Is the Top In?

Strange Times

In all the eight years I've been watching the markets full time, I've never seen a situation of the sort that's unfolding right now.  As of Thursday's close in front of a long holiday weekend, we weren't in bad shape.  The Dow closed down just 14.61 points, the SPX was basically flat, and the Nasdaq actually gained 0.4%.  There was no indication, technically at least, that things were about to turn south.  Then on Friday, a holiday, a day when stock trading was closed, the government released employment numbers - and they missed by a mile.

Now the stock market may have been closed, but the market futures were open apparently (I didn't even know about this) from 8:30 AM to 9:15 AM.  And in that brief time, they fell off a cliff, with ES dropping from 1392.50 to 1372, "recovering" to 1375 in the final minute.  I don't know who made money off this, but I sure wasn't one of them.

This move was the worst since March 6th, when ES lost 21.75 points.  And what happened the next day?  It retraced almost exactly half of that loss, and more than completely retraced it the next day.  But there's a big difference between yesterday and March 6th.  Back in March, that big dump took us right to the bottom of an ascending regression trend channel.  This time a big drop on Wednesday already took us to that spot.  Then Thursday traded outside the RTC which is a bearish setup.  And then boom, on Friday ES traded straight down from there - the bearish trigger.

But but but.  That was based on just 45 minutes of trading.  It's very dangerous to compare a daily candle to what amounts to less than a one hour candle.  And after four days of declines, ES is now quite oversold.

And it gets weirder.  On Friday eSignal posted a trade at 12:25 PM for one ES contract at 1390.25 which left ES exactly unchanged for the session.  ANd the same thing happened to both NQ and YM.  Now that's really weird.  Did some algo go haywire and place this trade by mistake?  On all three futures?  Is someone willing to risk a 21 point loss by manipulating the charts and turning a long red candle into a doji?  Or did eSignal screw up?  The same way on all three charts?  Lot's of questions, not many answers.  I'm still waiting to hear from eSignal.  FWIW, my broker's charts show ES closing at 1375.00 on Friday (which sounds more believable to me).

Is the Top In?

So that leaves us with the big question.  Have we seen the top?  Is 2012 going to be a rerun of 2011 where first quarter gains evaporated in the second quarter?  Is it going to be "sell in May and go away" or maybe, the way it's looking right now "had you fill, sell in April".

SPX Monthly

Well, I've got to say, that after the first week in April, the picture of the monthly SPX chart has changed considerably.  And here it is.  This is one of the main things I look at every week to make my vote in the Ticker Sense Blogger Poll.  And right now it's looking ready to roll over.  These are one month bars going back to mid-2009.  Note the eerie similarity of the current setup to where we were last year at the same time.

The RSI is quite overbought (I accidentally labeled it "RTC" in this chart).  Also look at the stochastic and how well it corresponds to both tops and bottoms.  The last two bullish crossovers there led to multi-month rallies.  And the last bearish crossover was in March, 2011, one month before the top last year.  The stochastic is now getting ready to form another bearish crossover.  And the candle itself that was looking good a week ago is now looking like a dark cloud cover which is quite an ominous bearish reversal warning.

So, bottom line is yes, I think it's time to start taking some profits and moving into cash, or at least doing some hedging with SDS, DXD or the like.  And I am going to switch my vote in the Ticker Sense poll from bullish to bearish for the first time this year in the poll coming out Monday.  I suspect we'll see a big jump in bearish sentiment then.  We'll get a better indicator of which way the market may move Monday when futures trading resumes tomorrow evening, but in the meantime, it's not looking good for Monday morning, and the bad part is that if you're not already short, I don't see any way to get in on it.  We may simply open down big time.  Should be an interesting day.

Thursday higher if pivot crossed

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

• Thursday higher, medium confidence.
• ES pivot 1396.92.  Breaking over is bullish.
• Next week bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1397.00.

Recap

Last night I wrote that I wasn't feeling the love and the Dow responded by barfing up 125 points in a truly ugly session.  The obvious question now, is was this just a one-off like the last big dump we saw on March 6th, or a harbinger of things to come.  The answer, my friend, is blowing in the charts.

The technicals

The Dow: The only good thing about today's big red candle is that it respected the 13K support line.  That, and the fact that it retraced enough to almost make it back into the 13,100-13,250 range we've been stuck in recently.  The bad news is that even losing 125 points today, the indicators are still only about halfway to oversold.  The stochastic in particular is just finishing its bearish crossover, and that's never a good thing.

The VIX:  What I like is that sometimes when the Dow chart has a measure of ambiguity, the VIX often comes to the rescue.  Such is the case tonight.  While the VIX did gap up big time today, gaining 5%, it did it on a red candle.  But most importantly, it poked through the upper BB at 17.18  intraday.  As I've often noted here, the VIX very rarely continues to climb after hitting its upper BB.  In fact it usually goes back down within a day or two at the most.  And the RSI is now at 95, which is more overbought than any time since last July.  This all suggest a a VIX ready to go lower, which would be good for stocks.

Market index futures: Tonight, we've got the futures all trading higher, with ES up 0.25% at 1:56 AM EDT.  And today's big red candle was enough to move this chart to oversold levels, at least on the RSI.  OBV has also hooked up, a good sign of a reversal.  Money flow has also come way down to levels from which reversals have occurred recently.  So while I don't think this chart is ready to take off, it does look like some support has kicked in.

ES daily pivot: Tonight the pivot drops from 1407.50  to 1396.92.  Since ES has been slowly drifting higher since about 10:30 this evening, we are now just touching the new pivot.  Breaking above this and staying there will be crucial to a positive close on Thursday.

Dollar index: The dollar today jumped 0.39% but put in a very toppy looking evening star (well the first 2/3 of one at least).  It was also stymied by resistance at 55.50 (remember, I'm using $USDUPX, not $DXY).  Anyway, this chart looks ready to move lower Thursday, which would be good for stocks.

Transportation: Today the $TRAN put in a hammer coupled with mixed indicators.  The RSI while still overbought, has peaked and turned lower.  OBV is now at its lowest level since the December lows.  But the stochastic continues to rise.  Perhaps the best tell is the RTC that shows we are still in a rising trend, though just barely.  In any case, this chart definitely does not look like one on the verge of a nervous breakdown.


History: According to The Stock Traders Almanac, this whole week is historically quite bullish.  In fact, April is number one ranked month of the entire year for the Dow, though you'd never know it so far.

Accuracy: Reminder - this is where I track how well my daily market close calls did.  Calls are based on the close of the Dow.

Month right  wrong

April   2      1

     And the winner is...

It's always tough calling a holiday shortened week, especially on the day before the holiday.  No doubt many of the big boys will be taking Thursday off, but oh no, not me.  I'm not smart enough for that.  Anyway, while I'm still not exactly feeling the love tonight, let's say I am feeling something of a casual friendship.  Given that the VIX and the dollar are both looking ready to reverse, and that they both called the last reversal correctly, and that people may realize that the world is not coming to an end, and that big one day dumps have tended this year not to be followed by a second day of big losses, I'm going to call for a higher close Thursday.  It may be more of a dead cat bounce than a real rally, but I do think the downside is limited from here.  That's all she wrote!

