Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1382.58.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I called today as "uncertain" because I was expecting a doji.  With the Dow finishing down 7, and the SPX up less than one point, I'd say that qualifies as a doji.  Nothing to see here, so moving right along we turn our attention to what Wednesday might have in store.

The technicals (daily)

The Dow: Today's candle was a dragonfly doji and after Monday's big move, this could signal a reversal.  But it requires confirmation so I'm not making too much out of today's action here.

The VIX:  And as the Dow made a dragonfly doji, the VIX did the opposite with a gravestone doji, posting its second close in a row below its lower BB.  The VIX rarely spends more than two days at levels like this and its indicators are also quite oversold now, so I'd say it is likely to move higher on Wednesday.

Market index futures: Tonight all three futures are down at 1:00 AM EST with ES lower by a significant 0.36%, a move largely in response to the news out of Euope about Greece.  While ES was the best performing chart of the day, managing to actually post some small gains, it's given it all back in the overnight so far on a developing bearish engulfing pattern.  ES is really looking pretty much out of gas right now.

ES daily pivot: Tonight the pivot rises from 1375.83 to 1382.58.  That move, plus the decline in ES caused it to break under the new pivot right at midnight, a bearish sign.

Dollar index: The dollar gained 0.10% today on a bullish piercing pattern.  However, its indicators are not yet oversold and its stochastic is nowhere near forming a bullish crossover.  So I'd say this chart is also giving us a warning of a reversal but not an exact date.

Euro: And for the second day in a row the euro was unable to break resistance at its 200 day mA, now at 1.2817, putting in a spinning top.  But the news here is the overnight action, no doubt in response to the Euro-ministers can-kicking on Greece.  The euro tumbled this evening from 1.2813 to 1.2755 right now, a move that is bringing RSI down off overbought and moving the stochastic into position for a bearish crossover.  I'll be looking for lower here on Wednesday.

Transportation: And you can add the trans to the list of dojis today, dropping just 0.77 points and reflecting the indecision elsewhere.  Another chart that requires confirmation.

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  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

 45  11/5       44         33        -     1414

 46  11/12      38         46        -     1380 

 47  11/19      52         34        +     1360

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 10/22 was right, the S&P now being lower than then. I'm using the column "Accuracy" to track my calls.  So now with just five weeks to go in 2012, I'm 26 for 43 or 60%.

For the record, I switched my vote from bearish to bullish, staying in sync with the majority for the second week in a row.  In fact, this week saw the highest bullish reading since October 8th.  No doubt people are counting on the Santa Calus rally to kick in along with some kind of resolution to the fiscal cliff.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

April      7      9      2                    .438
May       10      7      3           2        .632  
June       8      6      6           1        .600     632
July      11      2      6           1        .857     917
August     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19 
October    8      5      8           0        .615     208
November   6      3      4           0        .667     249

     And the winner is...

While I wasn't seeing any real bearish signs in the charts last night, tonight I am.  We ended up with a lot of dojis singaling uncertainty.  And tonight's news out of Europe may be the push the markets need to roll over.  With Wednesday being the day before Thanksgiving, market participation is likely to be below average, so we might see some exaggerated moves.  In any event, right now I'm not feeling the love, so I'm calling Wednesday lower.

And with the markets closed on Thursday plus half of Friday, let me wish a Happy Thanksgiving to all my readers.  See you again on Sunday night.

ES Fantasy Trader

Portfolio stats:  the account remains at $197,750 after 71 trades (56 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside because of the impending holiday.  I don't want to risk getting trapped on the wrong side of a trade potentially until next week.

Tuesday uncertain

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

• Tuesday uncertain.
• ES pivot 1375.83.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Today we got the rally I was looking for and then some with the Dow jumping 208 points on a mixture of housing numbers and more blather from politicians about how the fiscal cliff might be averted.  And notice how well the SPX Hi-Lo indicator played out.  Recall that way back last Thursday night I wrote "the SPX Hi-Lo index fell back to 8.33 today, a level from which rallies pretty much always follow. "

Whatever, I'll take it.  Now let's see how the rest of this holiday-shortened week might play out.

The technicals (daily)

The Dow: Today's big pop gave us the bullish RTC trigger confirming last Friday's bullish setup.  It also brought the indicators all the way out of oversold and on the path towards overbought.  And the rally stopped right in the 12,816 area that marked congestion last week.  So while technically, this chart looks good, note that more often than not, a big up day is followed by a small doji day.  The fact that this is a holiday week increases the liklihood of that.

The VIX:  I wasn't ready to call the VIX lower for Monday, but it responded to the bearish weekly chart by gapping down another 7.13% to close at 15.24, below its lower BB.  It also drove the indicators more oversold.  Interestingly, this is the first time we've touched the lower BB since June.  Back then, we had two more days lower and then a big jump.  So I'd say that further downside for the VIX is limited from here, though it may not begin rising immediately on Tuesday.

Market index futures: Tonight all three futures are down just a bit at 1:00 AM EST with ES lower by 0.05%.  ES put in a tall green marubozu today that significantly sliced right through the 200 day MA in a move reminiscent of the end of last May.  It also provided us with a bullish RTC trigger and brought us off oversold.  However, what I said about the Dow holds here too: after a big move up, watch for ES to take at least a one day breather.

