Thursday uncertain

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

• Thursday uncertain..
• ES pivot 1402.08.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00.

Recap

Last night's headline was "Wednesday uncertain but bias lower".  That pretty much summed it up as the Dow lost all of seven points today.  With the SPX higher just a bit, it was another mixed day and we remain mired in Nowheresville.  You can get an idea of how slow things are in the Accuracy section below.  August is half over now and I've only collected 60 Dow points.  It's too bad the Olympics wasn't this week instead of the last two.  It's looking like a great time to go on vacation.  Shoot - I could pretty much just copy last night's post here and hit Publish for all the change we saw today but we'll run down the charts anyway to see when and if we might finally see some action. 

The technicals (daily)

The Dow: Absolutely nothing new here.  Another day, and one more doji, making eight reversal candles in a row now.  Aside from the indicators ticking down just a bit, tonight's chart looks just like last night's and the night before, etc.  Still no indication of when this will end.

The VIX:  On the other hand, the VIX traded entirely outside its descending RTC today and even though it lost 1.48%, this was a bullish trigger.  The futures put in a doji but that does not negate the idea that the VIX still has higher to go on Thursday.

Market index futures: Tonight all three futures are up at 1:04 AM EDT with ES higher by 0.16%.  Not much has changed on this chart from last night.  We're now at the top of the recent range but that's still not a breakout.  And four days of sideways action have finally brought us outside the rising RTC.  This will become a bearish setup unless ES can hang onto the1406.25 level on Thursday.

ES daily pivot: Tonight the pivot ticks down from 1402.75 to 1402.08.  With ES gradually drifting higher in the overnight we're now back above the pivot, a bullish sign.

Dollar index: The dollar gapped up 0.22% but did it on a red candle today and that drove it to overbought levels.  Hanging in space as it is now, I have to wonder if it's going to be able to continue higher tomorrow but overall, this chart is too vague to draw any firm conclusions from.

Euro: The euro moved lower Wednesday and seems to be continuing downward in the overnight after a short blip upward t 8 PM.  It is now nearing its recent support at 1.2265 but I don't see anything on this chart suggesting a move higher on Thursday.

Transportation: While there's a lot of waffling going on elsewhere, there's nothing of the kind here.  The trans today gained  a solid 1.19% on a move that finally punched convincingly through the 200 day MA and established a new rising RTC.  With the upper BB still at 5184, I'd say we could still get some more upside here on Thursday.

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

 31  7/30       43         22        +     1386 

 32  8/6        52         28        +     1391  

 33  8/13       43         21        +     1406

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 7/23 was wrong, the S&P now being higher than then. I'm using the column "Accuracy" to track my calls.  So now I'm 16 for 29 .  After an impressive start this year, my monthly calls have now been wrong for 10 weeks running.   For the record, I voted bullish again this week based on my reading of the SPX monthly and weekly charts.


This week both bullish and bearish sentiment declined, indicating more poll participants heading for the sidelines, not quite sure what to make of this confusing market.  The bias remains net long though.


 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  4      3      3           1        .625      60
     And the winner is...

So the sideways action rolls on with still no resolution in sight.  The charts if anything are more mixed tonight than last night.  The trans, the TLT, the futures and the euro are suggesting more upside, the VIX, copper, and the NH/NL index are looking bearish for stocks while the Dow and SPX charts are simply moving sideways.  SPX is having trouble with resistance from the April highs while the Dow is stalled out even lower.  So once again, I'm afraid I have no alternative but to call Thursday uncertain with yet another doji day possible.

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 remain short at 1395.00.  One might be tempted to bail at this point, but with the momentum completely sideways right now, there's no compelling reason to give up just yet.  Patience may prevail in the end.  However, if we get a definitive move to the upside, I will have to consider taking the loss.

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 uncertain but bias lower

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

• Wednesday uncertain..
• ES pivot 1402.75.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00.

Recap

How about that?  Last night I wrote " it's not out of the question that we get yet another small-range doji day of indecision" and that's exactly what we got, with the Dow finishing up just over 2 and a half points and the SPX down just 0.18.  So we remain in the dog days, waiting in Casablanca, or for Godot - heck, I'm running out of metaphors here.  This is getting monotonous.  Let's scan the charts for any sign of a shake-up on the way.

The technicals (daily)

Dow daily

The Dow: Lately, the Dow has been giving a clinic on reversal candlesticks.  Just look at the last seven candles here: shooting star, inverted hammer, green spinning top, red spinning top, green hanging man, red hanging man, and today a perfect doji.  Every one a bearish warning, every one rejected.  And so we remain stuck in a narrow range.  The only difference today is that RSI has now finally started to come down from overbought and the stochastic looks like it may be unthreading itself as a bearish crossover.  But once again, we're going to need confirmation before calling an end to the congestion.