ES Fantasy Trader

Last night's short worked out well with a handy 12 point gain.  Thanks, Mr. Market!

Portfolio stats:  The account now rises to $137,750, after 28 trades (22 wins, 6 losses) starting from $100,000 on 1/1  Tonight we go long at 1397.00 at 1:48 AM EDT.

BOT    10    ES    false    JUN12 Futures     1391.00    USD    GLOBEX    11:15:40   

SLD    10    ES    false    JUN12 Futures     1403.00    USD    GLOBEX    01:33:23   

Wednesday lower

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

• Wednesday lower, medium confidence.
• ES pivot 1407.50.  Holding under is bearish.
• Rest of week bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes short at 1403.00.

Recap

Hmm - I wasn't really expecting a big gain today, but I sure wasn't expecting the FOMC minutes to torpedo the market.  In fact, I didn't even think it a topic worth mentioning last night.  Anyway, that made short work of my call for a higher close.  This is just one of those things that TA can't anticipate, like an earthquake in Japan.  At least the Dow managed to retrace the worst of it, to end down just 65 points.  Still, this development sort of has to make you wonder.  So let's hunt for some clues to Wednesday.

The technicals

The Dow: I've been talking about this Dow 13,100-13,250 range for a while now and today's close at 13,199.55 left us stuck inside there once again.  Yesterday's close just barely above that proved unsustainable.  And today's action gave us a hanging man in a bearish position relative to yesterday's fat star.  In addition, although there's no action from the stochastic, I note that OBV has turned south and money flow is continuing a slow but steady decline.  Those are all bad signs.

The VIX:  Like the Dow, the VIX is stuck in a groove called 15.50.  Today marked six straight sessions that we closed very close to that level, this time with a gravestone doji.  With action like this, it's very hard to say which way the VIX is going to go, since it doesn't seem to know itself.  The action in the futures seems to suggest the VIX may go higher on Wednesday though, so that would be bad for stocks.

Market index futures: Tonight the futures are running in the red by non-trivial amounts, with ES down 0.43% at 1:29 AM EDT.  This already gives us an ugly solid red candle longer than the body of today's hanging man.  Worse, it takes us outside the rising RTC for a bearish setup and the stochastic is forming a bearish crossover.  And meanwhile, ES continues a slow downward drift as I write.  Whereas last night this chart didn't look bad at all, tonight it's looking rather concerning.

ES daily pivot: Tonight the pivot steps down from 1409.75 to 1407.50.  We were below since 11 AM, and we're still below - not a good sign.  But it's now just a four point gap, so the pivot will bear watching Wednesday morning.  Failure to break over that number is bearish.

Dollar index: The dollar took a pop today that pushed it out of its descending RTC for a bullish setup.  Add in rising indicators and I would not be surprised to see the buck continue to strengthen Wednesday, and that would be bad for stocks.

Transportation: Today the $TRAN pretty much mirrored the Dow, giving us a hanging man that remains inside a rising RTC.  The indicators are a bit mixed, with the RTC showing overbought but OBV showing oversold.  The stochastic though does not suggest a top here yet.


History: According to The Stock Traders Almanac, this whole week is historically quite bullish.  In fact, April is number one ranked month of the entire year for the Dow.

Accuracy: Beginning with this new quarter, by popular reader request, I am going to start tracking the accuracy of my market calls every day.  I will count a prediction as correct if the Dow closes in the direction I called, no matter what the point value is.  So here we go:

Month right  wrong

April   1      1

     And the winner is...

Hmm, there's bad news crossing the wires about Australian trade deficits and Chinese growth, and some renewed rumblings about various issues in Europe.  I know that this week and whole month are supposed to be quite strong historically, but past results don't guarantee future results, as they say.  And right now, the charts seem to be taking a turn for the worse.  All of a sudden I'm not feeling the love, so I'm calling Wednesday lower.

ES Fantasy Trader

Portfolio stats:  Since we did not trade last night, the account remains at $131,750, after 27 trades (21 wins, 6 losses) starting from $100,000 on 1/1  Tonight we go short at 1403.00 at 1:33 AM EDT.
 

Tuesday possibly higher

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

• Tuesday higher, low confidence.
• ES pivot 1409.75.  Holding above is bullish.
• Rest of week bias higher, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I was calling for a higher close today, which we got, but I was expecting us to be bound by the Dow's 13,250 resistance line.  Today's close at 13,264 just breaks that.  Is this significant?  Let's see what's "up" with that.

The technicals

The Dow: I think it is significant.  Today we closed above a level that had been hit only three times intraday so far this year.  We have now comfortably cleared the highs of 2011 and are still not as overbought as we were back then.  The monthly upper BB is at 13,524. I think we've finally cleared out all the people who bought in the spring of 2008, rode the market all the way down and swore they'd sell if they ever got back to even, so there's not much standing in the way of the next 300 or so points.  Then of course there's the big barrier at 14,000 and the Dow's all-time high of 14,198.10 from October 2007.

The VIX:  For the fifth day in a row, we had a VIX that made a large excursion only to return almost exactly to the 15.5 level, closing up 0.9% at 15.64 today.  But this gain came on a big red candle, and its intraday high was lower than the two previous days that moved above 15.5.  The VIX is seemingly unable to gain any real traction here, which is good for stocks.  The futures seem to support this, having gained just 0.05% today on a red hanging man.

Market index futures: All three futures have just turned slightly positive at 1:06 AM EDT.  ES is now up 0.04%.  After today's fat green star, it is encouraging to see the overnight trading around the day's close rather than moving lower.  That said, there's resistance nearby at 1415, then again at today's high of 1417.75, so while some more upside is possible, it may be getting harder to come by than today.

ES daily pivot: Tonight the pivot jumps from 1401.75 to 1409.75.  With ES basically flat since the close, we remain above the new number, though not as much as earlier today.  Still, holding above is positive.

Dollar index: As I expected, the dollar moved lower today, giving up all of Friday's gains and a bit more.  With the lower BB falling away and the dollar stuck in a descending RTC back to March 14th, there's nothing here to suggest a move higher any time soon, also good for stocks.

Morningstar Market Fair Value Index: Beginning tonight, I am no longer going to comment on this number.  It seems to change from day to day (meaning that previous numbers get revised randomly) so I have no use for it.  I think it still makes a reasonable longer term indicator, but there's no point watching it every day, especially if you can't believe the numbers.  Beginning tomorrow, I'll be commenting on the transportation index, $TRAN, in this spot.


History: According to The Stock Traders Almanac, this whole week is historically quite bullish.  In fact, April is number one ranked month of the entire year for the Dow.

