Friday possibly lower

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

• Friday lower - low confidence.
• ES pivot 1392.00.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains short at 1386.75.

Recap

Well so much for opting for historical precedent instead of paying attention to what the charts were saying.  Turns out the charts were right in suggesting more upside and I was wrong.  The Dow did finally manage to string together more than two winning days in a row, this time with a convincing 114 point pop that smashed the 13K resistance level and the 13,115 level.  Now we need to wonder, can there be yet another day of upside in store or was this the blow-off top?  Let's round up the usual suspects and search for clues.

The technicals

The Dow: The Dow's three day run has a look and feel of going exponential.  This sort of accelerating run-up always makes me nervous.  And although we broke through the 13,115 resistance, there's another line at 13,260 and then the upper BB at 13,307.  RSI has also turned lower now.  However, there's no reversal warning on the stochastic yet.  This chart looks like it still has a bit of moxie to make one more push higher, but not by much.

The VIX:  The VIX fell another 3.45% today to close at 16.24, just above the top of last month's consolidation range.  While there's no sign of a reversal yet here, the VIX has been acting pretty jumpy lately, so it's not out of the question.  RSI did go oversold today and momentum turned positive.  The futures are also near support and their lower BB.

Market index futures: Today's ES gain wasn't quite as pronounced as the Dow's and featured a 10 point sell-off after the close.  This gives the overnight candle the look of a dark cloud cover.  With all three futures down at 1:22 AM EDT and ES lower by a not insignificant 0.41%, this chart seems to be ready to move lower.  A look at the hourly ES chart supports this idea, where the late afternoon dump broke the rising RTC for a bearish trigger.

ES daily pivot: Tonight the pivot climbs again from 1381.50 to 1392.00.  That now places us below the pivot and ES is continuing lower - a negative sign for Friday.

Dollar index: Yesterday I spoke of the dollar's support at its 200 day MA.  Today that support was tested and it held, with the dollar forming a bullish hammer.  Its indicators have now bottomed at oversold so I'm thinking we're likely to see the dollar move higher on Friday - bad for stocks.

Transportation: Uh oh - after moving up in sync with the Dow for two days, today the $TRAN was decidedly down, losing 1.06% on a bearish engulfing pattern.  Add in that four of my Fave Five indicators went lower today and it sure looks like this index is going lower Friday, and that's bad for stocks.


History: According to The Stock Traders Almanac, Friday is historically actually fairly bullish.

Accuracy:

 

Month right  wrong  no call

April   7      7      2
     And the winner is...

Hmmm - I'm not really seeing all that much negativity on the charts except for ES, which is looking like it wants to go lower.  And with $TRAN and the dollar guiding lower and the euro moving higher, I'd have to say there's a good chance that Friday will close lower.  It's been a difficult month to call for sure.  Perhaps my call for a lower Thursday was just a day too early - I've done that more than a few times in the past.

ES Fantasy Trader

Portfolio stats:  the account remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are remaining short at 1386.75.

Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.  But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post.  Also keep in mind that these trades run with no stops and no preset targets.

Thursday maybe lower

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

• Thursday lower - low confidence.
• ES pivot 1381.50.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes short at 1386.75.

Recap

With the kind of yo-yo market motion we've been seeing lately, it was kind of a leap of faith to call the market higher today, but that paid off in the form of an 89 point gain for the Dow.  The $64 million dollar question now is, with the Dow having been unable to string together more than two advancing days in a row since March 29th, can we go for three on Thursday?  Let us tilt the Market Ouija board and see where the pointer stops.

The technicals

The Dow: The Night Owl hates ambiguity  And yet the Dow persists in handing us just that.  Two nice up days in a row look quite positive.  And yet today's close at 13,091 left us just shy of resistance at 13,115.  But it also broke clear in a big way of the descending RTC, and that is a bullish setup.  And the stochastic today made a bullish crossover but it did it from a high level.    See the winner below for my conclusion.

The VIX:  King VIX took a big 7% gap down today to form an inverted hammer and bring its RSI into oversold territory.  But that still leaves us only halfway between BB's, right in the Twilight Zone.  The last time we had a big gap down after a big down day was in early March.  And then we got three more gap down days taking us right to the lower BB.  In any case, it's impossible to call a reversal here without confirmation, but we do have a reversal warning.

Market index futures: Tonight all three futures are trading just barely in the red, with ES lower by just 0.04%.  The pattern here lately has been that after two big days of gains, we get at least one day of retreat.  With RSI, momentum, and OBV all hooking lower tonight, that's not looking out of the question for Thursday.

ES daily pivot: Tonight the pivot jumps from 1367.42 to 1381.50.  This still leaves us above the pivot, but by a lot less than today.  And with ES drifting lower since around 11:30 PM, it looks like we may encounter the pivot before the open.  Bouncing off, bullish - breaking under, bearish.

Dollar index: The dollar put in its eighth consecutive red candle today, dropping another 0.27% on an inverted hammer like the VIX.  At this level the indicators are just beginning to show oversold.  And the dollar is nearing its lower BB and its 200 day MA, both around 54.70 (on the $USDPX).  That should provide some support.  Still I think the dollar is being driven more by Europe lately than by technicals.

Transportation: The transports had a good day along with the rest of the market, putting in a second green candle with a bullish stochastic crossover like the Dow.  But like the Dow, they're also near some resistance at 13,115.  This is a chart that looks like it's still got some room to run, but only a little.


History: According to The Stock Traders Almanac, Thursday is historically pretty much neutral..

Accuracy:

 

Month right  wrong  no call

April   7      6      2
     And the winner is...

Although the candlesticks seem to suggest further upside, and at the least don't have any reversal indicators, I think tonight I'm going to go with the "two steps forward, one step back" that we've been seeing lately.  That one is three for three since the early March rising RTC was broken.  Even without that, it's common for a big up day to be followed by some consolidation anyway.  So on that basis, I'm calling for a lower close Thursday but I'm not particularly confident about it.  One possibility that would not surprise me is that we rise in the morning until the various resistance levels on these dcharts are hit, and then move lower from there.

ES Fantasy Trader

Even though we missed a good part of the move last night, we were correct to go long, resulting in a nice 6.25 point profit today.  Portfolio stats:  the account now becomes $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are going short at 1386.75.

Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.  But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post.  Also keep in mind that these trades run with no stops and no preset targets.

SLD    10    ES    false    JUN12 Futures     1382.25    USD    GLOBEX    10:59:26   

BOT    10    ES    false    JUN12 Futures     1376.00    USD    GLOBEX    01:08:47   

Wednesday higher

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

• Wednesday higher - low confidence.
• ES pivot 1367.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes long at 1376.00.

