steps up from 1836.25  to 1838.83.  But ES fell under the old pivot around 10 PM so this indicator turns bearish.

Dollar index: I also missed the dollar on Wednesday as it posted a small gain off Tuesday's slide.  That was enough to push the indicators overbought.  The pattern is very nearly a bullish piercing line but with the dollar having had a two day streak only once so far this month, this chart remains too tough for me.

Euro: I thought the euro was going higher on Wednesday and while it did that intraday, it ended giving it all back and then some for a small loss and a fat little spinning top.  The new overnight is forming as doji and its outside the descending RTC for a buollish setup.  Indicators are now oversold and the stochastic is ready for a bullish crossover so I'll claim once again that the euro is ready to move higher.

Transportation: We got some more bullish divergence on Wednesday as the trans jumped over a percent while the Dow fell 0.25%.  The trans closed on their upper BB with a green marubozu that also caused a bullish stochastic crossover from a high level.  These are unusual and often good for a few additional days of gains.  So as we march further into record territory, more upside is not out of the question.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      8      5           0       0.111     -400

     And the winner is...

Tonight the balance seems to have shifted in favor of the bears so I'm calling Thursday lower.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Wednesday higher

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

• Wednesday higher, low confidence.
• ES pivot 1836.25.  Holding above is bullish.
• Rest of week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

Up down up down - it's now been a week since the Dow managed to string together more than one day in a row in the same direction.  No wonder this market is so tough to call and no wonder I'm now sitting on the worst forecasting record since I began keeping score.  I've only gotten one right all month.  This is getting embarrassing.  Complicating matters is that both the Nasdaq and the SPX did close with gains on Tuesday, so it must be something in the Dow.  This is really making me consider switching over to the SPX for my forecasts.  In any case, we now move on the Wednesday where we may finally see what's what.

The technicals (daily)

The Dow: The Dow continues its recent nervous consolidation.  The only thing I see here right now is a stochastic that's just about to execute a bearish crossover.  We're sitting on the edge of the rising RTC right now so if I had to guess I'd say this chart favors the downside for Wednesday.

The VIX:  On Tuesday the VIX put in a big gap-up inverted hammer for a 3.46% gain.  The indicators are nearing overbought territory and meanwhile VVIX is nearing its 200 day MA from below and is already overbought.  All this makes me think that while a bit more upside might be available here, more downside seems to be in the offing pretty soon  Wednesday might be a topping day.

Market index futures: Tonight all three futures are higher at 12:26 AM EST with ES up by 0.24%.  On Tuesday ES put in a second spinning top, megaphone-style, larger than the day before.  In any event, the overnight is moving higher and with the indicators still not yet overbought and the upper BB at 1847, it seems likely we'll hit that level on Wednesday.

ES daily pivot: Tonight the pivot ticks up from 1835.42  to 1836.25.  With ES taking off in the evening hours, we're well above the new pivot so this indicator remains decidedly bullish.

Dollar index: Well the dollar did open higher on Tuesday but then it was all downhill from there, ending the day with a dark cloud cover that bounced off the upper BB.  So now I'll claim that the dollar goes lower on Wednesday..

Euro: At least the euro did move higher on Tuesday though it remains in a week-long downtrend.  However, it has now hit oversold and the stochastic is about ready for a bullish crossover, so I'd say a move higher on Wednesday is not out of the question.

Transportation:Last Friday's hammer here was confirmed on Tuesday with a 0.57% advance, providing some bullish divergence to the Dow's 0.27% loss albeit on a spinning top that just touched the upper BB.  And we also have a new bearish stochastic crossover.  But this chart in general remains ill-behaved so I'm not trying to call it for Wednesday.


Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      7      5           0       0.125     -359

     And the winner is...

At this point I have little to lose - the indicators continue to remain bullish so that's how I'm calling the close - Wednesday higher.  Perhaps I should just call the SPX instead of the Dow.  Normally these two trade in highly correlated fashion.  But that relationship has broken down since the beginning of the year for some reason.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Tuesday - higher

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

• Tuesday higher, low confidence.
• ES pivot 1833.00.  Holding above is bullish.
• Rest of week bias uncertain.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside

Recap

The market concluded its nervous jiggling about last week with a win for the Dow but losses for the Nasdaq and SPX.  With this sort of action, is it any wonder I called Friday "uncertain".  Now we're starting  a holiday-shortened week.  If I had any sense I'd just take a vacation this week.  So instead on we go, to examine the charts, such as they are.