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

 12  3/19       46         29        +     1404

 13  3/26       39         29        +     1397

 14  4/2        42         21        +     1408

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 3/5 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 10 for 10.  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.  And as all year long so far, I again voted bullish this week.  With the year now one quarter gone, I'm still not seeing any immediate technical reversal indicators on the monthly SPX chart.  However, 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.

This week we see that bullish sentiment increased a little, but the big change was the drop in bearish sentiment from 29% to 21%.  Apparently, some of the pessimists are now throwing in the towel and moving to the sidelines.  Is this a contrarian sign of impending doom?  I don't think so.  The 21% bearish is still only equal to the previous low on January 3rd, and the 42% bullish is actually the second lowest bullish reading so far this year.

     And the winner is...

I think there's still some more room to run higher, particularly given the historical bias in the first week of April.  So I'm going to say we close higher Tuesday, though possibly not by much, in view of several resistance levels not too far above current prices.

ES Fantasy Trader

Last night's long was profitable and even though I missed the opening pop we still brought home 3.75 points.  Tonight we're going to stand aside, because I'm not seeing a big edge.

Portfolio stats:  We begin the month and the second quarter with $131,750, after 27 trades (21 wins, 6 losses) starting from $100,000 on 1/1

SLD    10    ES    false    JUN12 Futures     1411.25    USD    GLOBEX    11:37:58   

BOT    10    ES    false    JUN12 Futures     1407.50    USD    GLOBEX    00:47:55   

 

Monday maybe higher

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

• Monday higher, medium confidence.
• ES pivot 1401.75.  Breaking above is bullish.
• Rest of week bias higher, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1407.50.

Link of the Day

How Much Money Does It Take To Be In The Top 1% of Wealth and Net Worth in the United States 
 - Joshua Kennnon Blog


Recap

Last Thursday we faced something of a conundrum with the Dow and dollar charts giving contradictory signals.  I decided to go with the VIX and the futures which were guiding higher and so it was, with the Dow wrapping up the quarter with a decent 66 point gain.  Today is April 1st, but there's no fooling the Night Owl as we figure out what might be in store for Monday.

The technicals

The Dow: Thursday's hammer was confirmed with a nice solid green candle Friday on increased volume.  Window dressing?  Perhaps, but this three day pattern which I call a morning hammer star, is rather bullish.  The indicators too have now reversed course and are headed higher.

The VIX:  Perhaps reflecting my confusion last Thursday, the VIX on Friday put in a green candle right at the bottom of Thursday's tall red candle.  That makes now four straight days of closes right around 15.50.  The VIX seems to get pulled down when it tries to go higher, and up when it tries to go lower.  The futures, on the other hand, sure look like they're going lower, and that would be good for stocks.

Market index futures: At 1:10 AM EDT all three futures are positive, with ES up 0.27% after a gap-up open when trading opened Sunday evening.  After last Thursday's doji, we got a solid green candle on Friday confirming the doji as reversal.  This evening's gap-up open shows good follow-through.  OBV is moving up but not yet at overbought levels and the stochastic just formed a bullish crossover.    I'd say this chart is in pretty good shape.

ES daily pivot: Tonight the pivot rises from 1396.17 to 1401.75.  While ES has been drifting ever so slightly lower since around 7 PM Sunday, we are still five points above the new pivot.

Dollar index: Last Thursday the dollar chart was confusing to me.  Friday provided us with some clarity, with a big gap down that touched the lower BB and eventually closed down 0.28% but on a green candle.  The weekly chart though, with a now completed candle, continues to guide lower with all indicators continuing to come off overbought levels and a now complete bearish stochastic crossover.  This can only be good for stocks.

Morningstar Market Fair Value Index: I don't know what's up with MS and their index, but now they're showing the number as 0.96, unchanged in six straight sessions, whereas last week they were showing numbers up to 0.98.  I'm about ready to drop this as a daily indicator if I can't get consistent believable numbers out of them.

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

     And the winner is...

Tonight I'm seeing more positive signs than negative, so I have to give it to the bulls.  That said, the Dow is still pretty much range-bound in the 13,100-13,250 area and we're closer to the top of that than the bottom.  I'm not sure we're going to have the juice on Monday to break out above this, so while I'm going for a higher close Monday, I'm also thinking the upside is limited.

Performance:

Here are my performance stats so far for 2012.  "ESFT" is the ES Fantasy Trader.  The first two columns are for my trading account.  The next is for the ESFT.  The last is the Dow, my reference benchmark that I try to match or beat.

 Date    Trading Month  Tr. YTD  ESFT YTD   Dow YTD

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

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

3/31/12       1.76%      13.31%   29.88%     8.16%

ES Fantasy Trader

Thursday night's long was good for merely a single point, but a win is a win, right?

Portfolio stats:  We finish the month and the first quarter with $129,875, after 26 trades (20 wins, 6 losses) starting from $100,000 on 1/1.  Tonight we go long right at Thursday's pivot, 1407.50 at 12:48 AM.

SLD    10    ES    false    JUN12 Futures     1402.50    USD    GLOBEX    MAR 30 11:20:39   

BOT    10    ES    false    JUN12 Futures     1401.50    USD    GLOBEX    MAR 30 01:15:58   

 

Friday higher

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

• Friday higher, low confidence.
• ES pivot 1396.17.  Breaking above is bullish.
• Next week bias higher, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1401.50.

Recap

Well we did finally end up going a bit higher today, though it came right down to the wire.  Still I guess a 19.6 point gain counts.  Of course, the Naz and the SPX did end a bit lower.  I don't think there's much to be learned from this - call the market basically flat today.  Where does this leave us for Friday and the end of the quarter?  Let's try and figure it out.

The technicals

The Dow: Today's close at 13,146 gave us a tall hammer candle.  But it also caused a bearish stochastic crossover.  I can't remember the last time, if ever that I saw a situation like this.  In addition, money flow is going down but the RSI is going up.  They don't come more conflicted than this.  I just throw my hands up over a chart like this.  Let's move on and see if there's something less schizophrenic elsewhere.

The VIX:  After a big gap up this morning, the VIX finished the day with a big dark cloud cover type red candle, ending up just 0.01 on the day.  Going all the way back to last August, the last seven times we had such a big red candle, the next day was lower.  (The eighth time was in the middle of last summer's insanity over Greece, and the VIX went higher the next day).  The futures support this with a similar looking candle pattern.  So going lower Friday isn't out of the question, which would be good for stocks.

Market index futures: Tonight all three futures are trading in the green, and not by trivial amounts, with ES gaining 0.2% at 1:04 AM EDT.  Today's candle was a strange long asymmetrical spindly dojiish star that isn't by itself a reversal warning.  However, the developing overnight candle is coming across as a bullish engulfing pattern, generally very positive.  It's also trading outside the admittedly short but steep three day descending RTC we find ourselves in.