Recap

Last night wasn't at all clear to me.  I thought we might form some kind of star today but as it turns out the Dow simply gave us a nice 74 point gain.  I hoped to get some greater clarity in the markets and I think today provided some.  Read on...

The technicals

The Dow: Today's gain retraced most of yesterday's loss.  It also turned both money flow and momentum positive.  And the stochastic is now giving a hint at forming a bullish crossover, though not there just yet.  That said we remain inside a five day declining RTC.  Still, there's a few positive signs on this chart.

The VIX:  Today the VIX lost 4.59% on a bearish two crows pattern.  Indicators continue to decline supporting this idea.  And of course that would be good for stocks.

Market index futures: Tonight all three futures are in the green with ES leading the way higher at :32 AM EDT, up 0.4% which is pretty good for this time of night.  In fact the developing green candle is almost as big as today's completed one.  On the indicator side, money flow continues to rise for the fifth straight day, OBV is now rising from a low level, and the stochastic just barely squeaked out a bullish crossover.  While a continued advance Wednesday is not guaranteed, I'd say from this chart it's more likely than a decline.

ES daily pivot: Tonight the pivot rises from 1363.83 to 1367.42.  With ES pretty much flat in the overnight so far, we were above the pivot before and we're still above by a comfortable margin, all in all a positive sign.

Dollar index: Today the dollar continued its wayward ways giving up all of yesterday's gains gapping down to form a hammer virtually identical to the one we saw Friday.  The indicators are similarly confused.  If I had to guess, I'd say the dollar's going higher tomorrow just because it's now at the lower end of its recent trading range, but that's a pretty weak argument.  There's not really much to tell from this chart once again.

Transportation: Today the $TRAN delivered a decent 1.17% gain that confirmed yesterday's hammer, with a bonus bullish engulfing pattern.  This caused the indicators to hook back up - it's all looking pretty favorable right now.


History: According to The Stock Traders Almanac, Wednesday historically has no particular edge..

Accuracy: 

Month right  wrong  no call

April   6      6      2
     And the winner is...

It's still far from a slam-dunk, but I'm a bit more comfortable tonight calling for a higher close Wednesday.  There's an interesting pattern in the Dow lately of two up days following each big down day.  If that continues, we should see another up day on Wednesday.

ES Fantasy Trader

Portfolio stats: because we did not trade last night  the account remains at  $138,625, after 32 trades (25 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are going long at 1376.0..  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.

No call for Tuesday - star possible.

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

• Tuesday too tough to call - star possible.
• ES pivot 1363.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Well at least we got this one right, after three goofs in a row.  Today the market fell as expected, with the Dow shedding 102 points in a broad market decline.  It was even worse early on, with much of the session spent retracing part of the opening minutes' losses.  So will tomorrow continue this recovery or is there more downside to come?  Let's figure it all out.

The technicals

The Dow: Today's dump and recover act formed a hammer on the daily chart, but without a clear downtrend established and with indicators all solidly moving lower now, it's too soon to say that this might be a reversal.  It definitely requires confirmation on Tuesday.

The VIX:  The VIX put in a tall red candle today but nevertheless managed to gain 8.77% because of a big gap up that took it right to its recent resistance of 20.25 before backing off.  Because of the recent herky-jerky action in the VIX, the indicators are somewhat confused.  Even the rising RTC is too wide to be useful, with a poor Pearson's coefficient of just 0.789.  Not even much guidance from the futures today, so we'll just have to move on.

Market index futures: Remember last night when I posted the daily chart with the symmetrical triangle here that ended with the question "Exit lower?"  Well today that question was answered as the triangle resolved with an almost one percent drop.  The symmetrical triangle is one of my favorite patterns, even though it's not a candlestick pattern.  It generally works really well, as we saw today.

Anyway, tonight we find all three futures in the green, with ES up 0.18% at 1:27 AM EDT.  After rising all evening, this is actually something of a retreat, giving the developing candle the look of something of a dead cat bounce following today's long red candle.  I'm not convinced yet that this is the start of a rally, not even a short one.

ES daily pivot: Tonight the pivot takes a big drop from 1376.58 to 1363.83.  That was enough to put ES above the pivot for the first time in a while, so that's positive on the face of it.

Dollar index: The dollar gapped up for a 0.28% gain today but did it on a red candle.  In fact, only once in the last eight days has the dollar closed higher than its open.  With today's gap up pretty much retracing yesterday's gap down, this chart is once again too hard to call.  As expected though, the euro did move lower today.  I think the euro/dollar is going to be more news-driven than technically influence for the next few days, so we'll just leave it at that.

Transportation: Today the $TRAN took a nearly one percent drop that exactly touched its lower BB intraday, forming a nice hammer.  This sort of pattern often moves higher the next day, meaning a hammer to the lower BB combination.


History: According to The Stock Traders Almanac, Tuesday is historically quite bearish, and the worst day of the week.

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

 15  4/9        25         46        -     1398

 16  4/16       26         48        -     1370
 17  4/23       30         48        -     1379  

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 bullish call on 3/26 was, for the second time this year, wrong, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 13.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  Despite being wrong twice in  a row, 11 for 13 still isn't bad.

This week we see that not much has really changed form last week.  Bullish sentiment advanced slightly, but at the expense of the fence-sitters.  Bearish sentiment remained unchanged.  So once again, there are no contrarian messages in this poll and once again the Night Owl voted bearish

Accuracy: 

Month right  wrong  no call

April   6      6      1

    And the winner is...

I'm afraid that tonight the crystal ball is fogged over.  The charts aren't really talking to me and I'm just not feeling the love.  ES is up from the close but that boat has already sailed.  I don't see a lot of upward momentum or downward pressure.  My best guess is that we may see a small range spinning top on Tuesday but whether it's red or green is just too tough to tell.  So no call for Tuesday.  I do think though that by tomorrow's close we'll have more clarity for the rest of the week.

ES Fantasy Trader

Well we took some heat on this trade from last Thursday.  I don't like holding these over the weekend and I really don't like holding them when they're underwater, but in this case, once again patience paid off rewarding us today with a handy 14.25 point profit.

Portfolio stats: the account now climbs to $138,625, after 32 trades (25 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside, believing that ES may have already seen whatever run-up it's going to get into Tuesday..  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.

BOT    10    ES    false    JUN12 Futures     1358.50    USD    GLOBEX    11:45:27   

SLD    10    ES    false    JUN12 Futures     1372.75    USD    GLOBEX    APR 20 01:11:05

Monday lower

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

• Monday lower, medium confidence.
• ES pivot 1376.58.  Holding under is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains short at 1372.25.