The technicals (daily)

The Dow: Last Friday the Dow continued its semi-random jiggling by retracing most of Thursday's retracement of Wednesday's retracement.  Indicators continue vacillating midway between overbought and oversold, there's no RTC or stochastic crossover so this chart is totally devoid of guidance.  I there's a pattern in here, I don't see it.

The VIX:  The VIX is similarly conflicted, putting in on Friday a green spinning top that nonetheless was a 0.72% loss.  We do at least have a descending RTC going, though it's wide and not very focused (Pearson's = only 0.870).  My guess is that the VIX may go lower Tuesday, but only because it doesn't seem terribly interested in moving higher.

Market index futures: Tonight all three futures are higher at 12:23  AM EST with ES up by an impressive 0.40%. Monday's trading yielding something very close to a dragonfly doji which is a very good reversal indicator.  And the overnight candle is confirming this in a big way, bringing ES all the way back to resistance at 1842.  But with indicators still a ways from overbought, we may have enough momentum to continue at least a bit higher from here.

ES daily pivot: Tonight the pivot drops from 1838.17 to 1833.00.  That move plus the big jump in ES now leaves us well above the new pivot to make this indicator solidly bullish.

Dollar index: After putting in candles with tails pointing in opposite directions last week, the dollar finally managed  a decent 0.42% gain to hit its upper BB.  But even that did not drive the indicators overbought so more upside could be coming on Tuesday..

Euro: On Monday the euro gave us a fat hammer with a small gain.  The overnight is retracing the same ground but support at 1.3529 is firming up nicely.  With indicators now oversold and the stochastic positioning for a bullish crossover, I'd look for the next move to be higher.

Transportation: The trans moved lower last Friday on a red hammer.  But I wouldn't put too much faith in this since we also got a bearish RTC trigger and the indicators have now peaked at overbought.  More downside seems possible from here.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      6      5           0       0.143     -315

     And the winner is...

Tonight the majority of the charts seem to have turned bullish, so I'm going to call Tuesday higher.  And I'm going out on a limb here because this week is historically terrible.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

Friday uncertain

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

• Friday higher, low confidence.
  
• ES pivot 1838.17.  Dropping below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Ouch!  Another day, another miss for the Night Owl.  Clearly the current market does not agree with my forecasting style.  I guess it just proves the old adage that everyone's hot until they're not.  Tonight we retrench and try to figure out what's going on with Mr. Market this month that has me stymied.

The technicals (daily)

The Dow: I'm afraid I have no technical explanation for Thursday's 65 point drop in the Dow.  In fact the action all year so far has been pretty herky-jerky as the market tries to find a direction.  I'm happy to admit I haven't a clue.

The VIX:  At least I was right about the VIX being at a turning point when I wrote last night "I'd be very surprised if the VIX had much more downside left to it" as the VIX rose 2.04% on Thursday confirming the hammer.  But form here I'm kind of at a loss - the stochastic has stopped oscillating, we're between BB's and there's no decent RTC to follow.  Even VVIX is in the same boat.  So I'm stumped on this chart too.

Market index futures: Tonight all three futures are higher at 12:48 AM EST with ES up by 0.10%.  Thursday's candle was something of a dark cloud cover but it remained inside the rising RTC and the indicators are basically just wandering aimlessly.  There is really not much to go on here for Friday.

ES daily pivot: Tonight the pivot barely dips from 1839.58  to 1838.17.  There isn't even any clarity here as the overnight drift higher in ES has glued itself right on the new pivot.  Sitting on the fence like that, this indicator is neither bullish nor bearish.

Dollar index: At least we have a pattern here.  On Thursday the dollar lost 0.15% on a bearish engulfing pattern that basically completes an evening star.   Also RSI and momentum are now falling but we have a rising stochastic.  It's not often the indicators don't even agree with each other nut that just emphasizes the nervous nature of the markets right now.  I'm not calling this one.

Euro: Same deal with the euro, three up then two right back down.  Then a gain Thursday to leave us right in the middle of that entire range.  No idea.

Transportation: After touching their upper BB on Wednesday, the trans dropped 0.63% on Thursday giving up all of Wednesday's gains and then some.  But that just leaves us a 7456, a level we've seen every day for the past five sessions.  RSI is overbought, but only a little.  The only thing I see here is a bearish RTC setup but it's not really much to go on.  So no call here either.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      6      4           0       0.143     -315

     And the winner is...

Wow - it's rare that I can't find some indication of market direction from any of my favorite charts but tonight is one of those times.  I'm completely shut out here, and on top of everything else it's op-ex Friday so all I can do is call Friday uncertain.  And with next Monday being a holiday, we'll see you again Monday night rather than Sunday.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.