ES daily pivot: Tonight the index dropped from 1401.50 to 1396.17.  This.combined with a mid-evening move up in ES now leaves us above the pivot for the first time in a while, by about five points.  That is reason for encouragement.

Dollar index: Last night, I though the dollar would go higher today, and it did by 0.07%, but in keeping with this crazy day, it did it on a gap-up red candle.  It sure looks like this dollar is not wanting to go higher, but all the indicators have now bottomed at oversold levels and are headed back up.  Another chart I don't know what to make of.

Morningstar Market Fair Value Index: Yesterday the index dropped, not unexpectedly for the third straight day back to 0.96.  This is something of a support level so it will be interesting to see if we can hold this line.


History: According to The Stock Traders Almanac, Friday is historically quite bearish, in fact the weakest day of the week.

     And the winner is...

So what's it gonna be?  Window dressing or profit taking?  Recall that last year we got a small loss on the last day of March.  But by then we were considerably overbought.  We're not at this point this year.  With the Dow and the dollar charts completely opaque, tonight I have to go with the VIX and the futures.  And those are looking like there might be some upside in store Friday.   So I'm going to give this one to the bulls and call for a higher close Friday.

ES Fantasy Trader

Portfolio stats: With no trade once again last night, the account remains at $129,375, after 25 trades (19 wins, 6 losses) starting from $100,000 on 1/1.  Tonight we go long right at Thursday's pivot, 1401.50 at 1:16 AM.

Thursday higher if pivot crossed

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

• Thursday possibly a bit higher, low confidence.
• ES pivot 1401.50.  Breaking above is bullish.
• Friday bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I was having trouble picking a direction for today so I just said "I think for the next few days we're going to consolidate around the 13,100-13,300 area".  Well today the Dow gave us a range from 13,069 to 13,213, closing at 13,126.  So I'd say that was a reasonable guess.The question now is, having closed near the lower end of the range, will we go higher on Thursday?  The answer's not blowing in the wind, but it may be lurking in the charts.

The technicals

Dow hourly

The Dow: Tonight I'm presenting a chart I don't bring up very often, but I think it has the most insight as to where we may be going on Thursday: the Dow hourly chart.  (The thick black horizontal lines are the previous day range bars; the other panels from top to bottom are volume, stochastic, CCI, RSI, and momentum).

I have added the descending RTC here that began at 3 PM yesterday.  Note how we got a classical hammer in the 2 PM bar (3rd from the right).  That was followed by a green candle that took us outside the RTC - that's a bullish setup.  And the 4 PM bar was entirely outside the RTC - that's the bullish trigger.

Supporting this is the RTC which went oversold at 11 AM, bottomed at 1 PM, and then turned upward.  Also, the last three volume bars are increasing.  To me, this is a pretty good indication that the Dow may be wanting to go higher Thursday.

The VIX:  Today the VIX actually dropped 0.77% on a very tall gravestone doji that took it out the top of its recent trading range but ultimately came right back to finish at 15.47.  The futures showed a similar pattern.  This has the look of a breakout attempt that was cut short.  The indicators are confused here, and so am I, with momentum and RSI now moving lower but the stochastic just making a bullish crossover.  Unless the VIX can manage a breakout of this 13 day range, we're more likely to see it move lower than higher from here, which would be good for stocks.

Market index futures: At 12:53 AM EDT, all three futures a just barely in the green with ES up just 0.04% after basically wandering aimlessly in the overnight.  There is some comfort, I suppose, that after today's red candle, we're not moving any lower now.  There does seem to be a shallow ascent going on from 10 PM.  We'll be curious to see if this continues into the wee hours.

ES daily pivot: Tonight the pivot tumbles from 1410.75 to 1401.50.  With ES just drifting since the close, that now puts us just one point below.  We'll want to see ES break above this line by the open on Thursday.  Failing to do that would be bearish.

Dollar index: Last night I thought the dollar looked ready to go higher and it did today, though only by 0.1% and on a long asymmetrical star, almost a shooting star.  It's not clear though that this signifies another reversal.  The indicators are all still quite oversold and the stochastic just made a bullish crossover today, suggesting a higher dollar again on Thursday, which would be bad again for stocks.

Morningstar Market Fair Value Index: Yesterday the index dropped from 0.98 to 0.97.  To be still above the 0.96 level that provided resistance for so long is positive.


History: According to The Stock Traders Almanac, Thursday is historically neutral for the Dow but distinctly bearish for the S&P..

     And the winner is...

I'm not seeing any real signs that we're due to go higher on Thursday, but I am seeing signs that the declines of the past two days may be close to played out.  Today's tall ES star completely retraced Monday's big gain intraday, suggesting that the bears were unable to hold the low ground.  Meanwhile, there's just two days left to the week, the month, and the quarter.  Some people are looking for window dressing to occur, driving stocks higher, while others expect portfolio rebalancing to drive them lower.

It's all just too confusing for me right now so I'm going to stick to my same range call I made yesterday.  Until we close out this week, I'm expecting the Dow to stay inside the area of 13,100-13,250.  Based entirely on the action on hourly Dow chart though, I will go waaay out on a limb and hazard a guess that we might actually see a positive close Thursday.  The ES pivot will be key - we need to break above 1401.50 and stay there, otherwise all bets are off.

ES Fantasy Trader

Portfolio stats: the account remains at $129,375, after 25 trades (19 wins, 6 losses) starting from $100,000 on 1/1.  With an identifiable edge still not present either way tonight, once again we are not trading.
 

Wednesday neutral

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

• Wednesday uncertain..
• ES pivot 1410.75.  Holding below is bearish.
• Rest of week bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

My call last night for a slightly higher close was exactly right - until 3:10 PM when the market fell off a cliff.  OK, a little cliff, but still a modest 44 point loss.  Does this foreshadow a bigger retracement or will the uptrend reassert itself.  Maybe the charts can help answer that question.

The technicals

The Dow: Today's action was fairly typical after a big run up.  The fact that it was a red candle should not be taken as a reversal warning.  The indicators are actually mixed right now: momentum and OBV are decreasing, but money flow is increasing and the stochastic just finished executing a bullish crossover.  I tend to place more weight on the latter.

The VIX:  The VIX gave us its first green candle in four sessions today.  This took us to near the top of an eleven session trading range from 14.25 to 16.  Its rising indicators suggest at least a bit more room to run higher here.  However, I note that the futures put in a solid green candle today for the first time in eight sessions and that does look like a reversal warning.

Market index futures: After giving up the ghost in the last hour of trading, the futures have stabilized somewhat and are now all up marginally.  ES has gained 0.07% at 1:25 AM EDT.  And interestingly, the low we hit this evening, 1404.75 was almost exactly the 50% Fibonacci retracement of yesterday's big gain, at 1404.63.

ES daily pivot: Tonight the pivot rises from 1407.67 to 1410.75.  This now puts us below the pivot, not because ES is fading, but because the pivot has moved above the price.  Either way, it's not what we'd like to see.

