Friday lower

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

• Friday lower, low confidence..
• ES pivot 1399.33.  Holding below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader going short at 1395.00..

Recap

The Dog Days of Summer

I wasn't real confident about it, but I did think the Dow would close higher today.  It turned out to be just another sleepy low-volume nothing mid-summer day with the Dow losing 10 points and the SPX up by just over half of one point.  Clearly, this market is stuck in the doldrums.  We now scan the horizon for any signs of wind, whether from the north or the south.

The technicals (daily)

The Dow: Another day, another doji.  This one though nudged the indicators back up almost to overbought again.  And it also gave us one more failure to cross resistance at 13,175.  It's frustrating, but we know this kind of drifting (I hesitate to even call it consolidation) can go on for days, like back in February when we got 10 sideways days in a row before a big break.  Doing some curve-fitting to the daily chart, it does appear that we may be getting ready for a move soon, and it may be to the downside.

The VIX:  Today the VIX moved lower again, but this time only by 0.26% on an inverted hammer.  That's a reversal warning, but one that requires confirmation.  I continue to think we're due for a higher VIX soon but this isn't really quite the setup yet.

Market index futures: Tonight all three futures are lower with ES down 0.37% at 1:22 AM EDT.  After two days of kitty corner dojis we may be about to see a break.  ES at 1395 is sitting right on the edge of the rising RTC for the first time in five days.  Also, the indicators have now turned downward off overbought levels, though the stochastic remains threaded.  But this chart now seems to have a different flavor than the last few days and to me it tastes a lot like ... bear.  Yum!

ES daily pivot: Tonight the pivot rises from 1396.33 to 1399.33.  But with ES trending lower since 7 PM, we broke decisively under the old number at 11 PM and are now even further under - a bearish sign.

Dollar index: Here we got a second gap up spinning top in a row, this one green as the dollar gained 0.33% on the $USDUPX.  This also served as the bullish RTC trigger.  And the stochastic bullish crossover is now complete, so everything seems to be lining up for continued higher on Friday, which would be bad for stocks.

Euro: Meanwhile in euro-land, the currency continues a two day slide and confirms yesterday's bearish stochastic crossover.  We also now have a bearish RTC trigger here too.  This meshes nicely with the rising dollar and is also bad news for stocks.

Transportation: Perhaps the most telling chart tonight is the trans.  After attacking the 200 day MA for three straight days, the trans appear to have simply given up, putting in what is now two straight red candles in a row, with today's down 0.54%.  Today's also completed the bearish stochastic crossover.  With these sorts of declines, I'd expect the Dow to take notice and start following suit any day now.


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  3      2      1           1        .667      64
     And the winner is...

Zzzz... zzz...zzzzz...huh?  Oh 'scuse me, I must have dozed off there.  This less-than-thrilling action of the past few days is just putting me to sleep.  But help may be on the way!  It sure looks like my bearometer is starting to indicate some gathering storm clouds on the horizon, particularly in the futures and the $TRAN.  And also Dr. Copper has been making smaller and smaller gains for three days now and finally hit a resistance line today.  And I note that the SPX hi-low index ratio hit 100 today, a level that usually precedes a fall.  Finally I'll add that the TLT put in a big hammer today after five days of losses and is also just about to make a bullish stochastic crossover.  To me that spells money about to head for bonds and away from stocks.  Therefore all things considered (and I always do), I am calling Friday lower.

ES Fantasy Trader

Portfolio stats: the account still remains at $174,875 after 56 trades (43 wins, 13 losses) starting from $100,000 on 1/1/12. Tonight we're going short at 1395.00.  I missed the ideal entry point earlier this evening first due to dinner and then the Olympics, but I think there's still more money to be made on this trade on Friday.  I believe the risk/reward profile now favors the downside.

CUA (Commonly Used Acronyms)

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

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

Thursday maybe higher

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

• Thursday higher, low confidence..
• ES pivot 1396.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader stranding aside.

Recap

Last night I was figuring that we'd go higher if ES could break above its pivot in the morning.  It took a bit longer than I expected but after several failed attempts, it did break through at 11:10 AM and the Dow closed higher - by a whopping 7 points in a snoozer of a session.  Today's Olympic volleyball games were much more exciting than the market.  Heck, the Olympic thumb-wrestling loser's match was more exciting than this action was.  But it may just be setting us up for some interesting times.  Let's see if the charts agree..

