Thursday lower unless ES pivot regained

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

• Thursday lower unless ES pivot regained.
  
• ES pivot 1517.42.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

After dribbling lower most of the day, the bulls staged a furious last minute rally but it wasn't quite enough to save my call for a higher Wednesday, with the Dow ending down 36 points.  I did mention the risks of Mr. Market not liking Comrade Stalibama's State of the Soviet address last night and it turns out he got all dyspeptic over El Supremo's call for a big hike in the minimum wage.  That sent Mickey-D's down and we were done.  Now the S&P and the Nasdaq did both finish positive, but my call is for the Dow, so it's a miss.  Still, I think the fundamental thesis held - there was no major breakdown on Wednesday.  Now let's see whither might Thursday go.

The technicals (daily)

The Dow: Today's action marked the second day in a row we were stopped by resistance at the 14,012 level (the top of the ascending triangle).  However, we once again put in a higher low, so the triangle remains intact.  This is still not a bearish-looking chart.

The VIX:  I'll admit I was surprised by the VIX's 2.69% pop today, even if the resulting spinning top is less than convincing.  We're officially oversold and the stochastic seems to be on the verge of setting up a bullish crossover, but we also remain well inside the descending RTC, so it's too early to call this downtrend over.  And the spinning top does admit the possibility of continued lower on Thursday.  This one is too tough  to call - we'll need confirmation.

Market index futures:Tonight all three futures are ever so slightly lower at 1:20 AM EST with ES down by just one tick, or 0.02%.  Wednesday's candle was yet another doji, bur these have been coming regularly all year so far and mostly meant nothing.  So we remain in the rising RTC and the overnight is providing little guidance so far.  True, we're quite overbought, but we've been even more overbought this year and kept going higher.  I'll need to see some confirmation on Thursday before calling ES lower from here.

ES daily pivot: Tonight the pivot rises from 1514.58  to 1517.42.   After spending most of Wednesday comfortably above the pivot, we broke under as I write this, just as the Asian markets closed.  It's only half a point so far, but it's still a bearish sign and will have to be watched Thursday morning.

Dollar index:While the dollar did open lower on Wednesday, as I figured, it eventually recovered all its losses, ending up just 0.01% .on a stubby spinning top.  But it was enough to drive the indicators off  overbought and cause a bearish stochastic crossover.  So despite the green candle on Wednesday, I've got to go with a lower dollar on Thursday.

Euro: On Wednesday the euro put in a spindly long-legged doji sitting just outside its descending RTC for a bullish setup.  However, it's losing ground in the overnight, down 0.10% so far.  This makes me cautious about calling the euro higher Thursday, though that's what I'd expect if the dollar does move lower.

Transportation:The trans on Wednesday provided the most bullish chart, gaining 0.38% in a move that was significant mainly because it negated the two preceding dojis and kept us right in the middle of a rising RTC back to January 31st.  It did drive the indicators to overbought, but the indicators haven't been very useful lately as the trans continue to do nothing but go up.  So in the absence of a bearish candle about all that leaves is more upside.


Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   2      2      2           3        0.714    140

     And the winner is...

With ES having just fallen below its pivot, but with few bearish signs on the rest of the charts, I think the logical course tonight is another conditional call.  If, by mid-morning Thursday (say 10:30 - 11-ish), ES has not broken back over 1517.42, then we close lower,  If it does, we close higher.  This has been a frustrating rally as every time we get some sort of bearish technical sign, nothing comes of it.  So I'm reluctant to go all-out bearish, particularly in an op-ex week until I see clear evidence of a top, and I haven't seen it yet.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we just continue to stand aside.  I really want to go long here, but with those nagging overbought indicators, I'm just a bit reluctant.

Wednesday higher

• Wednesday higher, low confidence.
  
• ES pivot 1514.58.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I was tempted to call Tuesday higher but finally decided not to partly because I had called Monday higher and was wrong.  I guess I was just a day early as the Dow gained 47 points to recapture the 14K level.  To quote Gen. Burkhalter, "What is the meaning of this?"  We now interrogate the charts for answers.