Dollar index: Today the dollar put in a small doji centered within yesterday's gap down candle.  With highly oversold indicators, this is looking like a chart ready to reverse, and a higher dollar would be bad for stocks.

Morningstar Market Fair Value Index: Morningstar is having its usual web difficulties.  How hard is it to post one number?  It's either 0.96 oir 0.98.  I can't tell.

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

     And the winner is...

I find the lack of further downward follow-through in the overnight futures to be encouraging, particularly having hit the 50% Fib retracement in ES.  Also, the daily Dow chart looks encouraging.  But the VIX does not.  I know some people are clamoring for an immediate pullback, but I'm just not seeing the sort of toppy charts that would support that.  On the other hand, I'm also not seeing a lot of gas in the tank to motor higher.  I think for the next few days we're going to consolidate around the 13,100-13,300 area in the Dow.  That makes picking an exact close for Wednesday too hard.  The best I can guess right now is that we're not in for any major moves on Wednesday.

ES Fantasy Trader

Portfolio stats::the account remains at $129,375, after 25 trades (19 wins, 6 losses) starting from $100,000 on 1/1.  With the lack of an identifiable edge either way tonight, once again we are not trading.
 

Tuesday slightly higher

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

• Tuesday slightly higher, medium confidence.
• ES pivot 1407.67.  Holding above is bullish.
• Rest of week bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Sunday night I wrote that I was "cautiously optimistic" about today.  Turns out the caution was unnecessary.  I've got to thank Uncle Ben for turning a cautious day into a roaring bull run.  The big question after a big up day of course is always whether or not it can keep going.  I think the charts will tell us, so let's see what they have to say.  Speak, charts, speak.

The technicals

The Dow: Today we got a big pop right out the gate, and it only got better from there, thanks to Uncle Ben.  The resultant jolly green giant candle took us clear out of the Dow's six session descending RTC, for the mother of all bullish setups.  The indicators have all now clearly bottomed and the important stochastic just completed a bullish crossover today.  This sort of chart is canonically bullish.

The VIX:  Today the VIX gave us a gap-down inverted hammer that brought us right to the bottom of its 10 day range for a 3.78% loss.  But... its indicators are all still on the way down from overbought, including a stochastic that just completed a bearish crossover.  With the futures still stuck in a now-8 day descending RTC, it looks like there's still more downside possible here.  In particular, note that the lower BB is now at 13, over a point away.  I see nothing here not to like.

Market index futures: Today ES provided us with a tall green candle that didn't just retrace last week;s losses, it completely blew the door off the resistance at 1405 that stopped us cold then, as well as providing a major bullish seteup with a dramatic exit from the descending RTC.  As a bonus, we got a completed bullish stochastic crossover today.  Right now, at 1:35 AM EDT, all three futures are in the green with ES up 0.09%.  There's really nothing to dislike on this chart..

ES daily pivot: Tonight the pivot jumps from 1389.92 to 1407.67.  This big gain means that even though ES rose considerably right around the close today, we're now closer to the pivot than before.  But still, a seven point spread isn't bad and still provides a fairly comfortable cushion.

Dollar index: Today the dollar took a big gap down on a solid red candle to lose half a percent.  And yet even at that, we're still not close to either support or the lower BB.  There's still nothing in this chart to suggest a higher dollar, and that's good for stocks.  The indicators are now all in oversold-broken mode and have therefore lost their predictive power.

Morningstar Market Fair Value Index: The index did not update today.  I expect that tomorrow's number will show at least a one tick gain.

History: According to The Stock Traders Almanac, Tuesday is historically fairly bearish.

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

 11  3/12       46         32        +     1371

 12  3/19       46         29        +     1404

 13  3/26       39         29        +     1397

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 2/27 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 9 for 9.  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.  And once again, I voted bullish this week.  With the year just about one quarter gone, I'm still not seeing any technical reversal indicators on the monthly SPX chart

I find it interesting that while bearish sentiment remained unchanged this week at 29%, bullish sentiment declined to its lowest level of the year, leaving us also with the narrowest point spread of the year - just 10 points.  If you believe that the TS bloggers know what they're talking about (and history this year seems to support that), then it appears that some of them are thinking the rally may be near its end.  On the other hand, market tops are generally accompanied by a major increase in bullish sentiment.  To see bullish sentiment actually decrease like this could be considered contrarian bullish.

     And the winner is...

Often after a big run-up like we saw today, the market will pause and have a small range day the next day.  That's pretty much what I'm expecting tomorrow.  So with no real negative signs on the charts, I'm going to call for a small up day Tuesday.

ES Fantasy Trader

Last night's long turned out well, with a tidy 9.5 point profit. Portfolio stats::the account now goes to $129,375, after 25 trades (19 wins, 6 losses) starting from $100,000 on 1/1.  Because I'm not seeing a big edge right now either way for Tuesday, tonight we're going to stand aside.  At this stage, I'd rather leave some money on the table than risk a loss of similar size.

SLD    10    ES    false    JUN12 Futures     1404.75    USD    GLOBEX    11:13:30   

BOT    10    ES    false    JUN12 Futures     1395.25    USD    GLOBEX    01:03:00   

 

Monday maybe higher

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

• Monday higher, low confidence.
• ES pivot 1389.92.  Holding above is bullish.
• Rest of week bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1395.25 at 1:03 AM..

Recap

Thursday night I was expecting a doji on Friday - little change, with direction hard to determine.  It was more of a star than a doji but we did get a small move, with the Dow gaining just 35 points to close at 13,081.  What does that mean for the coming week?  Read on...

The technicals

The Dow: One thing I mentioned last wee was that Friday might be a bottoming day and that's just what the chart ended up looking like.  We got a nice green hammer on the day that held support at 13K.  The Dow is now firmly oversold and its stochastic is right at the level from which a bullish crossover appears ready to form.  I'm now liking the look of this chart.

The VIX:  On Friday, the VIX took its biggest tumble in 13 sessions, dropping 4.82% back below the 15 level.  And in so doing it just formed a bearish stochastic crossover.  This implies a lower VIX Monday which would suggest higher stocks.  The futures seem to support this idea, being stuck in a now seven day descending RTC that is showing no sign of reversing.

Market index futures: At 1:15 AM EDT we've got all three futures in the green.  NQ is up a nice 0.22% while ES and YM are lagging a bit, up just 0.05% each.  After three days of losses last week, ES on Friday put in a green hammer, just like the Dow.  The fact that we're now trading around the upper end of that hammer is early confirmation that the downtrend may be over.  This is supported by rising OBV and money flow, and a stochastic that looks to be readying a bullish crossover in the next few days.

ES daily pivot: Tonight the pivot ticks down from 1390.75 to 1389.92.  With ES pretty flat in the overnight after a pop on the open this evening, we're still about five points over the pivot - not a huge number but still encouraging for Monday morning.