The technicals (daily)

The Dow: OK, the Dow, somewhat surprisingly, continued grinding slowly higher today to gain 0.05% on a small spinning top.  That's the third bearish daily reversal candle in a row.  And the past two were rejected like a bad volleyball hit.  Not only that, but the indicators have now all come down off overbought even as we continue to move higher.  The Dow has now broken past resistance at 12,500, 13K, and 13,150.  There is now no more resistance until 13,260 which is coincidentally also the upper BB.  With the Dow drifting higher like a knuckleball float serve (OK, I've been watching too much volleyball), I am hesitant to call a top until I see the market actually go lower.  And right now I'm not seeing any evidence of that on this chart.

The VIX:  While the Dow and SPX barely budged today, the VIX dropped 4.19% on a tall red candle that's forming a bullish megaphone pattern.  With its indicators now quite oversold, I'd be inclined to expect this pattern to break out to the upside in a day or two.  I note too that the VIX at 15.32 is now getting close to a multi-year support line at 14.50.

Market index futures: While the other charts are looking fairly gloomy, all three futures are in the green at 1:20 AM EDT with ES up a respectable 0.36%.  Like the Dow, ES has been giving off hints of going lower for days now, but then it just goes higher.  And ES just broke through some resistance at 1394 yesterday too.  I'm not playing this game anymore.  I'm afraid I now need to see ES actually go lower before calling an end to this uptrend.

ES daily pivot: Tonight the pivot ticks up from 1395.92 to 1396.33.  With ES taking off earlier this evening, we're now much further above the pivot than before, a positive sign.

Dollar index: Today the dollar gained 0.23% on a small red gap-up spinning top.  But more importantly, it broke out of its descending RTC for a bullish setup and its stochastic is about to form a bullish crossover.  I'd not be surprised to see the dollar move higher Thursday, implying stocks lower.

Euro: Meanwhile the euro lost ground today on a red candle that confirmed Tuesday's bearish spinning top.  However, it's getting a boost in the overnight continuing a rally that began at 2 PM Wednesday.  This is making it difficult to say anything meaningful about where the euro might go Thursday.

Transportation: Today, the trans failed on the 200 day MA for the fourth straight session and in fact moved lower by 0.33%.  This is about the most bearish indicator we've got going at the moment.


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  3      1      1           1        .800      74

     And the winner is...

I'm not sure why the market continues to insist on going up lately, but like the Fed, the tape is another one of many things you should not fight in this arena.  So as long as we remain inside the rising RTC and continue to put in higher highs and lower lows, I really have no choice but to call Thursday higher.  And I say this not so much because the market has a lot of reasons to go higher, but more because I don't yet see many reasons to go lower (the trans being the one exception right now).  This is the kind of call that will be wrong eventually, but for the time being, I guess you just have to go with the flow.  That's all she wrote.

ES Fantasy Trader

Portfolio stats: the account remains at $174,875 after 56 trades (43 wins, 13 losses) starting from $100,000 on 1/1/12. Tonight I'm going to stand aside once again because although the market continues to grind higher, I think the risk/reward point has now moved against us.  Anyway, there's not much money to be made on these small range days.  The Night Owl does not play penny ante.

CUA (Commonly Used Acronyms)

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

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

Wednesday lower unless pivot crossed

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

• Wednesday lower unless ES breaks above pivot, low confidence..
• ES pivot 1395.92.  Holding under is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader stranding aside.

Recap

Wow - the Night Owl went for the gold last night but came away with the lead medal instead.  Virtually every technical idea I had about the market today was wrong.  We did not go down today, instead the Dow gained 51 points in another funny low-volume dome shaped session influenced by - who knows, Angela Merkel, some Fed member, whatever.  Clearly, something has changed over the last two days and I'm going to try and get to the bottom of it.

The technicals (daily)

The Dow: Yesterday's bearish shooting star was not confirmed today.  Oddly, we got something of an echo of that in a similar looking candle with an upper wick just touching the upper BB but a longer real body.  The indicators remain confused and with the rejection of yesterday's star, I'm not seeing the bearish case here anymore.

The VIX:  Support at 15.50 held today and the VIX gained 0.25%.  The stochastic is now quite oversold and looking ready to form a bullish crossover in the next few days.  So this is one point I did get right today and I'm expecting the VIX to move higher again on Wednesday.

Market index futures:Like everything else tonight, the futures are giving mixed messages.  NQ is up but ES and YM are down, with ES lower by 0.14% at 1:33 AM EDT.  I do see a developing pattern here though.  It's starting to resemble 6/29-7/5 where a big gain was not immediately followed by a leg down but rather a few more days of small momentum induced gains before falling.