The technicals (daily)

The Dow: Yesterday I posted my vision of an ascending triangle and observed it was within a day or two of breaking.  We got the break Tuesday with a close of 14,019 just above the top horizontal line I drew at 14,010.  Some may scoff at this as not being too significant, but if you draw a smaller triangle, one going only back five days instead of eight, the breakout line is at 13,990.  Either way, today's 47 point move isn't bad, considering the range narrowing we've seen recently.  And oddly enough, we're still not overbought.  RSI in fact went down today, now at 51.  If this is indeed the breakout, and I'm going to guess it is, then we're going to take a look at the 2007 highs in short order - we're not that far away now.

The VIX:  Last night I wrote "I'm not really seeing any bullish impulse here" and indeed there weren't as the VIX dropped another 2.32% Tuesday, breaking its short-term support.  Next support is at 12.41 and being as we remain in a descending RTC with indicators still not oversold, I see no reason we can't revisit that level.  If that falls, then we're going to the lower BB, now down to 12.03.  This, of course, is all good for stocks.

Market index futures: Tonight all three futures are higher at 1:16 AM EST with ES up by 0.07%.  With another green candle on Tuesday, ES remains solidly inside a rising RTC that now goes back to January 8th.  We're getting quite overbought, but the indicators have been none too reliable all year so far here.  We're been overbought more often than not but continue to go higher.  Fed money, sector rotation, PPT, whatever the reason, I'm still not seeing a top here.

ES daily pivot: Tonight the pivot inches up from 1513.25  to 1514.58.  We were higher before and remain higher now, so that's bullish.  And, at least at the moment, ES is showing no particular interest in checking out the new level, so that's all bullish.

Dollar index:On Tuesday the dollar confirmed Monday's evening star with a 0.28% drop that caused the indicators to peak at overbought and just gave us a bearish stochastic crossover. It also left us on the edge of the rising RTC for a bearish setup.  I'd say the dollar's moving lower again on Wednesday.

Euro: And the euro chart seems to confirm that with a decent gain on Tuesday that took it almost to the edge of its descending RTC, causing its indicators to bottom on oversold and gave us a bullish stochastic crossover.  That all looks good for more euro upside on Wednesday.

Transportation:I was hesitating on the trans last night because of yesterday's doji, but instead of confirmation Tuesday, they gave us - another doji and another tiny loss of 0.04%.  But that has the effect of nudging us closer to the edge of the rising RTC and bringing the indicators off overbought.  With resistance at 5912 proving to be tough, the trans may be headed lower soon, but once again, it's still too early to call a top here.

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.
 

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

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

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

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

  4  1/22       50         21        +      +   1486

  5  1/28       44         26        +      +   1503

  6  2/5        40         36        +      +   1513

  7  2/11       43         25        +      +   1518

  

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that I voted bullish four weeks ago, so both I and the majority were correct.   We therefore continue the year with an accuracy of 2 for 3, or 67%. 

Interestingly, bearish sentiment took a big drop this week while bullish only gained three points as a number of participants apparently moved to the sidelines.  One might be tempted to view this as contrarian bearish, but note that bearish sentiment dropped to 15% in week 3, and yet here we are in week 7,  46 SPX points higher.


Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   2      1      2           3        0.833    176

     And the winner is...

The picture isn't totally clarified tonight, but the weight of evidence seems to be in the bulls' favor - the futures, the pivot, the currencies, the VIX - all looking positive.  The Dow in particular is looking especially strong right here.  The worst thing I can see is that the trans may be taking a break, but that's hardly conclusive evidence of an imminent top.  So unless Mr. Market finds something in Comrade Stalibama's State of the Soviet address tonight he doesn't like come morning, I see no real reason why we can't go higher Wednesday.  Traders of the world, unite!  Forward!

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we just continue to stand aside.  I really want to go long here, but with those nagging overbought indicators, I'm just a bit reluctant.

Tuesday uncertain

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

• Tuesday uncertain.
  
• ES pivot 1513.25.  Holding below is bearish .
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Ho hum.  Same old same old.  With just a 22 point loss (which I'll admit I wasn't expecting), the Dow remains stuck in a narrow range that just seems to drone on and on.  Ho hum.  What's it going to take to get this market off of top dead center?  Let's set the choke and see if we can't get these charts to turn over.

The technicals (daily)

Dow daily

The Dow: At first glance a yawner, I think today's small range is instead really bringing into focus an ascending triangle pattern here.  Take a look and see if you don't agree.  I know, there's that one tail sticking down from three days ago, but if you go by opening and closing prices, this looks really good.   And since these are generally bullish patterns, I'd say that we very well may be looking at some higher prices soon.  This triangle is just about finished, like within a day or two.  Meanwhile the indicators have still yet to reach overbought, so there's potentially still some gas in the tank.  Despite today's 22 point loss, this chart's not looking bearish to me right now.