Dollar index: On Friday the dollar put in a stubby gap-down star - not really a reversal indicator.  Supposedly the $DXY is continuing lower tonight.  I no longer have access to $DXY since my data provider whom I will not name but their initials are eSignal decided to start charging for it.  So I have to use the Deutsche Bank dollar index $USDUPX.  It's still free but it only updates during regular hours.  So be it - hey eSignal, you already get enough money from me every year.  Well anyway, even though the dollar gapped down and its indicators are all oversold now, there's still more downside room to go, which would be good for stocks.

Morningstar Market Fair Value Index: On Friday, the index remained at 0.96, but it continues to step down from the high of 0.98 reached early last week. This remains at least something of a concern and will bear watching


History: According to The Stock Traders Almanac, Monday is historically slightly bullish, the only really at all bullish day of the week.  The whole last week of March is generally a downer.

     And the winner is...

I'm seeing enough positive signs in the charts tonight to be cautiously optimistic about tomorrow, so I'm going to call for a higher close Monday.  The rest of the week though remains to be seen.  However, I do note that J-Trader is long right now and the great Rob Hanna is seeing a pretty convincing historical bullish edge to the current setup.  That's all she wrote.

ES Fantasy Trader

Since we did not trade Thursday night, the account remains $124,625, after 24 trades (18 wins, 6 losses) starting from $100,000 on 1/1.  Tonight we're going to try a long from 1395.25.
 

Friday doji possible

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

• Friday little change expected, low confidence.
• ES pivot 1390.75.  Holding under is bearish.
• Next week bias higher, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Link of the Day


Are you a One Percenter?

From The Big Picture blog, this is a quick read of a few eye-opening statistics that paint a grim picture of the average American.  Check it out.


Recap

Well we got more downside today, basically what I was expecting.  Now let's see when this downturn might end.

The technicals

The Dow: Today the Dow shed another 78 points to continue a now three day stairstep decline.  The good news is that this was enough to bring the indicators to oversold levels.  And the stochastic is in position to execute a bullish crossover in the next day or two.  Also, the support at the 13K level held up.  So while there's no reversal of the downtrend in the candles (which look fairly close to a three black crows pattern), the worst of this decline may be over.

The VIX:  Today the VIX gapped up for a 2.91% gain, but did it on a stubby shooting star, a fairly good reversal pattern.  Its indicators are also nearing overbought levels.  In addition, the futures today formed a dark cloud cover, suggesting lower on Friday.  This all would seem to portend higher stocks if not tomorrow, then early next week.

Market index futures: At 1:44 AM EDT all three futures are up with ES gaining 0.13%.  ES gave us a long red candle today, with a long lower shadow.  The fact that we're now trading up from today's close rather than continuing lower is encouraging.  Also, the stochastic is now nearing it inflection point where it lines up for a bullish crossover.  And finally, OBV has turned up again after four straight days of declines.

ES daily pivot: Tonight the pivot takes a step down from 1399.17 to 1390.75.  Unfortunately, after rising most of the evening, ES turned south right at midnight and we've just now crossed below the pivot.  Unless ES can manage to retake the pivot before the open, it's not looking good for Friday.

Dollar index: After a doji yesterday, the dollar today gave us a narrow gap-up star.  However, its stochastic also executed a bullish crossover, so this indecision might be resolved in a higher dollar on Friday, bad for stocks.  Also, the euro is quite overbought right now and its stochastic just finished a bearish crossover, suggesting a lower euro (and therefore a higher dollar).

Morningstar Market Fair Value Index: Despite the recent losses in the market, yesterday the index remained at 0.97, near its high for the year.  I consider that it is not going lower to be a good sign.


History: According to The Stock Traders Almanac, Friday is historically quite bearish for the Dow (though bullish for the S&P)..

     And the winner is...

So tonight we've got a scenario setting up of a reversal that's coming soon, but doesn't quite seem to be at hand.  So I'd say Friday will be a bottoming day, possibly in the form of a doji, but in any case clearing the way for a move higher early next week.

ES Fantasy Trader

 Last night's short paid off nicely.  We covered at 10:53 AM for an 11.25 point profit.  With no real discernible edge tonight, we're going to stand aside again.

The account now rises to $124,625, after 24 trades (18 wins, 6 losses) starting from $100,000 on 1/1.

BOT    10    ES    false    JUN12 Futures     1384.75    USD    GLOBEX    10:52:50   

SLD    10    ES    false    JUN12 Futures     1396.00    USD    GLOBEX    00:37:12   

 

Thursday possibly lower

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

• Thursday lower, low confidence.
• ES pivot 1399.17.  Holding under is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes short at 1396.00.

Recap

Last night I was suggesting that the Dow could close lower today and it did, though it dropped just 46 point in a somewhat half-hearted decline.  Still, this gradual decay has a different feel than last month's sharp one day dump.  It makes one wonder if there's not lower still to come.

The technicals

The Dow: So anyway, today's solid red candle was enough to pull the indicators further down from their recent overbought peak, and to establish a new declining RTC.  When will this end?  These guys will let us know.  And right now, they're not talking.

The VIX:  Yesterday's hanging man was confirmed today with a 2.89% decline that brought us right back to the 15 level, although it happened on a funny gap-down green candle.  With indicators continuing to rise from oversold and today's drop not doing much to raise the market, I'm looking for a higher VIX again on Thursday, and that's a negative for stocks.

Market index futures: After some profit taking in the final hour of trading, the futures began a slow drift back up, until they got knocked down again at 10:30 PM, evidently on some bad news from China.  That leaves all three futures lower at 12:30 AM EDT, with ES down 0.11%.  That said, ES is once again retracing this latest drop, or at least trying to.  That's giving us a star in the making, following today's star and Monday's hanging man, all indicating uncertainty around a general path lower.  The indicators are now clearly on their trip back down and just coming off overbought levels.

ES daily pivot: Tonight the pivot ticks up from 1398.92 to 1399.17.  However, we're now back below it, not a good sign.

Dollar index: Today the dollar formed a perfect doji, closing exactly in the middle of its three day range and forming in the process a symmetrical triangle.  Since these most often resolve in the direction from which they were entered, that would imply a lower dollar soon, which would be good for stocks.  However, one must note that the indicators are only just now coming off oversold levels, suggesting a higher dollar.  So we'll just have to see which way this one turns out.

Morningstar Market Fair Value Index: Yesterday the index dropped back to 0.97.  The failure to advance any higher than 0.98 is somewhat of a concern at this point.


History: According to The Stock Traders Almanac, Thursday is historically quite bearish, almost as bad as Wednesday.

     And the winner is...

Tonight, the majority of the evidence points to a lower close Thursday.  However, a lot will depend on the importance the market attaches to this China manufacturing data.  As I write this, ES is slowly resuming the uptrend it was in before the news hit.  Whether or not it can creep back to the pivot remains to be seen.  But the technicals all seem to be pointing lower, so I'll just have to go with that.

ES Fantasy Trader

Tonight we go short at 1396.00.