Recap

Arrrgh!  Thursday I though the market would go higher and it went lower.  Friday I thought the market would go lower so naturally it went higher.  The Night Owl is now 0 for 3 and getting kind of depressed.  But this is pretty much a reflection of the market itself - unable to find a direction.  And I did mention a week ago that options expiration weeks tend to be squirrelly.  Well now that we've got that out of the way, maybe we can do better for Monday.

The technicals

The Dow: After closing outside its rising RTC on Thursday for a bearish setup, the Dow on Friday closed right back inside with its 65 point gain thus canceling the bearish signal.  However, the stochastic completed it bearish crossover.  The stochastic has called every top correctly so far this year.

The VIX:  The VIX chart is too tough to call on both the daily and weekly time frames.  However, the futures are giving at least a hint that the VIX may be going higher, in the form of oversold indicators.  And that would be bad for stocks.

ES daily

Market index futures: Tonight, once again, all three futures are trading lower with ES down 0.16% at 1:29 AM EDT.  The indicators also continue to move lower.  But more importantly, I think is the developing symmetrical triangle as you can see in this daily chart.  Notice how we've been putting in lower highs and higher lows for ten straight days now.  This has gone on about as long as it can.  It should be ready to break any day now and since it was entered from above, the break is most likely to be to the downside.

ES daily pivot: Tonight the pivot remains virtually unchanged,  nudging up from 1376.00 to 1376.58.  As we continue to hold below this and ES shows no signs of making any attempt on the pivot, that's a negative sign.

Dollar index: Meanwhile the dollar on Friday took a big gap down for a nearly half percent loss.  This took the indicators much closer to oversold than overbought and with some unsettled news from Europe over the weekend, I wouldn't be surprised to see the euro move lower on Monday.  That would drive the dollar higher and be bad for stocks.

Transportation: Friday the $TRAN put in a small spinning top at the bottom of Thursday's big drop.  That's only a potential reversal indicator and requires confirmation on Monday.  But with the stochastic just finishing a bearish crossover, I'm expecting more downside here too.


History: According to The Stock Traders Almanac, Monday is historically only slightly bullish.

Accuracy: 

Month right  wrong  no call

April   5      6      1

     And the winner is...

Once again, I think I was a day early on my bearish call, so I'll just say it again.  Given the mostly negative look on the charts I follow, I think we're going lower Monday.

ES Fantasy Trader

Portfolio stats: the account remains $131,500, after 31 trades (24 wins, 7 losses) starting from $100,000 on 1/1  Tonight we remain short from last Thursday.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

Monday looking lower

 POST IN PROGRESS - I ACCIDENTALLY HIT "PUBLISH" TOO SOON - PLEASE CHECK BACK IN 30 MINUTES FOR FINAL VERSION.


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

• Friday lower, low confidence.
• ES pivot 1376.00.  Holding under is bearish.
• Next week bias lower technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going short at 1372.25.

Recap

Oh man, wrong again  My call for a higher close today was looking good - until 10:40 AM.  Then it was all downhill from there to end with a disappointing 69 point loss for the Dow.  At least I did say it was a low-confidence call.  Let's see tonight if I can't do better than flipping a coin.

The technicals

The Dow: Today's red candle took us just outside the right edge of the rising RTC from 4/11.  That's the bearish setup.  The stochastic looks to be gearing up for a bearish crossover though its not quite there yet.  In any case, this chart tonight looks more likely to go lower than higher on Friday.

The VIX:  Compounding the confusion was a VIX that dropped along with everything else today.  The long-legged doji shows this indecision nicely.  A slightly bigger picture seems to show a developing symmetrical triangle, not perfect, but the general idea is there.  And since those resolve in the direction of entry about 75% of the time, that favors another leg higher for the VIX.  The futures seem to support this idea and that would be bad for stocks.

Market index futures: The futures seem to have their own symmetrical triangle going here.  All three are up just a tad tonight with ES gaining a single tick at 1:12 AM EDT.  Since the entry of this ES triangle was from above, the expected resolution is down.  And this triangle is would up about as far as it can go so I'll expect a resolution Real Soon Now, like either Friday or Monday at the latest.  A freshly completed bearish stochastic crossover supports this view.

ES daily pivot: Tonight the pivot drops again, from 1380.92 to 1376.00.  And just like last night, ES has been mostly directionless in the overnight, leaving us still under the new number, though not by quite as much.  Still, it's bearish unless ES can break above the pivot.  There's no sign of that right now.

Dollar index: The dollar, along with everything else is totally confused right now.  We've now got two almost identical side-by-side red candles with today's finishing up just 0.04%.  The only clue here is that the stochastic is just about to execute a bullish crossover suggesting a move higher and that would be bad for stocks.

Transportation: Last night this chart was too tough to call.  Well the market spoke and it was down big, by 1.41%.  This provided the bearish confirmation to yesterday's doji.  With the stochastic just forming a bearish crossover, it looks like the $TRAN is ready to move lower again on Friday, which is bad for the market as a whole.


History: According to The Stock Traders Almanac, Thursday is historically fairly bullish, with the Dow up 12 of the last 15.

Accuracy: 

Month right  wrong  no call

April   5      5      1

     And the winner is...

I',m thinking tonight has a bit more clarity than last night.  I'm seeing some definite bearish signs in the charts and not really anything bullish so I'm going to call for a lower close Friday.  Keep in mind that Friday is options expiration, so that could generate some unexpected gyrations, but right now things are looking down.

ES Fantasy Trader

Despite the Dow ending down, today we took some profits while the taking was good to lock in a 2.75 point gain before the sell-off got into gear.

Portfolio stats: the account rises to $131,500, after 31 trades (24 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1372.75.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

SLD    10    ES    false    JUN12 Futures     1384.00    USD    GLOBEX    11:19:05    

BOT    10    ES    false    JUN12 Futures     1381.25    USD    GLOBEX    01:08:45

Tough call - Thursday maybe higher

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

• Thursday higher, low confidence.
• ES pivot 1380.92.  Breaking above is bullish..
• Friday bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader going long at 1381.25.

Recap

Oh well - another wrong call.  At least I did mention that I had little confidence in this and that I wasn't going to take a long position in ES on that basis.  Good thing too, since the Dow dropped 83 points as we continue this crazy game of retracing the retracements.  For over a week now it has literally been a case of two steps forward, one step back.  The Dow has been up, up, down, then up, up, down.  Does this mean Thursday will be up again?  Let me see if I can figure it out.