The VIX:  And as if to underscore that, on a day when the Dow fell, the VIX did too, losing 0.61% to close back below 13 and remain in a descending RTC.  Indicators still not oversold yet.  At least I got this one right.  The VIX is now right at support though, so we're going to have to wait and see if it sinks through that on Tuesday.  No reason why it can't, as I'm not really seeing any bullish impulse here.

Market index futures:Tonight all three futures are lower at 1:42 AM EST with ES down by 0.20%.  On Monday, ES gave us a doji star just above last Friday's green marubozu.  Not quite an evening star though and we remain in the rising RTC.  That said, the overnight action seems to be confirming the doji so far, so this chart is now looking a bit on the bearish side.

ES daily pivot: Tonight the pivot rises from 1510.42  to 1513.25.  This, combined with the overnight sag we're seeing now puts ES below the new pivot, a bearish sign.

Dollar index:I was hesitating on calling the dollar lower for Monday and I'm glad I did, since it gained 0.09% on a bearish evening star.  Coupled with now quite overbought indicators and touching its upper BB for the third straight day, it now looks like we have a better shot at moving lower on Tuesday.

Euro: I always like to check the euro chart independently to see if it agrees with my dollar call.  After a small gain on Monday, the euro opened its new candle higher but has been losing ground ever since, now at 1.3389.  It also remains in a descending RTC.  However, it's now oversold and its stochastic is in prime position to form a bullish crossover.  I think it's due to move higher any day now - if not Tuesday then even more likely on Wednesday.

Transportation:The trans put in a doji on Monday, losing just 0.04%.  So we now have a reversal warning  and overbought indicators but remain in a rising RTC.  Thing is the trans have been so powerful lately, I really want confirmation of this doji before calling them lower.  So we need to see how this one goes on Tuesday.  For the time being, it's not bearish yet.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow                                                                      average  points

January    5      7      6           3       0.533    -101
February   2      1      1           3       0.833     176

     And the winner is...

The charts are not looking particularly bearish to me tonight as op-ex week grinds on.  Kind of like last night.  But my bullish call then didn't work out so hot tonight and I always hate to go against what the futures are telling me in the overnight.  On the other hand, we have that Dow triangle and a VIX in the toilet.  The overall picture seems to be a reflection of the general wayward movement of the market recently, so with no real handle to grab on to, I'm just going to punt and call Tuesday uncertain.  I know J-Trader's going all-in short here, and I admire and respect that, but personally I'm not seeing it.  I could be wrong.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again and will continue to do so until I see a trend developing one way or the other.

Monday higher

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

• Monday higher, low confidence.
  
• ES pivot 1510.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

There were a few reversal signs last Thursday night but most of the technicals seemed at least mildly bullish so I called Friday higher and that's what we got - a 49 point advance in the Dow.  That was the good news.  The bad news is that we remain stuck in what is now a 10 day trading range.  When will it all end?  Or more to the point, how will it all end?  Read on...

The technicals (daily)

The Dow: The Dow continues its down-up-down-up yo-yo-ing.  The only discernible trend, if you can call ti that is that its been making higher lows for the last three days.  But we remain stalled in the face of strong resistance just above 14K.  The indicators have actually come off overbought in the past week so there might be some room to run - if Mr. Market can ever find first gear.  Bottom line, there's still no direction on this chart.  But if we don't get moving soon, it's beginning to look more like a topping process than simple consolidation.

The VIX:  The VIX gapped down on Friday to finish just above 13, breaking six month support and remaining in a descending RTC.  With no further support til 12.50, a lower BB at 12.14, and indicators still not yet oversold, I'd guess that we might move lower again on Monday.

Market index futures:Tonight all three futures are barely up at 1:03 AM EST with YM and NQ both up just 0.04% and ES dead flat.  This follows the recent pattern.and feels more like the dog days of August than the middle of winter.  We did however put in a strong showing on Friday to keep ES at the upper end of its rising RTC.  And with indicators still not yet overbought and the upper BB continuing to run away, now at 1522.46, logic would seem to indicate that there's still more upside possible here on Monday.  ES (and SPX) seems to be gearing up for a run at the all-time ES high of 1576 from October 2007.