The account remains at $119,000 even, after 23 trades (17 wins, 6 losses) starting from $100,000 on 1/1.
 

Wednesday may go lower

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

• Wednesday possibly lower, low confidence.
• ES pivot 1398.92.  Holding above is bullish..
• Rest of week bias lower technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

It seemed to me last night like we had a chance to go lower today and so we did, with the Dow shedding 69 points, just its second losing session in 10 straight.  Since 2012 began, the Dow has only had one instance of a two day losing streak, one of three days, and one of four days.  Which path is Wednesday on?  Follow the Night Owl and get the hoot.

The technicals

The Dow: Today's drop was expected and I took a profit in my DXD trade from yesterday.  The indicators are all now coming off overbought, suggesting lower to come after today's long red candle.

The VIX:  Last night I wrote "there's more upside to come" and the VIX delivered today in the form of a 3.59% gap up.  But it was a red hanging man.  So this leaves us wondering if Wednesday will follow lower or if the rising indicators will prevail.  Falling VIX futures today would suggest the former, which would be good for stocks.

Market index futures: Unlike last night at this time, tonight all three futures are in the green at 1:24 AM EDT with ES leading the way, up 0.18%.  Nevertheless, we are now trading outside the rising RTC and that is a bearish setup.  Coupled to highly overbought indicators, and today's candle in the shape of a hanging man, this has the feel of a market ready to go lower.

ES daily pivot: Tonight the pivot falls from 1401.83 to 1398.92.  We had a pop in ES earlier this evening that broke through the old pivot and despite a gradual drift lower after 10:30 PM, we're still four points over the new number, a good sign - while it lasts.

Dollar index: Today the dollar actually gained 0.14% on a funny homing pigeon pattern you don't see very often.  This is a bullish reversal pattern and with indicators approaching oversold, we might see a higher dollar in the next few days, if not Wednesday.

Morningstar Market Fair Value Index: Yesterday the index remained at 0.98, the highest level of the year.  I'll take the fact that the index managed to break the 0.96 level last week as a positive sign.


History: According to The Stock Traders Almanac, Wednesday is historically very bearish.

     And the winner is...

More mixed messages tonight.  The Dow and ES charts look ready to go lower but the VIX and ES trend suggest higher.  What to do, what to do...  OK, what this feels like to me is a market that still wants to go higher but needs one more day of lower prices before resuming the uptrend.  We are also entering the weakest three days of the month.  So tonight is one of those times that I'm going to disagree with the futures, possibly at my own peril, and claim that Wednesday goes lower again.

ES Fantasy Trader



Last night's short paid off, not spectacularly, but I'll take a 4.75 point profit any day. Tonight, we're standing aside again.  While I do think the market's going lower Wednesday, the edge right now isn't compelling enough for me to jump in here.  With the account up 19% YTD, I think I can afford to take a pass on days like this.

So our balance now rises to $119,000 even, after 23 trades (17 wins, 6 losses) starting from $100,000 on 1/1.

BOT    10    ES    false    JUN12 Futures     1397.25    USD    GLOBEX    10:51:59    

SLD    10    ES    false    JUN12 Futures     1402.00    USD    GLOBEX    00:58:28   

 

Tuesday possibly lower

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

• Tuesday lower, low confidence.
• ES pivot 1401.83.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes short at 1402.00.

Recap

Last night I suggested that we might go higher today and so we did, although I have to point out something interesting.  The S&P gained 0.4% and the Naz jumped 0.75% while the Dow advanced a mere 0.05%.  When I see divergences like this, it's time for the Night Owl to do a head swivel and pay extra attention.  Read on...

The technicals

The Dow: The Dow put in a symmetrical doji today, give or take, to follow Friday's inverted hammer.  That's two consecutive reversal indicators.  And the Dow is clearly having trouble with the 13,250 resistance zone.  And the indicators are all starting to come alive from their highly overbought levels, with the stochastic just completing a bearish crossover.  This all suggests a down day Tuesday, albeit still eminently within the ongoing rising RTC.

The VIX:  The all-important VIX has been ping-ponging around in a range of 14-16 lately.  Today it gained 3.94% to close right on its long-term support line of 15 with a hanging man type candle, although there's not really a trend in place.  Meanwhile, its indicators have now all bottomed at oversold levels implying that there's more upside to come, which is bad for stocks especially given that we didn't see a lower close in the markets today.

Market index futures: At 12:45 AM EDT, all three futures are again back in the red, at least a little.  ES is down 0.09% after putting in a third straight decent green candle today.  The new candle developing is developing as a star drooping off the close of today's bar.  Of course, all year long so far these sorts of reversal warnings haven't counted for much without confirmation, and ES hasn't been able to put together more than one down day in a row since March 6th.  So this is something to watch, but we can't really pull the dive alarm on this basis alone.

ES daily pivot: Tonight the pivot rises once again from 1397.67 to 1401.83.  With ES dipping ever so slightly since the close, we're now less than a point away from this new number.  I'm thinking there's now a good chance ES could drive under the pivot before the open on Tuesday, which would be a negative for stocks.

Dollar index: Last night I wrote "this chart is looking for a lower dollar again on Monday".  And so it was once again, with the dollar giving up another 0.46%.  And in doing so it gave us a bearish three black crows pattern suggesting even more losses to come, which would again be good for stocks.  Supporting this notion is the stochastic, still descending from overbought levels.

Morningstar Market Fair Value Index: No update appeared on the MS web site today.


History: According to The Stock Traders Almanac, Tuesday is historically a bit more bullish than Monday.

Sentiment: Once again it's time for the latest 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

 10  3/5        43         26        +     1370

 11  3/12       46         32        +     1371

 12  3/19       46         29        +     1404

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 2/21 was correct, the S&P now being higher than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 8 for 8.  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.  And once again, I voted bullish this week.  I'm still not seeing any technical reversal indicators on the monthly SPX chart.

This week we note that while bearish sentiment dipped 3 points,  bullish sentiment remained the same as last week.  Still not the sort of extreme readings that might signal a reversal.

     And the winner is...

More mixed messages.  Both the Dow and SPX charts are quite oversold, yet the candle pattern on the SPX looks a lot healthier than the Dow.  In fact, I again took out a DXD position (at 12.75).  I guess tonight the overall evidence just makes me feel Tuesday is more likely to go lower than higher.  I really hate making these counter-trend calls, but I just have to calls 'em like I sees 'em.  Unless and until we drop out of a few rising RTC's, the overall trend will remain up.

ES Fantasy Trader

Tonight we go short at 1402.00 at 12:58 AM.  I'm planning on a short short, as it were.  I'll be exiting this one on Tuesday, win, lose or draw.

In the meantime, the account remains at $116,625 after 22 trades (16 wins, 6 losses) starting from $100,000 on 1/1.
 