The technicals

The Dow: It may not feel like it, but even after today's loss, the Dow remains in a rising RTC, and one with a fairly robust Pearson's coefficient of 0.959 going back to the 11th.  And the indicators continue to rise, so there's no reversal warning there either.  I'm feeling pessimistic right now, but there's nothing on this chart to support that viewpoint.

The VIX:  Today the VIX gave us another hammer pattern to gain just under 1%.  And in so doing, it appears to be forming a symmetrical triangle.  These resolve about three quarters of the time in the same direction as the entry.  In this case, that would be higher, which would be bad for stocks.  But who knows - the VIX has been characterized by some crazy choppy action for two months now making it difficult to tell which way it may be going next on a daily basis.

Market index futures: At 1:08 AM all three futures are up by some decent numbers, with ES rising 0.22%.  After a small range day today, it looks like ES is forming an ascending triangle.  Coming at the end of a downtrend, this is a bullish reversal pattern.

ES daily pivot: Tonight the pivot rises from 1377.17 to 1380.92.  With ES meandering about aimlessly in the overnight, so far we're now just below that number and it looks like ES is getting ready to launch an attack on it.  It will be interesting to see how this plays out.

Dollar index: In another weird chart, the dollar gained 0.06% today but did it on a  red candle in a dark cloud cover position relative to yesterday.  It looks like the dollar wants to go lower and just need a bit of encouragement here.  In any case, this is not a really bearish looking chart for stocks.

Transportation: Interestingly, the $TRAN has a much smaller drop than the major averages today - just 0.12%.  But it put in a doji doing it, warning that the last two days of gains may not continue.  Still, in an environment like this, one requires confirmation of these things first, so all we can say is that we need to wait and see what happens on Thursday here.


History: According to The Stock Traders Almanac, Thursday is historically essentially neutral.

Accuracy:

 

Month right  wrong  no call

April   5      4      1
     And the winner is...

Now I'm not so sure I was wrong about today or just a day early as I seem to be on occasion.  But with a number of dojis and triangles appearing on the charts, it looks like the market is winding up for a move pretty soon.  Up or down remains to be seen.  I'm going to go out on a limb tonight and claim that it's going to be up, for a higher close Thursday.  I'm not really seeing any convincing signs of a move either way just yet though.  This is yet another difficult one to call.

ES Fantasy Trader

Portfolio stats: the account remains at $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside again.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

Wednesday possibly higher

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

• Wednesday higher, low confidence.
• ES pivot 1377.17.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

Recap

Last night I was as confused about where today might go as I've ever been.  Turns out the bulls romped to a 194 point gain in the Dow.  Who knew?  And the SPX and Nasdaq gained even more, percentage-wise.  Is there more to come?  Let's take a look at the technicals.

The technicals

The Dow: After three days of trying, the Dow finally reclaimed the 13K line to close at 13,115 on a very tall green candle.  With no resistance until 13,250 and rising indicators, a further move up is not out of the question. 

The VIX:  Today the VIX fell 5.58% on a hammer-type candle.  This move was predicted by the futures, as I suggested lat night.  Today the futures moved lower again, so we could be in line for further declines in the VIX on Wednesday, an encouraging sign for the market.


Market index futures: All three futures are in the green at 1:52 AM EDT with ES up 0.14%.  This is encouraging after today's tall green candle.  Nevertheless, ES did not have the sort of breakout move over resistance that the Dow had today.  Instead it closed right at the top of its recent trading range.  But with rising indicators and a lack of selling pressure, it's possible that the way is cleared for further gains - if we can break above 1386.

ES daily pivot: Tonight the pivot rises from 1366.58 to 1377.17.  We were above the old number by so much that even with ES just wandering around we're still over the new pivot, and that's a good sign.

Dollar index: At least this chart worked.  Yesterday's dark cloud cover did result in a dollar that retreated 0.13% today..  But it left us with a spinning top in the Twilight Zone, that gray area half way between the upper and lower BB's.  This one could go either way Wednesday.

Transportation: With today's decent 1.44% gain, the $TRAN is now established in a rising RTC.  That said, it stopped just short of resistance at 5315.  However, its indicators are still rising, though giving signs of slowing down.  At this point, it looks like there's at least still a bit more room to run, though tomorrow will be critical.  We need to see a close above 5315 in order to continue higher.


History: According to The Stock Traders Almanac, Wednesday is historically not quite as good as today but bullish nonetheless.

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

 14  4/2        42         21        +     1408

 15  4/9        25         46        -     1398

 16  4/16       26         48        -     1370

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 bullish call on 3/19 was, for the first time this year, wrong, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 12.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  This also means that the Ticker Sense bloggers' winning streak is now broken at 11.  Still, 11 for 12 isn't bad.


This week we see that both bullish and bearish sentiment increased just a bit, as more fence-sitters came off the sidelines.  So the ratio remains essentially unchanged.  While 48% bearish sounds pretty bad, it's still not really at the sort of extreme level that would qualify as a contrarian bullish indicator.  For the time being anyway, the bearish monthly thesis remains intact.  And for what it's worth, I voted bearish again this week.  I'm still seeing the monthly SPX chart as having more downside than up.


Accuracy: 

Today I have to add a third column to this section to handle those instances where I'm unable to make a call for the next day.  Since that means I'm neither right nor wrong, we now have a column labelled "No Call".
 

Month right  wrong  no call

April   5      3      1

     And the winner is...

I'm just vaguely feeling that we could move higher again on Wednesday, but I'm not confident enough to stake an ES trade on it right now.  Nevertheless, I'll call for a higher close Wednesday.  I'm just seeing more positives than negatives here tonight.

ES Fantasy Trader

Portfolio stats: the account remains at $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside again.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

Tuesday too tough to tell

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

• Tuesday uncertain.
• ES pivot 1366.58.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside.

 Recap

Well today sure was a real puzzler.  Last night I was reasonably sure we were going lower today.  From what I read and heard today, so were a lot of other people.  Now the S&P did close down just a bit and the Nasdaq was off by 0.76% but what was up with the Dow?  Or what held up the Dow?  Up 83 points in the opening minute of trading, then up over 100 a few minutes later.  And despite giving some of that back, we still closed up 0.56%.  I don't know about you, but I find this sort of strange action for no good reason to be vaguely disconcerting.  Just op-ex week jitters?  Who knows.  Maybe the charts will have more clarity tonight.