ES daily pivot: Tonight the pivot rises again from 1391.00  to 1395.92.  The pivot action is really similar to last night, with the pivot rising just up over the current ES level for a bearish indication.  But that didn't work out too well today.

Dollar index: The dollar fell today by 0.07% but did it on a green candle.  Nevertheless, the current downtrend remains intact.  The indicators are confused on this chart and frankly, so am I.

Euro: After two days of doji's the euro in the overnight is forming, yes, yet another doji.  It just seems to be hanging on top of last Friday's big gain.  Just looking at this I want to say what goes up must come down.  Whether that will be on Wednesday isn't clear.

Transportation: The trans gained 0.20% today on a second shooting star on increased volume that once again failed to break above the 200 day MA.  This is still looking bearish to me.

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

 30  7/23       33         42        -     1363

 31  7/30       43         22        +     1386 

 32  8/6        52         28        +     1391 

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 7/9 was wrong (again), the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 27 .  After an impressive start this year, my monthly calls have now been wrong for 9 weeks running.   For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.


Interestingly, bullish sentiment has now risen to the second highest level of the year.  Only the week of February 6 was greater.  Contrarian bearish?  After February 6th, the SPX went on to rise for six more weeks.



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  3      1      1           0        .750      74
     And the winner is...

Well you know, the charts tonight are looking an awful lot like last night.  My call then was for lower and I got fooled badly.  But now I'm thinking I might have been really more just a day early than flat-out wrong.  Still, this market doesn't seem to be committed to turning over just yet.  So what I'm going to do is make a conditional call.

If ES stays below its pivot by the open Wednesday morning, then we're closing lower.  But if ES breaks above the pivot and holds there, we'll close higher.  This tactic would have worked nicely today and I think it's safer than just calling Wednesday lower, given the fact that with similar charts, that did not work today.

And do note that the recent pattern of cycles of five or six days up followed by five or six days down going back to June 13th now seems to be breaking down.  All the more reason to be cautious right now.

ES Fantasy Trader

Well they can't all be winners.  I bailed on this trade for an 11 point loss.  In retrospect, I exited too early rather than exercising the patience that generally serves me well.

Portfolio stats: the account falls to $174,875 after 56 trades (43 wins, 13 losses) starting from $100,000 on 1/1/12. Tonight, with the market looking just like it did last night and still smarting from today's loss, we're going to stand aside.  Fool me once, etc.

BOT    10    ES    false    SEP12 Futures     1401.50    USD    GLOBEX    11:44:41    

SLD    10    ES    false    SEP12 Futures     1390.50    USD    GLOBEX    00:51:32    

CUA (Commonly Used Acronyms)

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

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

Tuesday lower

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

• Tuesday lower, low confidence..
• ES pivot 1391.00.  Holding under is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader going short at 1390.50.

Recap

Last night I called Monday's close as "uncertain".  But there are two different types of uncertainty - one in which you expect the market to move but are not sure which way, and the other, where I wrote "I expect little change [on Monday]".  In the latter case, there's not really much point in calling a close "higher" or "lower" when there isn't going to be much price movement.  And I think today fit the bill, with the Dow finishing up just 21 points (and my calls are always for the Dow).  Accordingly, I think I'm going to add this one to the "right" column in my daily accuracy section but I won't accumulate the Dow points since I didn't call a direction.  Anyway, let's see now where Tuesday may go.

The technicals (daily)

The Dow: Today's small gain was in the form of a long shooting star - a bearish reversal pattern, coming as it did at the top of a big up-day and just touching the upper BB.  And RSI actually peaked on Friday and has begun moving lower, still overbought.  Plus the stochastic's attempted bullish crossover was canceled and the stochastic is now all threaded out.  So overall, this chart looks ready to roll over.

The VIX:  Of the VIX, last night I wrote "I'm not seeing much more downside left".  Turns out there wasn't any downside left and the VIX gained 1.98% on a little inverted hammer.  But that was enough to hook RSI upward from oversold and drive the stochastic into a position from which to form a bullish crossover Real Soon Now.  And the futures's stochastic did just form a bullish stochastic crossover on a double hammer pattern today.  Verdict: more upside to follow.

Market index futures: Tonight all three futures are actually up, but by the slimmest of margins, with ES up just a single tick at 1:33 AM EDT.  Today's candle was a classic doji with ES closing just one tick below where it opened.  Coming as it did at the top of Friday's tall green candle, there is, like the Dow chart, the suggestion of lower to come.  RSI and OBV have both already started down from overbought levels.