The VIX:  After hitting a five year low yesterday as I noted, the VIX today staged a big comeback with an 8.39% bounce that took it right out of its descending RTC for a bullish setup.  It also sent the RSI and stochastic turning back up from oversold.  This all seems to suggest more upside to follow which would be bad for stocks.

Market index futures: Tonight all three futures are down at 1:12 AM EDT with ES lower by 0.27%.  Today gave us a classic doji, making five straight reversal candles here too.  So far, the new candle developing seems to suggest a move lower, but we've seen this movie before.  At 1398 right now, we're still inside the recent congestion range.  I do note though that RSI has come off its recent 100 readings.  And perhaps of greater importance, we are now trading entirely outside the latest rising RTC and that's a bearish setup.  This is the best case I can make for lower prices Wednesday.  Unless ES can trade back up over 1403 on Wednesday, the bear case will become much stronger.

ES daily pivot: Tonight the pivot bumps up from 1400.25 to 1402.75.  We moved back under the old level after today's close and are now even more below the new number, a bearish sign.  Note also how the pivot is now the same value is the right edge of the RTC.  It's mostly coincidence, but it reinforces the importance of that level.

Dollar index: Today the dollar gained 0.05% but that was enough to create a classic morning star pattern, which is a pretty good bullish reversal sign.  The indicators are also now rising off oversold.  I'd say further gains for the dollar are possible on Wednesday.

Euro: While the dollar gained a bit today, the euro gave us a perfect doji warning that yesterday's bullish RTC setup might not carry through.  And in the evening session so far, it is trading lower which, along with declining indicators suggest that there may be more downside on Wednesday.

Transportation: Last night I mentioned the possibility of a bullish RTC setup here and today the trans obliged with just that, gaining 0.39%.  If we go higher on Wednesday, that would be a bullish trigger, but the indicators seem to suggest downward pressure.  Note too that they tried, but failed to break over the 200 day MA at 5102 today.  I'm not convinced they're going to be able to move higher again on Wednesday.


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  4      3      2           1        .625      60
     And the winner is...

Looking over the charts, three things stand out: the big move up in the VIX, indicators starting to come off extreme overbought levels in the Dow and ES, and candles riding the edge of RTC's suggesting the rising trend may be over.  I've been saying for days now that I think the next move (when the market finally does decide to move) will be lower.  However, the hourly ES chart is still not showing the break, so given the current environment, I'm just going to have to call Wednesday uncertain.

If I absolutely had to guess, I'd say we're going lower, but in this environment confirmation is required.  In the meantime, I continue to hold my position in SDS, which amazingly enough closed today at the exact same level where I bought it last week.

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 remain short at 1395.00.  I'm still expecting a move lower before we go higher.

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 uncertain

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

• Tuesday uncertain..
• ES pivot 1400.25.  Holding above is bullish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00.

Recap

Waiting for an exit visa....

Well, it looks like not much has changed since last week.  I'm starting to feel like the opening scene in Casablanca where the narrator talks about the refugees who come to Casablanca where they wait... and wait... and wait.  Although my call for Monday was correct as the Dow did in fact finish lower, it has more the feel of flipping coins than anything else.  Obviously this can't go on forever, but is tomorrow the day?  Read on...

The technicals (daily)

The Dow: Make it six straight reversal candle sin a row now for the Dow with another hanging man.  Nothing has changed here, except that RSI got even more overbought today.  The analysis remains the same: looking toppy but requiring confirmation.

The VIX:  Well there was one development today - the VIX blew right through its support at 14.5 to close at 13.70, a level we have not seen since - get ready for it - June of 2007.  I had to back out to the monthly chart to find that one.  And while we're there, I note that the monthly stochastic has just executed a bearish crossover from a low level.  Short term though, we have a gap-down inverted hammer that could signal a reversal with highly oversold indicators.  But - (insert broken record here) after being fooled so many times already, we require confirmation.

Market index futures: Tonight all three futures are up at 1:23 AM EDT with ES higher by 0.11%, most of that coming on a pop at 9 PM on (I think) a news item about increased electricity demand in China.  Meanwhile we now have four straight hanging men in a row here and tonight's candle is developing as a doji too.  The only difference is that RSI has now hit 100 for the first time since February 9th.  While it's tempting to start ignoring this parade of reversal candles that don't, I'll note that an RSI at 100 is generally a pretty good indication that the top is coming.  Also, this parade of dojis are moving us closer to the right hand edge of the rising RTC.  When we get there, that will be a bearish setup.  The RTC is one of the best indications of trend changes there is.

ES daily pivot: Tonight the pivot notches up again from 1399.08 to 1400.25.  We broke above the old level this afternoon and remain just a few points above the new line.  That's bullish on the face of it but bears close watching.