The technicals

The Dow: So of course right after I claimed that we wouldn't retrace yesterday's big drop, we did exactly that today, although the Dow then closed at exactly halfway down what's now a three day see-saw.  This is the sort of herky-jerky schizophrenic action we saw last summer that I hate so much.  Technically I have no clue what to make of this chart.  The candles are all over the place.  The only guidance I can see comes from the indicators, which are now rising from oversold levels, suggesting more upside.  But who knows.  This is weird.

The VIX:  The daily VIX is also pretty muddy.  We did spike up to the upper BB intraday before retreating to finish exactly unchanged.  The only clue I can find here comes from the futures which have been putting in lower highs for four days now and have indicators that sort of suggest a move lower.  So that would be good for stocks, but it's a long way from certain.

Market index futures: Tonight all three futures are down by just a hair, with ES losing just 0.07% at 1:55 AM EDT.  The stochastic completed a bearish crossover today, but did it from a very oversold level, which is odd.  I don't really know what's going on here either.

ES daily pivot: Tonight the pivot drops from 1372.42 to 1366.58.  But since ES seems to be showing no enthusiasm for moving higher in the overnight so far, that still leaves us under the pivot, just a bit less so.  Until and unless we can cross that line, it's not looking good for Tuesday.

Dollar index: This is really the only chart tonight that has a recognizable pattern on it - a big dark cloud cover.  Coupled to declining indicators, this would suggest a  move lower on Tuesday which would be good for stocks.

Transportation: Another chart here that looks like it's trying and failing to move higher.  There's no obvious pattern here.


History: According to The Stock Traders Almanac, Thursday is historically even slightly more bullish than Monday.

Accuracy:

Month right  wrong

April   5      4

     And the winner is...

Very very strange.  It's not often that I'm left completely at a loss, but tonight is just one of those times.  So there is no call and no trade.  The best I can suggest is to watch the ES pivot to see if we can move above it Tuesday morning.  That would be bullish, otherwise another move lower is possible.

ES Fantasy Trader

I guess like the Germans in WWII in Foy when Lt. Speirs ran right through their lines, I couldn't believe what I was seeing today, but I finally pulled the plug on this trade while it was still positive, just barely, for a quarter point gain.  Nevertheless, a win is a win.  But with no readily observable edge, tonight we're going to stand aside.

Portfolio stats: the account is now $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1363.75 at 2:13 AM EDT.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

BOT    10    ES    false    JUN12 Futures     1363.50    USD    GLOBEX    11:55:58
SLD    10    ES    false    JUN12 Futures     1363.75    USD    GLOBEX    02:12:51

Monday lower

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

• Monday lower, medium confidence.
• ES pivot 1372.42.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes short at 1363.75.

Recap

Last week ended lower as I expected, though by more than I expected.  Friday's 137 point dump put the kabosh on what was starting to look like a new uptrend after two solid green candles.  With another options expiration week coming up, things should be interesting.  Never a dull moment on the Street of Dreams, eh?

The technicals

The Dow: With the Dow up big and then down big and a full week behind us, I like to back out to the weekly chart.  And I have to say, it's looking more like a weakly chart, with two consecutive solid red candles.  Even worse, the candle from two weeks ago took us right to the lower edge of a weekly rising RTC all the way back to last December 5th.  That's a bearish setup.  And then last week's candle traded entirely outside the RTC.  That's the bearish trigger.  And the indicators continue their march downward from overbought levels.  Nothing but ugly here, folks.

The VIX:  Let's keep the weekly theme going here since the daily VIX chart is also somewhat confusing right now.  The weekly VIX closed with a big gap-up spinning top just short of 20.  But it's too soon to view this as a reversal warning.  Note that preceding candle looked almost identical and we moved up a lot from there.  And the weekly indicators continue to rise from oversold levels.  All of this suggests more upside to come from the VIX and that would be bad for stocks.

Market index futures: All three futures are trading lower tonight at 2:14 AM EDT, though not hugely with ES down 0.11%.  Friday's big red candle that essentially completely retraced Thursday's gains short-circuited the indicators, pulling the rug out from what was starting to look like an advance.  Although this kind of yo-yo motion might make you think that we could go right back up again on Monday, the fact that the VIX remains sub-20 tends to put a damper on that idea.  Overall, this chart's not looking so hot.

ES daily pivot: Tonight, the pivot fell from 1378.50 to 1372.42.  With ES pretty much wandering around little changed this evening, we were below before and are still below.  Not very encouraging.

Dollar index: The weekly dollar chart is less clear than the others, probably because of the recent renewed attention to Europe.  The greenback now finds itself near the upper end of a two month trading range with a hanging man and overbought indicators that would suggest the next move would be lower, contrary to what many of the other charts are telling us.  By itself, this would be good for stocks.

Transportation: And finally, the weekly $TRAN looks bad too.  Here we have two rising spinning tops followed by a hanging man.  The indicators are starting to top off at overbought levels, with the stochastic trying to form a  bearish crossover and OBV turning lower from a very high level.  Not good at all.

History: According to The Stock Traders Almanac, Monday is historically quite bullish.

Accuracy:

Month right  wrong

April   5      3

     And the winner is...

Tonight I'm just not feeling the love.  The charts are mostly in agreement about some more downside from here, so I'm going to call for a lower close Monday.

ES Fantasy Trader

Portfolio stats: With no trade over the weekend, the account remains at  $130,000, after 29 trades (22 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1363.75 at 2:13 AM EDT.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

Friday maybe slightly lower

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

• Friday lower, low confidence.
• ES pivot 1378.50.  Holding above is bullish..
• Next week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader standing aside..

Recap

Last night the market looked ready to move higher today and so it did, with the Dow tacking on181 points to close just below 13K.  Things were looking up earlier this evening for Friday until the China GDP numbers came out.  They missed, though not by much, but that was enough to throw a money wrench into the outlook for Friday.  We'll quickly run down the technicals anyway, bearing in mind that they may get skewed (or maybe skewered) on Friday.

The technicals

The Dow: Today's tall solid green candle just about exactly retraced 50% of the decline from the April 2nd top and left us just short of 13K which is once again resistance.  That said, the indicators are all in a wonderfully bullish position, with the stochastic having completed a bullish crossover from a very oversold position.  There's nothing to suggest a move lower on this chart.

The VIX:  This VIX took a big tumble today dropping 14.1%.  I told you it doesn't like hanging around the upper BB for long.  Even after that, it's still overbought and looks likely to go lower still on Friday, which would be good for stocks.