ES daily pivot: Tonight the pivot jumps from 1379.83 to 1391.00 even.  Because of this we just broke below the new number.  Unless ES can break back above by morning, this is a negative sign for the market.

Dollar index: The dollar put in a small hammer on Monday entirely below Friday's big drop, at least suggesting the possibility of a reversal on Tuesday.

Euro: Meanwhile the euro put in a totally classic bearish long-legged starthat closed right on the upper BB.  The follow-through in the overnight so far seems to be guiding lower and the euro just broke under its own pivot.  This chart suggests lower to come.

Transportation: Always worth watching, the trans today dropped 0.08%, seemingly stymied in their attempt to cross the 200 day MA on a long shooting star, just like the Dow's.  The indicators are kind of in disagreement, no doubt as aftermath to Friday's big run-up, but I'm not liking the combination of 200 MA failure and the shooting star.

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  3      0      1           0       1.000     125


     And the winner is...

I dunno - tonight I'm just not feeling the love, baby.  I'm seeing a bunch of doji's out there and indicators at extremes that suggest to me that the market's going to be wanting to retrace some of last Friday's big gains.  Accordingly, I'm calling Tuesday lower.  I also took out some SDS again today at 14.76 to hedge my longs.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $180,375 after 55 trades (43 wins, 12 losses) starting from $100,000 on 1/1/12. Tonight, with the market looking tired, we go short at 1390.50.

CUA (Commonly Used Acronyms)

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

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

Monday uncertain

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

• Monday uncertain.
• ES pivot 1379.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

It really wasn't very clear to me last Thursday night which way the market might go Friday as there were signs pointing both up and down.  Turns out Mr. Market chose to go up - big time with a 217 point pop in the Dow that completely canceled all the negative indications we were seeing.  So just like the last time we had a big up day like this the question is, was this a one-off or is there more in store?  Read on...

The technicals (daily)

The Dow: Friday's jolly green candle simply smashed through the descending RTC for a bullish setup and as a bonus, reclaimed the 13K level.  It also left us about to form a bullish stochastic crossover from a high level.  I've mentioned that this unusual pattern can be a good trend change indicator.  There is now resistance at 13,100 and the upper BB at 13,151.

The VIX:  Corresponding to the market's gains, the VIX on Friday took a big gap down with a small red candle that left it just above support at 15.5.  This move just brought the indicators to oversold, though there's surely some distortion here.  In short, I'm not seeing much more downside left after Friday's big move.

Market index futures: All three futures are running higher at 1:37 AM EDT with ES up just a bit at +0.04%.  However, after Friday's big move, there's no real follow-through forming and ES is just meandering right now.  We're also now back to the upper BB, which has been well-respected all year so far.  Further upside would seem to be limited here.

ES daily pivot: Tonight the pivot rises from 1364.75 to 1379.83.  With ES little changed in the overnight, we're still comfortably above the new number, so that's bullish.

Dollar index: The dollar's megaphone pattern broke to the downside on a long red candle, contrary to what I was expecting.  This move was enough to bring us to the lower BB.  While the stochastic looks to be forming a bearish crossover, this may be an artifact and I would not be surprised to see the dollar retrace some of Friday's loss in the next few days.

Euro: Like the Dow, the euro had a big day on Friday and closed outside its descending RTC on high volume for a bullish setup.And it is indeed drifting slowly higher in the overnight.  My only concern here is that the euro has moved all the way up to its upper BB now and if you look at the chart, it has really respected this line all year long so far.  I'd say a lower euro is in the works, maybe not Monday, but at some point this coming week.

Transportation: Last week I mentioned how the trans didn't spend more than two days below the 200 day MA lately and that's just what happened again.  Big down day Wednesday, doji Thursday, and then boom, Friday popped right back through the 200 MA before closing just a hair below it.  Stochastic is setting up for a bullish crossover - nothing really negative here.


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  2      0      1           0       1.000     125


     And the winner is...

The pattern all year so far has been for big up moves to be followed by small doji days and that's what I'm expecting for Monday.  With no economic news on the table, it's hard to see where the short-term push for higher prices will come from.  We're also now technically right up against a number of BB's from which reversals usually come.  So I'm going to call Monday uncertain, not because I have no idea where we're going, but because I expect little change.  It would really be splitting hairs to try to call this one higher or lower.  I don't really like doing this two days in a row, but I have to call 'em like I sees 'em.  If I really had to guess, I'd say we might close a bit lower, but that's just a guess.

ES Fantasy Trader

Portfolio stats: the account the account now rises to $180,375 after 55 trades (43 wins, 12 losses) starting from $100,000 on 1/1/12. With no real evidence for a tradeable move on Monday, I'm just going to stand aside again tonight.