ES daily pivot: Tonight the pivot rises from 1503.58  to 1510.42. Despite this, we remain above the new number, though just by two points.  But as long as we don't break under, it's bullish.

Dollar index:After a big gain last Thursday, the dollar tacked on another 0.07% to touch its upper BB and move to overbought levels. .The dollar hasn't really been respecting its upper BB too well lately, so while the caution flag is out, it's still to early to call a move lower.  I'll be looking to Monday for some clarification.

Euro: The euro continued its recent plunge on Friday, contrary to my expectations.  But I might have been just a day early as it is up 0.11% in the Sunday overnight trade.  Still, there's no definitive sign yet that the euro slump is over - the indicators still aren't even oversold yet.

Transportation:The trans have now retraced all of their losses and then some from that one big down day January 30th, establishing a new rising RTC.  However, Friday's 0.41% gain drove them into overbought territory.  There's still no reversal sign in the candles though so it's too early to call a top here - more upside possible Monday.


Accuracy (daily calls):
Month    right  wrong  no call  conditional  batting   Dow                                                                      average  points

January    5      7      6           3       0.533    -101
February   2      0      1           3       1.000     198

     And the winner is...

Tonight the technicals are looking a lot like they were last Thursday night - some reversal warnings but no strong pull either up or down.  It's also an op-ex week and a pre-holiday one at that, with all the usual brou-ha that implies.  But I guess the logical course is the same as last Thursday - in the absence of clear bearish signs, the thing to do is keep following the trend and call Monday higher.  I'd be more comfortable if I had a better reason for saying that, but you gotta play the hand you're dealt.


ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again and will continue to do so until I see a trend developing one way or the other.

Friday higher

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

• Friday higher, low confidence.
  
• ES pivot 1503.58.  Holding above is bullish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well, it looks like it worked again.  Last night's call was for a move higher if the ES pivot held up, else lower.  Well at 10:10 AM we dove below the pivot and that was that.  Dow down 42 points.  End of story.  QED.  Now onward!  We blitz the charts in an all-out assault to determine Friday's direction.  Ooh rah!

The technicals (daily)

The Dow: After a small green hanging man yesterday, on Thursday the Dow gave us, yes, another hanging man, this one a big angry red one.  But just like yesterday, we need confirmation and Wednesday's action doesn't cut it.  So we're pretty much left where we've been for seven sessions now - range-bound.  If you ignore the tails, the triangle formation still seems to be developing, but it's not really classical.  But we also have a bearish RTC trigger, for what its worth.  So we're pretty much remaining in limbo here without any clear direction either way.  That's life.

The VIX:  So turning to VIX-land, we see a gravestone doji.  In fact the mother of all gravestone dojis.  One that would make Morticia Addams proud.  And contrary to what you might think. the GSD is actually a bullish reversal pattern.  That said, we now have a new descending RTC going and falling indicators.  On top of that, we stopped right on an S/R line so it's all pretty much a wash.  I'll hazard a guess though that I don't think we're moving much higher here on Friday.

Market index futures: Tonight all three futures are higher at 1:06 AM EST with ES up by 0.08%.  ES gave us a tall spinning top doji ton Wednesday as it continues to be stymied by resistance around 1510.  However, the opens and closes of both of the last two days have been around the top of its latest consolidation range.  By failing to revisit the 1495 area we were at last week, ES is showing some strength.  It has also come down off overbought recently.  So the selling pressure appears to be more like intermittent gusts now rather than a steady gale.  But until it can break above 1510, I think we'll continue to remain range-bound.  Accordingly, it's difficult to pick a direction on this chart.  Too much noise, not enough signal.

ES daily pivot: Tonight the pivot dips from 1505.33  to 1503.58.  After threading about the old number all evening, ES broke out just before 9 PM and the new lower pivot leaves us about four points above, a bullish sign.

Dollar index: I expected some rising action in the dollar on Thursday but I sure didn't think we'd see it blasting straight through its rising RTC with a big 0.61% gain that took it clear to its upper BB. .And with the indicators still not overbought, it looks like there could very well be some more upside available here on Friday.  And it's interesting that even with this big move up, the Dow hasn't been all that negatively affected.  Apparently, the party-goers are not yet ready to head for the exits.