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1397.67.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last Thursday I was looking for some small gains for the Dow on Friday.  While the Dow was looking good early on only to end up losing 20 points, the S&P instead did deliver, up 0.11%.  Is this a sign the rally is out of gas or is there still more upside to come?  Read on...

The technicals

The Dow: Three things about last Friday's action: first the Dow had its first losing day in seven sessions, second it formed an inverted hammer reversal warning, and third, it did it on greatly increased volume/  In fact this was the biggest volume day since last September.  Add to this mix some very overbought daily indicators that actually appear to have peaked on Friday, plus a stochastic that just executed a bearish crossover, and you have to wonder if this market may be just about ready to roll over.  At least that's what this chart looks like.

The VIX:  Meanwhile, the VIX gave us a large doji centered around its recent lows near 14.5.  This makes five straight days the VIX has played tag with its lower BB - very unusual.  With the VIX now at a multi-year support level, the prudent bet would be that it's going higher before it goes any lower, and that would be a negative for stocks.

Market index futures: All three futures are in the green at 1:15 AM EDT with ES now up 0.2%.  Unlike the daily Dow chart, ES looks quite healthy.  It remains solidly inside its rising RTC and the green candle being formed now represents good follow-through to Friday's smaller gain.  That's really all we've got to go on since the indicators are now all pegged in "overbought broken" mode and therefore unable to predict anything.

ES daily pivot: Tonight the pivot rises once again from 1392.75 to 1397.67.  After a gain earlier this evening, ES remains above the new level, though now only by 3 points.  Nevertheless, unless ES breaks under the pivot and stays under, this is a good sign for Monday.

Dollar index: Last Thursday I wrote "There's nothing on this chart to suggest anything but a lower dollar Friday".  And the dollar was happy to oblige, dropping even more on Friday for a half percent loss in a deep red candle.  Even at that, the indicators are still just coming off overbought and the dollar has no immediate support in sight, so I'd say this chart is looking for a lower dollar again on Monday which would be good for stocks.

Morningstar Market Fair Value Index: On Friday the index hit 0.98 for the first time this year, finally breaking above the 0.97 barrier.  This is quite a positive development.


History: According to The Stock Traders Almanac, Monday is historically fairly bullish, and the week as a whole is quite bullish with the Dow rising in 6 of the last 8.

     And the winner is...

Another difficult choice.  On the one hand, the Dow and the VIX both point to a lower Monday, but the dollar and the futures indicate higher.  And all four of these are usually good signposts for the market.  What I've noticed lately is that when the Dow telegraphs a possible top, it usually takes one day longer to roll over than you'd think.  With the futures and dollar being more recent than last Friday's closes of the Dow and VIX, I'm going to have to go with that and opine that we close higher Monday. But being so close to the ES pivot makes me nervous.  If we drop below 1397.67, a lower close is much more likely.  On the other hand, I'm not seeing much in the way of negative news on the horizon for Monday, so that should help the bull cause.  I guess we'll see soon enough.

ES Fantasy Trader

Last Thursday night's long idea played out nicely on Friday, resulting in a decent 3.75 profit, not too shabby on a small range day.  Due to the mixed messages I'm getting tonight, I think it's more prudent to simply stand aside than place a possibly low probability bet.  I'd rather wait for something with a bit more of an edge.  And of course waiting is always just as much of a decision and buying or selling.

So now the account increases to $116,625 after 22 trades (16 wins, 6 losses) starting from $100,000 on 1/1.

SLD    10    ES    false    JUN12 Futures     1399.00    USD    GLOBEX    MAR 16 11:17:27    

BOT    10    ES    false    JUN12 Futures     1395.25    USD    GLOBEX    MAR 16 01:25:57   

 

Friday could go a bit higher

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

• Friday higher, low confidence.
• ES pivot 1392.75.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1395.25.

Recap

What did they call me?

Last night I suspected we'd go higher today if the ES pivot held.  It did and we did, with the Dow tacking on another 59 points extending its winning streak to seven straight sessions.  Can we go for eight?  Let's sort it all out.

The technicals

The Dow: Today's close at 13,253 brings us so high I had to back out to the monthly chart to find the last time we were up here.  It was way back in January of 2008, when the Great Recession was just getting underway.  The last time we climbed up to this level was even earlier: May 2007.  And speaking of streaks, the Dow is working on six straight months of gains, something we haven't seen since 2006.

The important point here is that we've now just about completely cleared out the backlog of sellers who rode the market to the bottom in 2009 after buying in on the way down and swore that they'd get out if they ever got back to even.  From here, there's no real resistance until 14,000, and then the all-time high of 14,198 set in October 2007.  Even the current monthly upper BB is at 13,525, leaving us another 250 points of upside possible.

On a daily basis though, the RSI, stochastic and OBV have reached overbought levels, but money flow is still in pretty good shape - rising but not overly high.  We have hit the daily upper BB at 13,202 though.  But unlike the VIX, the Dow is known to sometimes just crawl right up the BB when it's in rally mode, and we certainly still seem to be in rally mode.  And we remain firmly inside the rising RTC of March 7th.  So no reversal signs here just yet.

The VIX:  Last night it looked like the VIX might go higher today and it did, slightly, adding 0.72%.  But it also made a nice doji in the process.  Does this signal a reversal/  Well the VIX futures also rose today but did so on a red candle, so I'd say it's not out of the question that the VIX may be stalling out here, despite its oversold indicators.

Market index futures: At 1:11 AM EDT we've got all three futures in the red, just barely.  ES is lower by 0.09%.  This seems to be following the recent stair step pattern of gains one day followed by a pause the next.  At this point the indicators are all stuck at overbought levels and have thus lost their predictive power.  That leaves us with an ES still solidly inside its rising RTC and a tiny little developing candle.  Not much to go on tonight.  At least there's no indication of a big dump on the way.

ES daily pivot: Tonight the pivot rises again, but just a bit from 1389.08 to 1392.75.  Since ES has been essentially flat in the overnight, we're now closer to the pivot than before.  Remaining above is still bullish, but with just a 2.5 point cushion, we'll need to watch this number Friday morning.

Dollar index: The dollar bounced off its upper BB today as I figured, ad exited it most recent rising RTC in the process.  There's nothing on this chart to suggest anything but a lower dollar Friday, which would be good for stocks.

Morningstar Market Fair Value Index: Yesterday the index remained at 0.97, tying its highest level of the year so far.  If we can break above this that will definitely be a bullish sign. 
 
History: According to The Stock Traders Almanac, Friday's triple witching day is historically quite bullish although the Dow has been down three of the last five years.

     And the winner is...

Friday is tough to call because of the triple witching.  But there's little in the charts to suggest a reversal is at hand right now, so on that basis I'm going to call Friday's close higher, though probably not by a lot.

ES Fantasy Trader

Tonight we go long at 1395.25, less out of conviction that we're going higher than belief that we're not going lower.

For now the account remains at $114,750 after 21 trades (15 wins, 6 losses) starting from $100,000 on 1/1.