CUA (Commonly Used Acronyms)

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

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

Friday uncertain

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

• Friday uncertain.
• ES pivot 1364.75.  Breaking above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

We got the downside continuation I was expecting today with the Dow shedding another 92 points.  Friday could be tricky, with more employments numbers coming out.  We can't know what they're going to be, but we can look at the charts and see if we can figure out how to serve an ace on Friday.

The technicals (daily)

The Dow: Today's candle looks almost, but not quite like a hammer.  While it is tempting to read positive signs into this, I'd be careful.  The stochastic, which has been turning in a gold medal performance since June 20th, continues its move from overbought to oversold, implying that the selling here isn't over yet.

The VIX:  Last night I wrote "I'd favor continued upside here on Thursday" and the VIX gave us just that, down 7.33% on a long red candle.  This short-circuited the stochastic bullish crossover and the stochastic in fact now looks poised to execute a bearish crossover from a low level.  This really bears watching because it often presages strong moves.  For example, on May 14th, we got a bullish crossover form a high level and the VIX went on to go from 21.87 to just over 25 in the next four days.  The idea here is that we could conceivably see more downside to the VIX over the next few days which would be positive for stocks.

Market index futures: Tonight we have another mixed market.  NQ and YM are actually up a bit but ES is down one tick at 1:08 AM EDT.  Today's candle was a broad spinning top that continued the now three day downtrend.  Interestingly, I was not able to fit a good RTC to this decline and ES actually staged a rally from 2 PM right into the close.  And it's only been wandering around the flat line since then, almost like the bears have suddenly gone into hibernation.  Ad as I write this, ES has now turned positive - by one tick.

And while RSI remains quite overbought and the stochastic continues lower, momentum, and OBV have actually turned higher.  With the overnight candle developing as a doji, there does seem to be some indecision in the air - more than one would expect from looking at the past three days alone.

ES daily pivot: Tonight the pivot drops from 1373.25 to 1364.75.  With ES having posted some afternoon gains, this drop now leaves us just a couple of points below the new number - definitely within striking distance.  Whenever we're this close to the pivot, it pays to pay attention.  Breaking above it before the open would be bullish.

Dollar index: Wow - we have another megaphone (diverging triangle) pattern developing in the dollar, which put in a 0.33% gain today on a tall green candle.  These triangles usually resolve in the same direction they were entered form, so in this case we should be due for further gains in the dollar, which would be bad for stocks.  The stochastic, which just finished a bullish crossover, supports this idea.

Euro: Meanwhile, the euro ended the day lower on a crazy red candle with a tall upper shadow.  It has now clearly broken down from its support at 1.2250and is continuing to drift lower in the overnight.  The indicators are all only about halfway down from overbought, so more downside could be possible here on Friday.

Transportation: An interesting development in the trans today - while the Dow dropped 0.71% the trans fell just 0.05% and formed a tall dragonfly doji that nearly touched the lower BB, co-located with support at 4935.  There's at least a hint of a turn-around on this chart.

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  2      0      0           0       1.000     125

     And the winner is...

Dow hourly

While the overall chart patterns continue to look quite bearish, I'm concerned about the lack of follow-through to the downside in the overnight futures, as well as this afternoon's market rally.  In fact, if one draws the RTC on the Dow hourly chart, we get a nice bullish setup.- check it out.  The 3 PM bar is the setup and the 4 PM "tail" is the trigger.  (The same thing is visible on the hourly ES chart which of course continues past 4 PM).

So tonight we have some pretty strong technical reasons to go higher and some good reasons to go lower.  There seems to be considerable indecision in the air.  The TLT formed a doji and its stochastic is all knotted up.  I'm afraid this one is too hard for me.  Logic would dictate we're going lower again on Friday, but something doesn't feel right here.  I'm afraid I'm just going to have to call Friday uncertain.  The best I can say is to watch the ES pivot Friday morning.  If we can break above that, we might actually go higher.

ES Fantasy Trader

It was looking a bit iffy this morning for this trade, but patience paid off once again for a 15.5 point gain.  I pulled the trigger just before lunch when it looked like ES was breaking out of its descending RTC.  With so much uncertainty surrounding recent developments in Europe, I decided that there was no point in being an oinker about it  I left a little on the table, but not much.  Although I still think there's more downside ahead, it never hurts to lock in gains.  Tonight, with our earlier momentum seemingly gone and some real mixed signals, I'm just going to stand aside and watch the Olympics instead.