Market index futures: Today's tall solid green candle was big - almost too big.  It's pretty common for the market to take a pause after big up days like this and that's sort of what we're seeing now at 1:52 AM with all three futures in the red and ES down 0.2%.  This was admittedly helped along by the poor China numbers, but I think it was already in the cards.  The developing overnight candle is a red star, no doubt paying homage to the Chicoms and reflecting a market teetering on the edge.

ES daily pivot: Tonight, the pivot jumps from 1364.00 to 1378.50.  ES was comfortably above the old number, but this rise along with the hit ES took on the China data now leaves us less than five points above the pivot.  That's still OK, but bears watching.

Dollar index: Last night I wrote "more downside to come Thursday" and the dollar obliged, gapping down for a 0.68% loss.  Even at that, it remains overbought so I think there's still room to run lower on Friday.

Transportation: The trannies also had a big day today, like just about everyone.  Like the Dow, we now have a completed bullish stochastic crossover and other rising indicators.  No sign of a reversal here either.


History: According to The Stock Traders Almanac, Thursday is historically fairly bullish for the Dow, only so-so for the SPX.

Accuracy:

Month right  wrong

April   4      3

And speaking of accuracy, I came across this interesting post, Guru Grades over on cxoadvisory.com.  They give a long list of more than 60 well-known market forecasters along with their accuracy.  It's too long to reprint entirely here but I will note that they claim that

 "The overall accuracy of the group based on both raw forecast count and on the average of forecaster accuracies (weighting each individual equally) is 47% (48%)."

Now the Night Owl has never claimed to be a guru and has somehow inexplicably been left off this list, but I will simply note that since I started tracking my daily calls this month, my current average is 57%, which puts me tied for third place.  And this is just a short sample.  I humbly believe I'm better than this.  (Now watch, I'll be wrong for the next two weeks).

     And the winner is...

Wow - a very tough one tonight.  I'm almost feeling like taking a pass on this call but ultimately I think I'm going to go for a lower close Friday.  I'm thinking that the China numbers will weigh on the market and people are going to want to take some profits ahead of the weekend after two nice up days.  Nevertheless, I'm bothered by the VIX and the dollar which both really look like ready to head lower.  So I'm not looking for a big dump on Friday, but I'd be really surprised to see another day of gains like the last two.

ES Fantasy Trader

Tonight I threw in the towel on my long trade from last week for a disappointing 15.5 point loss.  Still, we were down more than double that at one point, so this feels like a victory.  Still I think I'd be pushing my luck to hold onto this much longer, so I'm just going to give up on it.  They can't all be winners.  Portfolio stats: The account takes a hit down to  $130,000, after 29 trades (22 wins, 7 losses) starting from $100,000 on 1/1  

Tonight we're simply standing aside amid the uncertainty over the China numbers.

SLD    10    ES    false    JUN12 Futures     1381.50    USD    GLOBEX    00:47:21    0001f4e5.4f875c76.01.01        20.10    null

Went long at 1397.00 on April 5th - since this is over a week ago, I don't have the line item for it anymore and I'm not digging up the daily report from IB to find it.  I just need the number, which I gave on the post for that day.

Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 1364.00.  Holding above is bullish..
• Friday bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains trapped long.

Recap

As sometimes happens, I was right, but just one day early.  We got the bounce I was looking for today to the tune of 89 Dow points.  As I was looking for, we saw ES break above its pivot in the wee hours of Wednesday morning, when even the Night Owl is sleeping, and it was all uphill from there.  So was today a one-off sucker trap for the bulls, or are we resuming an up-trend?  Few are foolish enough to even attempt to answer that question, but I figure what the hey, I'll give it a shot.

The technicals

The Dow: Today the Dow retraced close to but not quite half of yesterday's losses.  It is now >< that close to executing a bullish stochastic crossover.  And both momentum and money flow have now hooked up from depressed levels  RSI remains oversold at 20.55.  On that alone, I'd have to say there's more chance of the Dow moving higher than lower on Thursday.  If we do a Fibonacci retracement of the recent selloff, we see that we're still not even up to the 0.25% retracement at 12,855.

The VIX:  Ah, all hail King VIX!   The VIX today did go lower as I expected, but only by 1.81%.  And it did it on a green candle.  But - that was a pretty good bearish harami, a pattern you don't see too often.  In addition, it remains above its upper BB and its indicators are now highly overbought.    I'd say the VIX is more likely to go lower Thursday than higher, and that's good for stocks.

Market index futures: At x AM EDT all three futures are up, though not as much as last night at this time.  ES, NQ, and YM are all up exactly 0.2% at 1:04 AM EDT.  I'm actually liking the looks of the ES daily chart more than last night.  The developing candle is just touching the right edge of the descending RTC, ready for a bullish setup.  And all of my Fave Five indicators have bottomed at very oversold levels and are now rising, also a good sign.  Whereas two days ago there was no sign of an end to the pullback, now there are several.

ES daily pivot: Tonight the pivot nudges up from 1363.42 to 1364.00.  The old number served as support all day and we're still three points above the new value in a roller coaster overnight session.  As long as we can stay above this level, that's a good sign.

Dollar index: Today the dollar gave us some more clarity compared to last night by way of dropping 0.13% and forming a descending triangle which, coupled with overbought indicators implies more downside to come Thursday.  And that would be good for stocks.

Transportation: Today, after a big two day sell-off, the trannies pretty much emulated the Dow, gaining 0.91%.  They are now quite oversold and  three of my Fave Five indicators have now bottomed.  From here, I'd say its more likely they go higher than lower.


History: According to The Stock Traders Almanac, Thursday is historically fairly bullish.

Accuracy:

Month right  wrong

April   3      3

     And the winner is...

After a run of several bad days, especially when they involve big drops there's always a tendency to be gloomy about the future.  I'm reading a lot of that kind of talk in the blogosphere right now.  But for the short term anyway, which for me means tomorrow, I have to say I'm not really seeing any technical reasons to be pessimistic.  In fact, all the charts I watch seem to be in agreement, so I'm going to claim there's more room to run and we're in for a higher close Thursday.

ES Fantasy Trader

Portfolio stats:  The account remains, for the time being, $137,750, after 28 trades (22 wins, 6 losses) starting from $100,000 on 1/1  Tonight we continue to remain long from last Wednesday's trade.  Patience may pay off in the end.  In this case, not caving yesterday proved to be the right decision as we made back some of our (unrealized) losses.

Bounce Wednesday if pivot passed

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

• Wednesday higher, low confidence.
• ES pivot 1363.42.  Breaking above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains trapped long.