ES daily pivot: Tonight the pivot jumps from 1353.50 to 1375.83.  With ES little changed in the overnight, this now puts us a lot closer to the new number, but unless we break under it, that's still bullish.

Dollar index: Last night I wrote "I'd say the dollar is ready to move lower" and today it finally did, losing 0.48% in a move that gapped down back below its 200 day MA and putting some distance from it for the first time in six sessions.  But even that left the indicators still just in overbought territory so I'd say the dollar could move lower again Tuesday.

Euro: Today the euro negated Friday's bearish engulfing pattern with a big gain that stopped just short of its 200 day MA, closing at 1.2811  Then after gapping down at the open this evening, it began climbing again and it's current level of 1.2803 is just enough to get it back into the new rising RTC.  Today's gains did bring us into overbought territory but without a reversal candle or RTC trigger, I'd hesitate to call the euro lower just yet.

Transportation: Recall that last night we had two reversal candles on the trans: a doji followed by a strong hammer.  And today the hammer came down as the trans jumped 1.89%.  But even that was only enough to bearly get us off oversold so I'd say we still have a fair bit of room to run on Tuesday.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

April      7      9      2                    .438
May       10      7      3           2        .632  
June       8      6      6           1        .600     632
July      11      2      6           1        .857     917
August     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19 
October    8      5      8           0        .615     208
November   5      3      4           0        .625     249

     And the winner is...

Although there are still no real bearish signs in the charts again tonight, I'll note that the two days leading up to Thanksgiving are historically fairly weak, and given the big run we had on Monday the pattern has been for the market to take a pause the following day.  So I'm going to call Tuesday uncertain, not because I can't tell which way we're trending but because I'm expecting a small-range doji day.  I'll bet a lot of traders are already wrapping things up if not simply taking the whole week off.

ES Fantasy Trader

Patience was rewarded again today and although I only took a slim 0.75 point profit, it felt like a much bigger win since I was down over $13,000 at one point on Friday  Still, this trade had run its course so I decided not to press my luck.

Portfolio stats:  the account now rises to $197,750 after 71 trades (56 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside.  I don't think there's much of an edge here and I'm not expecting any big moves on Tuesday anyway.

SLD    10    false    ES    DEC12 Futures     1377.00    USD    GLOBEX    11:04:17   
BOT    10    false    ES    DEC12 Futures     1376.25    USD    GLOBEX    NOV 14 00:52:49   

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1353.50.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remaining long at 1376.25.

Recap

Well the Dow finally eked out its first meaningful gain in seven session on Friday.  I'd been waiting for this, though it's not clear whether this rally was technical or generated by Boehner's comments to the press.   Either way, it was good news for the markets.  So let's see now how this takes us into another holiday-shortened week as we get ready for Turkey Day.

The technicals (daily)

The Dow: After hitting an RSI of practically zero as I noted last week, the Dow finally closed up 46 points on Friday.  It doesn't seem like much but it was enough to form a bullish engulfing candle and bring the indicators (finally) off their extreme oversold levels.  And even more importantly, it brought the Dow out of its new descending RTC that I drew after last week's dojis, for a bullish setup.  So overall, this chart's not looking too bad tonight.

The VIX:  After an inverted hammer warning just above the 200 day MA on Thursday, the VIX gave it up on Friday dropping 8.78% to return near the bottom of its recent range.  With no obvious trends, this chart is unclear tonight.  However, the weekly chart is now looking rather bearish for the VIX.

Market index futures: Tonight all three futures are up at 1: 41 AM EST with ES higher by 0.22%.  On Friday ES gave us a powerful hammer that just managed to close outside its descending RTC for a bullish setup.  With good follow-through in the overnight and indicators that have now clearly bottomed at oversold, I'm liking the looks of this chart for Monday.

ES daily pivot: Tonight the pivot rises from 1351.83 to 1353.50.  We broke above the old number after Boehner's comments on Friday and remain above in the overnight tonight, so that's all a good sign.

Dollar index: On Friday the dollar gave us an inverted hammer sitting right on its 200 day MA/  Coupled with very highly overbought indicators, I'd say the dollar is ready to move lower this week.

Euro: And also on Friday the euro gave up its earlier gains, somewhat to my surprise, with a bearish engulfing candle.  However, in the Sunday overnight, it is climbing again and at 1.2768 is high enough to regain the rising RTC.  With indicators still rising, I'd say the euro's going higher on Monday.

Transportation: After a doji on Thursday, the trans gave us another reversal candle in the form of a classic hammer on Friday.  With both of these trading outside the long-running descending RTC, we now have a good bottoming sign.  I'd wager the trans are going higher this week.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

April      7      9      2                    .438
May       10      7      3           2        .632  
June       8      6      6           1        .600     632
July      11      2      6           1        .857     917
August     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19 
October    8      5      8           0        .615     208
November   4      3      4           0        .571      41

     And the winner is...

Tonight, the general tone of the charts is all positive.  And with Emperor Nerobama making positive noises from Bangkok, a visit to which he apparently thought was more important that our fiscal problems back home, I'm not seeing any real reason to be bearish tonight.  So I'm calling Monday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we remain long at 1376.25.  I still have hopes for this trade.