Portfolio stats: the account the account now rises to $180,375 after 55 trades (43 wins, 12 losses) starting from $100,000 on 1/1/12. 

BOT    10    ES    false    SEP12 Futures     1358.00    USD    GLOBEX    11:26:58   

SLD    10    ES    false    SEP12 Futures     1373.50    USD    GLOBEX    AUG 1 01:18:10   


CUA (Commonly Used Acronyms)

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

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

Thursday lower

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

• Thursday lower, low confidence.
• ES pivot 1373.25.  Holding above is bullish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader holding short at 1373.50.

Recap

I'll admit I was a bit surprised at the big pop out the gate this morning, though now I'm wondering if this had anything to do with the, ahem, "trading irregularities" I read about in an alert from my broker.  In any case, those issues were soon resolved and the Dow ended going lower as I had originally expected, closing down 38 points and establishing a new downtrend.  I guess Mr. Market didn't really like what the Fed had to say.  Question now is whether this will carry through to Thursday.  There has to be a clue in here somewhere.

The technicals (daily)

The Dow: The Dow's solid red candle was bearish on the face of it, particularly when coupled to the stochastic which has now completed its bearish crossover.  Nothing here to suggests anything but further downside.

The VIX:  Meanwhile, the VIX did go higher today, also as I expected, but put in a tall doji.  However, with a bullish stochastic crossover now complete, I'd favor continued upside here on Thursday.

Market index futures: Tonight all three futures are running higher with ES up 0.24% at 1:09 AM EDT.  Today's ES candle was also a doji and the overnight action seems to be suggesting a reversal.  However, the indicators are all quite overbought and that suggests more downside to come.

ES daily pivot: Tonight the pivot drops from 1377.33 to 1373.25.  We just broke above the new level at 12:30 AM.  If this holds into the morning, it would be bullish.

Dollar index: The dollar took off after the Fed announcement today to gain 0.57%, breaking out of its recent consolidation to the up side.  With its indicators all depressed, there's no reason it couldn't go higher again Thursday, and that's bad for stocks.

Euro: Meanwhile, the euro moved lower again today, though doing it on a green candle.

Transportation: After hitting their 200 day MA on Tuesday, the trans followed through on their recent pattern by moving lower again today.  And while the Dow dropped just 0.29%, the trans fell a solid 2% on a tall red candle that was also good for completing a bearish stochastic crossover.  With the lower BB down to 4933, there's still more downside possible here.

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  1      0      0           0       1.000      33


Performance:

Here are my performance stats for the first seven months of 2012.  The first two columns are for my trading account.  The next, "ESFT", is the ES Fantasy Trader.  Following that I've now added the results for my IRA.  The last is the Dow, my reference benchmark that I try to match or beat.

 Date    Trading, Month  Tr. YTD  ESFT YTD   IRA YTD   Dow YTD

1/31/12       7.41%        7.41%   -0.50%     6.18%     3.41%

2/29/12       3.67%       11.35%    7.88%     9.02%     6.02%

3/31/12       1.76%       13.31%   29.88%    10.05%     8.16%
4/30/12       2.35%       15.97%   41.75%    10.90%     8.17%

5/31/12      -1.92%       14.23%   26.63%     4.91%     1.45%

6/30/12       4.33%       19.17%   40.38%     2.80%     5.44%

7/31/12       2.96%       22.69%   76.00%    10.98%     6.49%

And for those who might be interested, here's a daily graph of my trading account balance so far this year (I tried, but failed to get Excel to draw vertical lines on month boundaries).  This corresponds to a Sharpe ratio of 0.32.


     And the winner is...

Tonight I'm seeing some confusion in the charts, probably reflecting uncertainty over whatever the heck the ECB is planning on saying Thursday.  But just as the chatter was right about the Fed today, the chatter I'm hearing now is that the ECB is going to disappoint the market.  And since there are also enough technical signs to warrant lower stocks, I'm going to call Thursday lower.

ES Fantasy Trader

Portfolio stats: with no trade last night the account the account remains at $172,625 after 54 trades (42 wins, 12 losses) starting from $100,000 on 1/1/12.  Tonight we remain short at 1373.50.  I'm still a bit nervous about doing this in the face of upcoming ECB news, but we'll see.  I contemplated getting out of this trade Wednesday afternoon, but I'm going to gamble that there's more downside in store on Thursday.  I'll admit that this strategy is riskier than I usually play.

CUA (Commonly Used Acronyms)

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

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

Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1373.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going short at 1373.50.

Recap

Today the Dow lost 64 points amid signs that we may have put in a short-term top.  With pronouncements due on Wednesday from the Fed, let's check the charts to see what may be in store for us.