Dollar index: As expected, the dollar moved lower on Monday, dropping 0.18% on a gap-down spinning top.  More indecision!

Euro: The euro gained ground for the second day in a row and in so doing traded entirely outside its descending RTC for a bullish trigger.  With confirmation from a stochastic just executing a bullish crossover, I'd say look for a higher euro on Tuesday.

Transportation: And finally, more indecision from the trans with a dragonfly doji today.    The most telling feature here is that this was good enough to move us right to the edge of the descending RTC which could give us a bullish setup on Tuesday if we get any advance at all.


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  4      3      1           1        .625      60
     And the winner is...

With such a gaggle of dojis on the charts tonight, it's difficult to make a reasoned call in either direction.  The Dow and ES are both giving warnings of a decline but the euro and the trans suggest a move higher.  The VIX and the dollar are simply unclear.  And TLT, after looking like it would go higher today, did not.  But Dr. Copper does look to have peaked and is moving lower.  What to make of all this?  Darned if I know.  If I had to make a wild guess, I'd say it's not out of the question that we get yet another small-range doji day of indecision.  I already got fooled once into expecting a decline that didn't happen.  Now I'm just going to wait until I see it.  Therefore I am simply calling Tuesday uncertain.  I always hate to punt, but that's really all I'm seeing tonight.

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 remain short at 1395.00.Although this trade is moving against us, I believe that when the break comes (and it will come eventually) it will be to the downside.  I realize this puts me in a minority opinion since I'm reading a lot of chatter that the break will be higher, but sometimes that's not a bad place to be.  In the meantime, we continue to take some heat.

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 lower

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

• Monday lower, low confidence.
• ES pivot 1399.08.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1395.00..

Recap

Tonight, the Night Owl is bumming, because the Olympics just ended.  For the past two weeks I have been gorging on the spectacle day and night.  And now, suddenly, it's all over.  I'm going into withdrawal.  It's all so sad.  Thankfully, the stock market is the show that never ends.  That's one of the reasons I like it.  Whether you're going for the gold or merely sitting in the stands, there's always something for everyone.  And last Friday we got pretty much what we got all week long - more sideways action as the Dog Days bark on.  Will we get a break this week?  Let's take a look.

The technicals (daily)

The Dow: Friday's 43 point gain was in the form of a hanging man, the fifth consecutive reversal candle in a row - and still no reversal.  I really was expecting a break lower.  So we're pretty much in the same waiting-for-Godot mode we've been in for a few days now.  Overbought indicators, sideways action, and daily reversal warnings that require confirmation.

The VIX:  Last week I was talking about support at 14.5 for the VIX and on Friday we got pretty close with a red candle that brought us to 14.74.  Meanwhile, the indicators remain massively oversold and the stochastic is just lying on the floor (%K and %D lines both under 7).  So I have to think the VIX is due for a reversal Any Day Now, but just which day that is, I can't say.

Market index futures: All three futures are running lower at :27 AM EDT with ES down 0.32%.  With three consecutive daily reversal candles that came to naught, this is the first sign we might actually be going lower.  It also brings us to the very edge of the rising RTC that last week's melt-up established.  Any further downside action will give us a bearish setup.  And the indicators just keep getting more overbought.  RSI is now 90.6.  The last time it was this high was right before the big May meltdown.

ES daily pivot: Tonight the pivot ticks down from 1399.33 to 1399.08.  This leaves us right below the new line but so far ES does not seem interested in taking a crack at it.  Unless that happens, this looks bearish.

Dollar index: After two consecutive rising dojis, the dollar lost .1% on Friday with a bearish engulfing pattern.  This would suggest a  move lower on Monday even though the indicators are not particularly overbought.

Euro: On Friday, the euro put in a hammer after two big down days.  After falling further early Sunday evening, it suddenly reversed course right after 9 PM, possibly on some Chinese housing news,and is now right back where it closed on Friday.  The pattern indicates the possibility of a move higher on Monday, but it definitely requires confirmation.

Transportation: After two days of declines, the prospects for the trans brightened somewhat on Friday as they gained 0.3% on a little hammer.  Of course, this too requires confirmation and the indicators remain highly overbought.  It's hard to say where this chart may be going on Monday.


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      3      1           1        .571      21
     And the winner is...

I hate to keep saying this, but nothing's really changed since last week.  We're still overbought and still getting reversal warning candles.  And still not getting a reversal  But it seems more logical to call for the reversal than to expect a break higher under these conditions.  And as I mentioned, back in February, we had a run of 10 straight days of doji-laden sideways motion before getting the break.  So although I was wrong about Friday, I'm going to do it again and call Monday lower.  With TLT gaining half a percent on Friday and clearly looking to have bottomed (about the clearest direction change of any of the charts I follow), the downside is just looking the more sensible option here.

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 remain short at 1395.00.

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 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.