Friday weakly higher

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

• Friday higher - very low confidence..
• ES pivot 1355.67.  Holding below is bearish.
• Next week bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains long at 1365.00.

Recap

It was touch and go for a while there coming into the close, but ultimately the Dow managed to finish up a modest 20 points and save me from having to eat my hat.  Whew!  So does this mean we're out of the woods?  Not so fast - read on...

The technicals

The Dow: You don't see the combination of a hammer followed by an inverted hammer very often, but we got one today.  You'd think that if a hammer is a bullish reversal candle, then the inverted hammer should be bearish, but it isn't.  They're both bullish reversal signs.  Taken together, they're even more bullish.  I found two instances of a hammer/inverted hammer after a decline in the last five years.  In both cases, the next day was higher.

The indicators, which by now are about as oversold as they get, support this.  However, for the time being, we're still stuck in a seven day declining RTC.  But it would take just one day of sideways action to get a bullish RTC setup, so this bears watching.  It's worth noting in passing that the descending RTC on the hourly chart was exited at 11 AM today.

The VIX:  Last night I was so convinced the VIX would go lower today I offered to eat my hat if it didn't.  Fortunately the VIX obliged me with a nice 6.23% decline that started the indicators on a trip down from overbought, taking the VIX back below 20 in the process.  This leaves us just teetering on the edge of the latest rising RTC.  It all looks ready for more downside, though I'm not quite as certain about it tonight, particularly in view of the JPM news that came out late today.

Market index futures: The strangeness just continues here.  At 1:34 AM EDT all three futures are running lower with ES down a disturbing 0.68%.  But if you look at the daily chart, we're not seeing a continuation of last week's declines.  Instead we're getting some sideways consolidation.  And that took us entirely outside the descending RTC today.  And the overnight action, despite being down pretty substantially, is actually a bullish trigger.  Go figure.

ES daily pivot: Tonight the pivot actually rises from 1350.33 to 1355.67.  Where we were just about even with the pivot this evening, we're now well below it and showing no signs of mounting an attack on this level - not a good sign.

Dollar index: The dollar did not go lower today as I expected it might, gaining instead 0.03%.  However, the body of the candle was entirely below yesterday's star and off the upper BB suggesting lower to come which would be good for stocks.  The indicators are also massively overbought here.  RSI remained at 100 for the third day running.  The dollar tends to respect its upper BB about the same as the VIX, so I'd say a lower dollar is more likely from here.

Transportation: Last night I called this chart weak and kicked some sand in its face.  Well today the trans dropped another 0.49%.  But they did it on an inverted hammer here too that dribbled down the lower BB and left the indicators finally entering oversold territory.  It's a reversal warning, but one that requires confirmation.


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

Accuracy: 

Month right  wrong  no call

April   7      9      2
May     5      2      1
 
     And the winner is...

This one's a real puzzler.  The charts all look fairly bullish to me tonight - even ES.  But the actual direction of ES in the overnight is down, and down significantly, and going lower as I write.  On the other hand, we bounced off a strong 1344 support level earlier this evening.  It bothers me greatly that the futures are running so poorly right now, but we've seen reversals happen in the wee hours before.  In the final analysis, I'm going to go waaaay out on the limb and vote with the charts, and with some misgivings call for a higher close Friday.  Maybe.  We'll see.

ES Fantasy Trader

Portfolio stats:  the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1  Tonight we're still holding on to this long at 1365.00, as I hum along to "Some Day My Prince Will Come".

Thursday may reverse higher

[For some reason, this post, which was completed at 2 AM Thursday morning, never appeared.  My apologies to my readers.]

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

• Thursday higher, low confidence.
• ES pivot 1350.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains long at 1365.00.

Recap

Well last night I said we'd go higher today if ES could manage to break above its pivot this morning.  It couldn't and so we didn't, with the Dow dropping an additional 97 points to extend the losing streak to six now  There's been some rather strange market action this week so far.  Let's see if we can make some sense of it.

The technicals

The Dow:Another day, another hanging man.  We now have a  whole army of three hanging men marching steadily downward.  I've never seen anything like this.  I just scanned back 10 years of Dow daily candles and there's nothing similar.  All I can say is that everything in place yesterday in still in place today only more so.  The only difference is that we've now finally reached the lower BB.  A reversal has to be coming Real Soon Now.

The VIX:  Closed just over 20 today on a gap-up spinning top right to the upper BB.  As I often mention, the VIX tends to bounce off the upper BB fairly quickly, rarely spending more than a day there.  And we have a complete bearish stochastic crossover now.  And highly overbought indicators.  If this one doesn't go lower Thursday, I'll eat my Hatlo hat.