Euro: And while the dollar had a big gain, the euro correspondingly had a big drop on Wednesday, establishing a new downtrend as its indicators continue their march towards oversold.  It was unable to hold its five-minute pivot from last night and the new overnight candle continues moving lower, now down to 1.3402.  This is something of a support line so we'll have to see if it holds on Friday morning.  My guess is that after two relatively big down days, the euro may take a break or even a DCB.

Transportation: Interesting divergence here. The trans were up 0.24% on Wednesday while the Dow was down 0.30%.  And oddly enough, the Dow was up Tuesday while the trans were down.  And while the Dow appears to be just treading water, the trans continue to put in higher lows and testing resistance at 5884.  This keeps them in a rising RTC with a continuation of the bullish stochastic crossover we saw four days ago.  So while the hanging man is a reversal warning, the general gestalt here doesn't look all that bearish so I'm not convinced the trans will be moving lower on Friday.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    5      7      6           3       0.533    -101
February   1      0      1           3       1.000     149
     And the winner is...

With surprising strength in the trans, the futures all green and above their pivots in the overnight, a euro ready to rest after a long fall, copper finding support, bellwether IBM looking ready to move higher, the TLT in a continuing downtrend, and a VIX trending lower, it's looking like the correct technical call is for Friday higher.  We do have a number of dojis around but they are warnings only and have not yet been confirmed.  If we go lower Friday I'll be sorry I didn't wait for that instead of going out on a limb.. But I must add that I think we stand a chance of seeing some more downside early next week.  That's all she wrote.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again.

Thursday higher if ES pivot holds

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

• Thursday higher if ES pivot holds, else lower.
  
• ES pivot 1507.75.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Wednesday's call was for a higher close if the ES pivot held.  Well we broke under in the early morning hours, which doesn't count, then back above right after the open.  There was one quick attempt by the bears to drag 'em under the pivot around 1:30 PM but that failed and we did end the day higher, just barely, with the Dow gaining all of seven points.  Still, following the pivot proved that the selling pressure just wasn't there.  Now let's turn our attention to Thursday.

The technicals (daily)

The Dow: The Dow remains in consolidation mode.  It put in a hanging man candle on Wednesday but that's meaningless as it does not come in the context of an uptrend.  More significant is that it appeared entirely outside the rising RTC for a bearish setup.  But this type of situation requires confirmation.  It's just too unclear to try and make a call off a chart like this.

The VIX:  By comparison, I took a pass of the VIX yesterday for similar reasons.  But on Wednesday, the VIX traded down again for a second day, losing 2.26% and this was a bearish RTC trigger.  The stochastic is trying, but has not completed a bullish crossover, so I'd say technically there is more downside to go here.

Market index futures:Tonight the futures are mixed at 1:32 AM EST with NQ up 0.08%, YM up 0.03% but ES down by 0.02%, or one tick.  So call it basically flat.  Like the Dow and  the trans, ES gave us a doji today near the top of its recent trading range.  It remains to be seen if ES can break above resistance at 1507.  With a slowly rising pivot continuing to provide support, it's not out of the question.  If we get BTE jobs numbers on Thursday, that might provide  the needed push.  And depending on what you've been drinking, you might see an ascending triangle in the last three ES candles, which would be bullish.  Overall though, I'm going to wait for a breakout.

ES daily pivot: Tonight the pivot inches up from 1503.08  to 1505.33.  There seems to be some issue going on here with the pivot numbers as pointed out to me by several readers, so tonight I'm taking extra special precautions to verify that the pivot number that eSignal is showing me is in fact correct.  As of 1:09 AM EST, eSignal says the new pivot for Thursday is in fact 1505.33.  Going by that, we see that we were above the old number most of the day and then just nicked the new pivot right at midnight but managed to stay above the new number, just barely.  That puts the pivot in play so we need to watch for any attempts to dive under which would be bearish.

Dollar index:The dollar continues it wayward ways, this time gapping up 0.29% but doing it on a small red candle. .However, that's enough to finally draw a new rising RTC and that, plus rising indicators suggest more upside for the dollar on Thursday.

Euro: I thought the euro could move higher Wednesday but it did not, instead it reversed most of Tuesday's gains.  So much for the bullish piercing pattern.  Like the dollar, the euro is moving in odd ways lately.  As I write this, it's on a tear, going from 1.3514 to 1.3541 in just 90 minutes.  That brings it right up to its own pivot

Transportation:On Wednesday the trans put in a red hanging man.  Unlike the Dow, this one comes in an uptrend, so there's at least a warning of a reversal here.  But we remain solidly in a rising RTC, so this uptrend is still far from over.  Not enough evidence here to call 'em lower Thursday.


Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    5      7      6           3       0.533    -101
February   1      0      1           2       1.000     149

     And the winner is...

It's another difficult call tonight.  Overall I'm not getting any really great reads off any charts.  My fallback position is the ES pivot so I'm going to go to the well once again and claim that if we can manage to stay above the pivot (which just before 2 AM is still showing 1505.33) then we'll close higher Thursday.  If we break down convincingly below before 11 AM-ish, then we close the day lower.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again.

Wednesday higher if ES pivot holds

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

• Wednesday higher if ES pivot holds, else lower.
• ES pivot 1503.58..  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

 [ES pivot value corrected, 12:47 PM EST, 2//6/13]

Recap

Last night I called for the day to end higher if the ES pivot was crossed.  Well turns out that did happen around 3:45 AM while I was snoozing and we never looked back.  The pivot was never threatened again and we closed higher.  In this case, you snooze, you win.  And so the Dow won 99 points to claw its way almost back to 14K.  But that move sets up an interesting pattern, one that only the charts can resolve.  And since I love a mystery, let's get right to it.


The technicals (daily)

The Dow: You know, most of the time the market is either going up or down.  But sometimes it gets into these schizophrenic moods where it can't decide which way to go.  I scanned back through the daily Dow and oddly enough the last time we had this sort of pattern was back in February 2012 and then also February 2011.  Maybe it has something to do with February.  But in any case we are now clearly in  the Brownian Motion Zone, that down-up-down-up never-never land where logic and reason fly right out the window.  FWIW, we now have a developing bullish stochastic crossover here.  But with what looks like a new channel developing, I'd say we're just as likely to go lower.  Who knows, who cares?  None of this makes any sense.  One interesting point for the bears is that the Dow crossed 14K intraday but was unable to hold onto it.

The VIX:  I sort of outsmarted myself on the VIX.  I always like to say that the VIX never spends more than a day or two at its upper BB before reversing but for some reason I was willing to give it a pass for Tuesday.  Bad move, as the VIX bounced off that BB like a triple score rocker in a pinball machine, losing 6.48% to close right back out of its rising RTC for a second bearish setup in three days..  I'd like now to call it lower again, but this chart has all the earmarks of just getting jerked around by unseen forces - maybe it's Planet X at work again.  Homey don't play that game, so we'll just take a pass on this one tonight.

Market index futures:Tonight all three futures are higher at 1:07 AM EST with ES up by 0.12%.  ES is definitely consolidating now, stuck in a range between 1492 and 1507.  We're at the upper end of that right now, so recent experience would suggest we go lower from here.  But with so much bullish momentum at work lately I'm reluctant to say that on that basis alone.  The prudent course is to just wait for the break, either up or down.

ES daily pivot: Tonight the pivot rises from 1497.42  to 1503.58.   We were above all day and remain above the new pivot.  I can't stress enough the importance of this number.  I don't know why it works (probably because it's programmed into all the HFT bots) but it does.  So as long as we stay above this line, it's bullish.

Dollar index:Last night's evening star was neither confirmed nor rejected on Tuesday as the dollar lost just 0.05% on a fat little inverted hammer.  So unfortunately, there's still not much direction on this chart.  The indicators suggest higher, but they haven't been all that reliable lately. .

Euro: After a big dump on Monday, I though we were in for more downside action Tuesday.  Bzzzt!  Thanks for playing our game.  The euro retraced half of those losses in a nice bullish piercing pattern.  It's giving some of that back though in the new candle overnight.  Looks like something's up here, as the euro is falling out of bed as I write - down from 1.3581 to 1.3566 in just 15 minutes on a big spike in volume.  I checked the news wires but see no reason for this.  It may just not have hit the peon news feed that I get, or it may just be some overnight trading shenanigans.  Either way, it's possible the euro could actually move higher on Wednesday.  We'll have to see if Tuesday's move has any legs.

Transportation:After a fair bit of indecision on this chart like the rest, the trans took off to the upside on Tuesday  to close above their recent resistance of 5876.  This move also gives us a new rising RTC and a bullish stochastic crossover.  So unlike last night there does seem to be something of a pattern developing here, and it's to the upside.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    5      7      6           3       0.533    -101
February   1      0      1           1       1.000     149
     And the winner is...