Recap

Sigh - wrong again.  I did mention yesterday that we had "a market that wants to reverse but isn't totally committed to the idea."  Turns out it actually hated the idea, with the Dow plunging another 214 points to close on session lows.  Looks like we're right back to last year's Euro-mania, with Spain now apparently taking on the Greece role in the 2012 edition.  We'll give the charts another shot tonihgt in the hopes that we can be a bit more accurate on Wednesday.

The technicals

The Dow: There is absolutely no candlestick reversal pattern at all on the Dow daily chart.  On the other hand, the indicators, which were all oversold yesterday only got even more oversold today.  The thing is, is that once the market gets into these selling snits, it can go on for quite a while with oversold indicators as we saw last July when it took 10 straight sessions to get a reversal after the stochastic made a bullish crossover.

So having broken support at 13K and support at the lower BB (12,881) and monthly support at 12,756, we're kind of in free-fall at the moment.  From here there is no further support until 12,625, then 12,470, then 12,250.

There are just two positive signs here.  First, the Dow has now fallen off the left edge of the steep descending RTC.  Second, this sell-off is going exponential to the downside.  Parabolic moves are always a great top indicator and they work the other direction too.  Still, at this point we need confirmation before calling a bottom and I don't see any right now.

The VIX: Hah - after putting in a clear reversal indicator yesterday, today the VIX didn't.  Indeed, closing at 20.39, up another 8.4% today, it just left its upper BB in the dust at 18.6.  Although I did expect a turnaround today, the fact that we moved even further above the upper BB only strengthens the case for a move lower on Wednesday.  It would be highly unusual indeed for the VIX to spend three days above the upper BB.  And I note that the VIX has gone just completely exponential - always a sign on any chart that a blow-off top is near.

Market index futures: Tonight we're finally seeing some concrete signs of an end to the slump with all three futures in the green by meaningful amounts.  ES is up 0.44% at 1:31 AM EDT.  Also OBV today hooked up for the first time since this slide began seven sessions ago.  Momentum also seems to have bottomed.  However, what looked like a bullish stochastic crossover unwound itself today, so there is not total agreement here.

ES daily pivot: Tonight the pivot takes a big drop from 1376.50 to 1363.42.  This is good news indeed because with ES trending higher since around 3 PM today, we're now only about a point under this.  Breaking through this level will be bullish.  If we bounce off and head south again, that's bad news.

Dollar index: Well the evening star failed to come out today.  Instead of going lower, the dollar gained 0.22%.  But it left us with a quandary.  The candle is a bullish piercing pattern, suggesting more upside.  But the stochastic just completed a bearish crossover suggesting some downside.  My best guess is that the dollar has no idea which way to go and we're back to simply reacting to news from Europe, just like last year.  Ugh.

Transportation: The story of the trannies is a bit better than the Dow.  While they took a dive today along with the rest of the market, they stopped just short of some support at 5044.  Still there's nothing on this chart to suggest a reversal yet.


History: According to The Stock Traders Almanac, Thursday is historically slightly on the bearish side.

Accuracy:

Month right  wrong

April   2      3

     And the winner is...

Yesterday we were oversold.  Today we're even more oversold and the reversal signs are a bit more convincing tonight than last night.  So I'm going out on a limb and once again call for a higher close Wednesday.  If we do move higher, I'm going to use the opportunity to raise cash and do some hedging.  The monthly SPX chart is beginning to look pretty ominous.  And I do want to point out that this call is predicated on ES moving above its daily pivot.  If that doesn't happen by mid-morning, then all bets are off.

ES Fantasy Trader

Portfolio stats:  The account remains, for the time being, $137,750, after 28 trades (22 wins, 6 losses) starting from $100,000 on 1/1  Tonight we continue to remain long from last Wednesday's trade.  Patience may pay off in the end.

Tuesday slightly higher

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

• Tuesday higher, low confidence.
• ES pivot 1376.50.  Holding under is bearish..
• Rest of week bias mixed technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains trapped long.

Recap

Well you sure didn't need a crystal ball today to see a dive in the Dow coming today.  The only thing that surprised me was that it wasn't worse than the 1% we lost.  In fact, for a while there it looked like we might retrace a lot of the opening losses until the bears came back out around 2:30 and knocked 'em lower into the close.  Will this continue on Tuesday or are we in store for a rally as some are suggesting?  The charts will speak to us now.

The technicals

The Dow: Today the Dow did pretty much the obvious, shedding 130 points and forming another solid red candle that keeps it solidly in a descending RTC channel that now includes four straight down days.  However, we hit the lower BB at 12,960 and then kept on going to 12,930.  And the indicators have all gone from overbought to oversold in just five days.  The stochastic in particular, while not yet forming a bullish crossover, is now lower than any time since the end of last November's ugly two week slide.  While there's nothing on this chart to suggest an immediate reversal, it's quite possible it might happen on Wednesday.

VIX daily

The VIX:  OK, this really merits a chart.  Check out the VIX today right here.  Here we have a chart that jumped 12.63%.  The VIX finished at 18.18, gapping up way above the upper BB at 17.42.  And it formed the mother of all hanging men in the process.  Oh yes, and its RSI hit 100 today.  It doesn't get any more overbought than that.

I had to go back to November 12, 2007 to find anything similar, a hanging man that gapped up way above the upper BB.  And the next day was down.  Down big.  And the Dow?  The next day it soared 332 points.  Not that that's a guarantee that this will happen again tomorrow.  But right now it looks like the VIX is much more likely to go lower on Tueday than it is to go higher and that would be very good for stocks.

Market index futures: Tonight, all three futures are up, with ES gaining 0.18% at 1:27 AM EDT.  That in itself is a good thing.  Today's ES candle was a long-legged doji, which is a decent reversal indicator.  And the indicators are all oversold now, with the stochastic just starting a bullish crossover.  However, we do remain inside the falling RTC, just like the Dow.

ES daily pivot: Tonight the pivot drops from 1385.67 to 1376.50.  And with ES wandering around vaguely higher from today's close, that now puts us above the pivot, finally.  Since this number now serves as support, that's a good sign for stocks.

Dollar index: Today the dollar completed its evening doji star (and not the bearish tri-star I was sort of expecting last night) but still moved lower as I was expecting by about half a percent.  With a bearish stochastic crossover now complete and RSI having peaked at overbought levels, the dollar looks ready to continue lower Tuesday which would be good for stocks.

Transportation: The $TRAN got badly beaten by an ugly stick today.  Not only did it drop 1.65%, but it has now traded for a second day outside its rising RTC and that's a bearish trigger.  And to top it all off, the indicators confirm that, moving clearly lower from a peak at overbought levels.  The only positive note here is that they have a modicum of support around 5175.  If that doesn't hold, we're going to the lower BB at 5157.