The technicals (daily)

The Dow: Today's solid red candle confirmed yesterday's doji as a reversal making it look like the top is in on this chart.  And volume, while lower than average, was higher than Monday.  In addition, today's loss took us right out the rising RTC and that's a bearish setup.  And finally, the stochastic is just about to execute a bearish crossover.  This chart looks ready to go lower.

The VIX:  As I suspected, the VIX did indeed move higher today, gaining 5% on a gap up green candle.  With a stochastic just forming a bullish crossover now, there's a good chance to go higher Wednesday here again, a negative for stocks.

Market index futures: The futures are mixed tonight, with NQ and YM up a bit but ES down just a tick at 1:45 AM EDT, although it's been drifting higher since 10:30 PM, retracing about half its decline in the final hour of regular trading today.  The picture here is similar to the Dow: doji followed by a red candle lower, RTC exit, and overbought indicators.  And here the bearish stochastic crossover is now complete.  This chart really looks ready for more downside action on Wednesday.

ES daily pivot: Tonight the pivot drops from 1381.25 to 1377.33.  With ES just about unchanged as I write this, we're still below the new level, so that's bearish. 

Dollar index: Another doji today, this one from the dollar which has shown support right around 57  on the USDUPX.  Its stochastic is just about to form a bullish crossover suggesting a move higher on Wednesday.

Euro: The euro moved higher today, continuing what is now a three day consolidation in the range of 1.2273 to 1.2322.  While the euro has now entered overbought territory, there's no sign right now that this consolidation will break on Wednesday.

Transportation: The trans dropped 0.47% today on a red candle stopped only by the 200 day MA at 5088.  Three of the last four times this happened, the trans ended the next day below the MA.


Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632  
June    8      6      6           1        .600     632   +$330
July   11      2      6           1        .857     917

     And the winner is...

With the rumor mill not expecting a dramatic announcement from the Fed on Wednesday and all the charts looking about ready to roll over, I'm going to have to give this one to the bears and call for a lower close Wednesday.  I note also that while the first trading day of the month is usually positive, that's not been the case for the 1st of August.

ES Fantasy Trader

Portfolio stats: with no trade last night the account the account remains at $172,625 after 54 trades (42 wins, 12 losses) starting from $100,000 on 1/1/12.  Tonight we go short at 1373.50.  I'm a bit nervous about doing this in the face of upcoming Fed news, but we'll see.  The technicals really look like we're ready to move lower.

CUA (Commonly Used Acronyms)

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

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

Tuesday could go higher

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

• Tuesday higher, low confidence.
• ES pivot 1381.25.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I wrote "we're due for a doji day or even a small loss following such an impressive run."  This time I was right - we got a tiny 3 point loss on the Dow forming a small doji.  But these things generally require confirmation.  Is there any in the charts?  Let's scout out the opposition as we go for the gold.

The technicals (daily)

The Dow: Today's doji ended right on the upper BB.  However, the stochastic (which I ignored yesterday and lived to regret that) has yet to form a bearish crossover.  Therefore it is too early to call the Dow lower based solely on this chart.

The VIX:  While I thought the VIX might go lower on Monday, it instead gained almost 8%.  Now one has to think that the VIX might go higher on Tuesday.

Market index futures: Tonight all three futures are running in the green by non-trivial amounts with ES now up 0.40% at a:21 EDT, keeping us inside the latest rising RTC.  This is basically canceling today's doji and indicating the potential for more upside on Tuesday.  Apparently, traders are expecting some positive news from Uncle Ben and the Europeans (hey that would make a good band name).

ES daily pivot: Tonight the pivot bumps up from 1373.42  to 1381.25.  We were above before and thanks to the continuing overnight gains in ES, we're still above the new number, so that's a positive sign for Tuesday.

Dollar index: Last night this chart looked pretty indeterminate. Today confirmed (sort of) yesterday's spinning top as the dollar gained 0.12% but did it on a gap-up red candle.  Still, with indicators now having bottomed near oversold and the stochastic getting ready for a bullish crossover I'd say we're within a day or two of some more upward dollar action.  Ergo, bad for stocks.

Euro: Technically, the euro looks ready to move lower on Tuesday, having now exited its rising RTC and its stochastic just completing a bearish crossover.  However, I think the financial news this week is going to trump the technicals for this currency.

Transportation: While the Dow was nearly unchanged today, the trans dropped 0.28% on a red spinning top.  There's at least the hint of a downward move here but one that requires confirmation.  Also, we're now back above the 200 day MA which served as support today and likely will do so on Tuesday too.