With the Dow unable to put in more than two days in a row of the same direction in the last seven, recent history would suggest that Wednesday's going lower.  But that's kind of flimsy reasoning.  The indicators  seem to have stalled out in their descent from overbought and look like they're heading back up again - a bullish sign.  And the TLT continues to drift lower.  So while it's not out of the question that we could get whipsawed some more on Wednesday, I'm going to apply the ES pivot again and claim that as long as we remain above the pivot by mid-morning, we'll close higher Wednesday.  A decisive punch through under and we're closing lower.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside once again.

Tuesday higher if ES pivot crossed

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

• Tuesday higher if ES pivot crossed, else lower.
• ES pivot 1497.42.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Wow - I sure didn't see that one coming.  I even came right out and said I wasn't expecting a big move on Monday.  How's that old saying go?  "Fool me once, shame on me, fool me 3,276 times, find another line of business"?  About the best I can say is that did call Monday as "uncertain".  Anyway, moving right along, let's see if we can redeem ourselves for Tuesday.

The technicals (daily)

The Dow: The Dow's big dump on Monday took it back outside the rising RTC and closed there for the first time, and that is a clear bearish setup.  The indicators are also now clearly trending lower towards oversold.  And today's tall red marubozu, part dark cloud cover, part harami, just looks bearish.  Is this the start of the pullback everyone's been waiting for?  Hard to say without at least an RTC confirmation.  That should come on Tuesday.

The VIX:  After gapping down right out of its own rising RTC on Friday, the VIX on Monday gapped right back up again and right back into the RTC.  In fact its 13.72% gain closed right on its upper BB.  The VIX usually reverses when that happens but can spend a day or two climbing the BB.  With the indicators no longer overbought, that's a distinct possibility for Tuesday.

Market index futures:Tonight all three futures are higher at 1:29 AM EST with ES up by 0.13%.  ES is now giving us a bearish RTC breakout and declining indicators, all suggesting a move lower.  Still, we have to note the failure to move lower in the overnight so far.  This may simply be due to the support around 1495 that may crack soon, or it may be renewed buying pressure after Monday's drop.  Hard to say.  This is another chart that requires confirmation before calling a direction.

ES daily pivot: Tonight the pivot drops from 1504.33  to 1497.42. We've now been under the pivot since early Monday morning and remain there even with this drop.  It's just two points now but ES is showing little enthusiasm for testing the pivot.

Dollar index:I did correctly call the dollar higher on Monday.  In fact it gapped up a big 0.55%but ended with an evening star.  Frustratingly, the indicators look bullish so we'll have to wait for confirmation of a move lower from here based on the candle.

Euro: At least the euro/dollar inverse correlation is working.  The euro tumbled on Monday, crashing right out of its rising RTC for a bearish setup.  It's gapping even lower in the overnight and with falling indicators I'd say it's got lower still to go on Tuesday.

Transportation:I blew this one too as the trans gave back most of Friday's gains on Monday, losing 0.63%.  The candle is somewhat bearish but the stochastic seems to be trying to set up a bullish crossover.  And with no RTC now to guide us, I'm just going to have to take a pass on this chart.  I'm not seeing any pattern here.

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.  We've now completed the stats for all of 2012 so we start over with 2013.
 

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

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

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

  3  1/14       52         15        +      +   1472

  4  1/22       50         21        +      +   1486

  5  1/28       44         26        +      +   1503

  6  2/5        40         36        +      +   1513

  

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that I voted bullish four weeks ago, so both I and the majority were correct.   We therefore continue the year with an accuracy of 1 for 2, or 50%.  I  still expect that number to rise as the year goes on :-)

This week we note the continuation of a now four week trend of declining bullishness and increasing bearishness as the spread now narrow to just four points.  Nonetheless, I continue to vote with the majority, though it may be starting to look risky.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    5      7      6           3       0.533    -101
February   1      0      1           0       1.000     149
     And the winner is...

This is a very difficult night.  I'm seeing some bearish indications but all are of the sort that require confirmation.  I'm also a bit wary of calling this market lower when the futures aren't cooperating at this late hour of the night.  But I do believe that if we are to move higher on Tuesday, ES will have to cross its pivot of 1497.42.  So I'm going to make a conditional call: if ES crosses its pivot before mid-morning, we'll end Tuesday higher, else lower.

ES Fantasy Trader

Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight with no clear direction we're going to stand aside again.