History: According to The Stock Traders Almanac, Tuesday is historically basically neutral.

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

 13  3/26       39         29        +     1397

 14  4/2        42         21        +     1408

 15  4/9        25         46        -     1398

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 bullish call on 3/12 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 11.  And of course that means that since I voted with the majority back then, the poll as a whole was also correct that week.  Once again the Ticker Sense bloggers continue to bat 1000.

Notably though, for the first time this year, I voted bearish this week.  As we begin the second quarter, I'm finally beginning to see some technical reversal indicators on the monthly SPX chart.  See my weekend post  Is the Top In?   And it looks like the majority of the TS bloggers are with me.  This week also marks the first time this year that bearish sentiment has exceeded bullish.  And the change was as dramatic as it was sudden.  Bullish sentiment was cut nearly in half while bearish sentiment more than doubled.  The bulls and bears have essentially flipped from where they were on January 1st.

Recall that one week ago I wrote "I am seeing signs that a turnaround is coming, possibly next month.  This may be a good time to sell in May, as they say."  For the time being anyway, we seem to be on track for that.

Accuracy:

Month right  wrong

April   3      2

     And the winner is...

Tonight I'm seeing signs of a market that wants to reverse but isn't totally committed to the idea.  That said, I keep coming back to that crazy VIX chart.  As I've often said here, the VIX rarely spends more than one day without reversing after hitting its upper BB.  And today we totally punctured that level.  This kind of move is almost always followed by a decline.  Now the conservative in me wants to wait for confirmation in the form of an RTC exit from the Dow or SPX, but I think the evidence from both the VIX and the dollar is compelling enough  tonight to call Tuesday at least marginally higher.

ES Fantasy Trader

Portfolio stats:  The account remains, for the time being, $137,750, after 28 trades (22 wins, 6 losses) starting from $100,000 on 1/1  Tonight we continue to remain long from last Wednesday's trade.  Patience may pay off in the end.

Monday lower

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

• Monday lower, medium confidence.
• ES pivot 1385.67.  Holding under is bearish..
• Rest of week bias mixed technically.
• Monthly outlook: bias down.
• ES Fantasy Trader now trapped long.

Recap

These holiday weeks always disrupt things.  I have to go back to last Wednesday night when I was thinking that Thursday might go higher.  While the Nasdaq did, the Dow fell 14.6 points and since that's what I base my calls on, I was wrong.  But the big bombshell fell on Friday when the markets were closed, with some worse-than-expected employment numbers.  That tanked the futures and dimmed our prospects going forward.  See my previous post, Is the Top In?   Anyway, let's try to make some sense of this mess.

The technicals

The Dow: There's little point in trying to analyze last Thursday's session in view of what happened on Friday.  The fact that we did not get a dead cat bounce or any bounce for that matter only makes it worse.  The best that can be said for this doji is that it once again respected the 13K support line.  I'm pretty sure it isn't going to hold on Monday.

The VIX:  This is really the only bright spot in the charts, though I'm not sure it's going to hold for Monday.  On Thursday, the VIX bounced off its upper BB as expected and closed on a red hanging man, though that was still higher on the day by 1.58%.  Ordinarily I'd say this means the VIX goes lower Monday and that's good for stocks.  But this doesn't factor in the mess we saw in the futures on Friday, so again, I can't draw any technical conclusions here.

Market index futures: Tonight the futures are all down massively from Thursday, with ES leading the way lower at minus 1.08% at 1:07 AM EDT.    After such a huge dump like we got Friday, it is natural to expect some sort of retracement. However, we've seen very little in the way of that so far at least.  ES is admittedly not losing any more right now, but it's still just 3 points off its low set earlier this evening.  Still it is creeping higher ever so slowly, so one cannot yet rule out a retracement to some level.  The first three Fibonacci retracements would be 1377.50 (we're already just two points below that), then 1380.14 and 1382.50 (that's 50%).


There are however a couple of good points here.  First, this big dump took us all the way to the lower BB at 1379.55.  We're actually below that now at 1375.75.  Also, the losses of the last four days have brought all the indicators well into oversold territory.  OBV in particular is lying on the floor, running negative 2M.  That's the sort of extreme reading one would expect before a reversal.

ES daily pivot: The pivot now drops from 1390.67 to 1385.67.  Of course, we're well below even this number.  Not at all encouraging.

Dollar index: On Thursday, the dollar put in a gap-up spinning top/almost doji for 2/3 of a bearish tri-star pattern.  The oversold indicators suggest the dollar is due to move lower, which would be good for stocks.  Trading continued in the euro though and Friday's action there plus today's overnight suggest that the euro has found support around 1.3060.  It is also just now exiting its falling RTC and that's a bullish setup.  And its stochastic is about to make a bullish crossover.  This all suggests a higher euro Monday which would imply a lower dollar which would be good for stocks.

Transportation: The $TRAN on Thursday put in a spinning top after falling for two days indicating at least some indecision.  However, the stochastic just made a bearish crossover suggesting the trans are headed lower, even before factoring in Friday and that's bad for stocks.


History: According to The Stock Traders Almanac, Monday is historically quite bearish in the long term, though the SPX is up 6 of the last 8.  Somehow, I'm not thinking tomorrow is going to make it 7 of 9.

Accuracy:

Month right  wrong

April   2      2

     And the winner is...

Going on the futures alone, I'd have to say Monday will close lower.  That said, there at at least a few positive signs, notably in the movement of the dollar and (possibly) the VIX (which we'll know more about on Monday).  This makes me cautious now about going all out short at this point.  I'd like to wait a bit and at least see how Monday plays out before making that decision.  That said, the monthly charts have weakened considerably due to Friday's move (see my previous post below) and I'm changing my 30 day outlook to negative.  It will be interesting to see the new Ticker Sense Sentiment Survey on Monday.

ES Fantasy Trader

Portfolio stats:  The account remains, for the time being, $137,750, after 28 trades (22 wins, 6 losses) starting from $100,000 on 1/1  Tonight we (unfortunately) remain long at 1397.00.  One nice thing about this being a fantasy trade is that I can take unlimited heat.  I'm afraid that's what we're in for here.  But patience may prevail in the end.  Let's see what Monday brings.


New: Twitter


By popular request, I am going to try an experiment in real-time calls for my ESFT trades in my brand new Twitter feed.  Feel free to follow @NightOwlTrader on Twitter.  For now, you can expect at the most two tweets per day - one entry and one exit.  If this goes well, I may post some of my other trades there too.  Reader feedback is always appreciated.