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

 29  7/16       44         32        -     1357

 30  7/23       33         42        -     1363

 31  7/30       43         22        +     1386

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 7/2 was wrong (again), the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 27 .  After an impressive start this year, my monthly calls have now been wrong for 8 weeks running.   For the record, I switched my vote to bullish this week, for the first time since April 30th, based on my reading of the SPX monthly and weekly charts.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632  
June    8      6      6           1        .600     632   +$330
July   12      1      6           1        .929     984
“You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct.”  

               - Warren Buffett


     And the winner is...

Sunday night I tried to anticipate the top and paid the price for it.  With the charts not really looking any closer to topping tonight than a day ago, no really bearish signals in sight, and with the futures showing some strong gains, I'm going to have to call Tuesday higher.  But I have to add the caveat that I think the next few days are going to be more news-driven than technically directed.  That's just how it is sometimes.

My trades today: bought OXF at 8.90, sold DHY at 3.18 and bought RSO at 5.43.

ES Fantasy Trader

Tonight the more prudent course of action seems to be to simply give up on last night's short attempt, taking a 6.75 point loss rather than run the risk of some announcement from the Fed or the Europeans running the market any higher later this week.

Portfolio stats: the account falls to $172,625 after 54 trades (42 wins, 12 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside in the expectation of coming uncertainty Tuesday.

BOT    10    ES    false    SEP12 Futures     1384.25    USD    GLOBEX    00:52:43   

SLD    10    ES    false    SEP12 Futures     1377.50    USD    GLOBEX    JUL 30 01:48:23   


CUA (Commonly Used Acronyms)

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

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

Monday maybe lower

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

• Monday lower, low confidence.
• ES pivot 1373.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going short at 1377.50..

Quote of the Day

“You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct.”  

               - Warren Buffett

Recap

OK, I know I said I was going to take two weeks off to watch the Olympics, but who am I kidding - I need to watch the market too.  I admit it - I'm hooked.  I may omit some of the usual details, but for now at least it looks like I'll keep the usual schedule.

Anyway, I was surprised at the extent of Friday's gains which leave us at a number of extremes now but not necessarily reversal indications

The technicals (daily)

The Dow: Last Thursday I said a big up day in the Dow was often followed by a doji.  That obviously didn't happen.  But now we've got two big up days, the second of which blew right past the 12,950 resistance line, the 13K psychological line and the upper BB too.  At the risk of repeating myself, I'm going to say again that we're due for a doji day or even a small loss following such an impressive run.

The VIX:  The VIX dropped again Friday but has no support in sight.  More downside possible here Monday.

Market index futures: All three futures are in the red Sunday night with ES down 0.34%.  Like the Dow, ES put in two days of outsized gains that took it above its upper BB.  And unlike last Thursday night, tonight there is no continuing upside follow-through and that worries me.

ES daily pivot: Tonight the pivot jumps from 1347.08  to 1373.42.  While this still leaves us above the new number, we're now pretty close.  Once again we have to watch the pivot for a break under.

Dollar index: The dollar gave us a doji Thursday, and then a second, lower one Friday.  But with so much additional news coming out of Europe over the weekend, it's hard to draw any conclusions form this chart.

Euro: After three days of gains, the euro seems to be running out of gas and has been unable to recover from a Friday afternoon slide.  Of all the charts I look at, this one seems the closest to turning bearish on Monday.

Transportation: Unlike the Dow, the trans still seem to have lots of room to run up some more.


Accuracy (daily calls):

Month right  wrong  no call  conditional  batting   Dow
                                          average  points trade

April   7      9      2                    .438
May    10      7      3           2        .632  
June    8      6      6           1        .600     632   +$330
July   11      1      6           1        .923     981

     And the winner is...

Once again, another tricky night full of mixed messages.  The Dow, VIX, and the trans are looking good, the euro is looking poised to move higher which would be bad for stocks, and the ES overnight is bearish.  All things considered though, I'm going to go with the futures which have reversed within a day the last five times they hit their upper BB.  Accordingly, I'm calling Monday lower, though I'm not feeling particularly confident about saying that.  I hope my facts, hypotheses, and reasoning are all correct.

ES Fantasy Trader

Portfolio stats: with no trade last Thursday night the account remains at $176,000 even after 53 trades (42 wins, 11 losses) starting from $100,000 on 1/1/12.  Tonight we go short at 1377.50.  If this trade isn't profitable Monday, I think it will be Tuesday.

CUA (Commonly Used Acronyms)

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

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