Monday uncertain, doji possible

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

• Monday uncertain, doji possible..
• ES pivot 1504.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Recall that last Thursday night, bearish sentiment appeared to be on the wane and although things didn't look particularly bullish either, I let my vote be decided by the historically strong odds favoring the upside for the first day of February.  And that bet was rewarded with a nice 149 pop in the Dow that gave us out first close back over 14,000 since teh historic highs of October 2007.  And predictibly, that was the lead-in story to the TV news that night, and it hit the front page of the paper the next day.  That alone is generally a good bearish sign, but is it ready to kick in just yet?  Aye, there's the rub.  Let's scratch the charts and see who purrs.


The technicals (daily)

The Dow: Friday's 1.06% gain rescued the Dow from the very edge of the rising RTC to put us solidly back into it.  It also canceled the developing trend of two consecutive red candles.  And it kept the indicators at overbought, but that's counted for little lately.  So now 14K becomes support and there's no real bearish signs on this chart tonight.

The VIX:  As the Dow popped on Friday, so did the VIX tank, re-establishing their inverse correlation nicely.  In fact the VIX fell 9.68% in a big gap down that dumped it right out its rising RTC for a bearish setup.  It also caused a bearish stochastic crossover.  And caused the indicators to peak at overbought and begin moving lower.  That's three strikes, yer out.  I'd expect more downside here on Monday.

Market index futures:Tonight the futures are mixed at 1: 07AM EST with ES down by 0.03%, NQ down 0.11% but interestingly, YM actually up 0.02% - an unusual occurrence.  With a bearish setup last Thursday, things were looking iffy for ES for Friday.  However, Friday's pop rescued the RTC here too and just managed to get us back inside.  And I note that we just got a bullish stochastic crossover from a high level.  We've seen three of those in the last three months and every time after that ES moved higher.

So I'd say unless we get a day or two of red candles, this run's not over, even at these levels.  I'm thinking now that with the SPX having hit 1500 and not immediately fallen back, and with the Dow now above 14K, we're going to revisit the all-time highs before seeing a pullback.

ES daily pivot: Tonight the pivot rises from 1494.83  to 1504.33. We were above before and remain above, though with ES flat, it's only by two points now.  Still, it remains bullish unless ES cracks through the ice Monday morning.

Dollar index:The dollar also resumed its inverse correlation with the market Friday, gapping down 0.11% for a doji and continuing to dribble down the lower BB.  But with indicators now quite oversold and the stochastic just a hair away from a bullish crossover, there's at least a chance of a move higher Monday and if not then, then on Tuesday.

Euro: After another big gain Friday, the euro is giving back some ground in the Sunday overnight, now at 1.3628.  That leaves it right on the edge of its rising RTC.  Any close lower and its a bearish setup.  It will take a close above 1.3658 to cancel that.  With indicators finally starting to come off overbought, it's looking like the euro may see more downside Monday.

Transportation:Late last week we were looking at what appeared to be the start of a breakdown in the trans as they fell right out of their rising RTC on Wednesday and then only managed a weak doji on Thursday.  But on Friday they bounced right back for a 0.91% gain that confirmed the doji and makes the earlier action look like the two day fake out breakdown we got on January 7th and 8th.  More upside seems likely here on Monday.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    5      7      6           3       0.533    -101
February   1      0      0           0       1.000     149

     And the winner is...

The usual pattern is generally for big up days to be followed by a day of consolidation.  With no major economic news coming out on Monday and with no great technical tugging either up or down, I think that this is pretty much what we can expect.  Accordingly, I'm going to call Monday uncertain, not because I have no idea if we're going to have a big move up or down, but because I think we'll have a finish near where we start - another doji day.

ES Fantasy Trader

Last Thursday night we went long for the first time this year despite some bearish-looking RTC signals.  The decision was vindicated as we took a decent 9,75 point profit just before lunchtime Friday morning.  I took this exit not on any quantitative signal but just because it looked to me like ES was done for the day.  Turns out, we were pretty close to the top by then so it wasn't a bad trade.

 

Portfolio stats: the account now rises to  $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we're going to stand aside in anticipation of a low probability of any significant moves.

 

SLD    10    false    ES    MAR13 Futures     1507.50    USD    GLOBEX    FEB 1 11:43:52

BOT    10    false    ES    MAR13 Futures     1497.75    USD    GLOBEX    FEB 1 00:46:19