Market index futures: At 1:52 AM EDT we've got NQ just about flat, YM up a hair, and ES up a respectable 0.24%.  This is looking to me like we're nearing the end of the downtrend.

ES daily pivot: Tonight the pivot drops from 1356.75 to 1350.33.  With this drop and ES rising since the close, we're now above the pivot for the first time in a while.  This is a positive sign.

Dollar index: Big gap-up here today, for a spinning top right at the upper BB.  If this one doesn't go lower on Thursday, I'll buy another hat and eat that too.  Of course, there was news today that the Chicoms are manipulating xxxxxxxx supporting the euro, so I suppose anything's possible now in currency-land.

Transportation: Big dump here today, right to the lower BB.  But that's not a reversal guarantee.  Overall, this chart's looking weak.


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

Accuracy:

Month right  wrong  no call

April   7      9      2
May     4      2      1
     And the winner is...

It's tempting to throw in the towel after so many days of negativity, but this downtrend is getting long in the tooth.  You really don't want to sell at these levels.  From here I believe there is clearly more short term upside potential than downside risk.  With the futures (finally) up in the overnight, and the VIX looking ready to go lower, I'm going to go way out on the limb and cautiously call Thursday higher.  We'll see.

ES Fantasy Trader

Portfolio stats:  the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1  Tonight we're still holding on to this long at 1365.00.  I briefly considered dumping this one but looking at the chart, if I was out of the market right now, I'd be buying this level, not selling it.  It's buy low, sell high, not the other way around.

Wednesday higher if pivot passed

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

• Wednesday higher, low confidence.
• ES pivot 1356.75.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains long at 1365.00.

Recap

Huh - well I sure didn't see that one coming.  I thought the latest Greek drama, version 258,243, was already priced in.  I guess I was wrong as the Dow dumped another 76 points on Tuesday.  Those freakin' Greeks!  Tonight we review the smoking wreckage to see if I was a day early or just plain off my rocker.

The technicals

The Dow: Yesterday's little hammer that fooled me into thinking we'd go higher today was replaced instead with a much bigger hammer, one that very nearly hit the lower BB.  And even though things are looking pretty miserable right now, two hammers in a row like this are quite often a good reversal indicator.  Aside from that, the indicators all got only more oversold today than Monday.

The VIX:  Despite spiking to an intraday high just over 20 this morning, the VIX regained some sanity to actually close higher by just 0.58% on a giant red spinning top.  The failure of the VIX to either open or close above yesterday's open confirms, for me anyway, yesterday's dark cloud cover.   And the bearish stochastic crossover is >< that close to completing.  I still have to believe the VIX goes lower Wednesday, which would be bullish for stocks.

Market index futures: Tonight, all three futures are running in the red with ES down a third of a percent at 1:52 AM EDT.  The chart is somewhat unclear, with a big hammer today following yesterday's fat spinning top.  The overnight follow through so far is negative enough to keep us inside what is anow a six day descending RTC.

On the other hand, the indicators are all quite oversold now and we have touched the lower BB three days running.  And support seems to continue coming in at the 1340-1350 area.  This is now reminding me a lot of the early April nastiness we saw.  If that history repeats itself, this downtrend should be just about exhausted.

ES daily pivot: Tonight the pivot drops from 1359.50 to 1356.75.  Even at that, we're still beneath, which is bearish.

Dollar index: After gapping up yesterday, not only did the dollar not move lower to form an evening star as I expected - it moved higher, and in confusing fashion with a second red candle in a row.  And it is even more overbought now than last night.  Today its RSI hit 100.  It doesn't go any higher than that.  Technically, it's really looking ready to go lower.  Realistically, it's now being controlled by the antics in Europe.

Transportation: A big hammer in the $TRAN today, raising at least the possibility of a reversal in a day or two.


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

Accuracy:

 

Month right  wrong  no call

April   7      9      2
May     3      2      1
     And the winner is...

Sigh - it's starting to look a lot like 2011 all over again, right down to the April peak.  Maybe the sell-in-May'ers were right after all.  That said, everything I sadi last night about overbought and oversold is still true tonight, only now even more so.  The question now, is who will be in the driver's seat on Wednesday?  The technicals, or the news stories from Europe that jerked us around so badly last summer?

I'm giving my bounce thesis one more shot at redemption on Wednesday, with the understanding that it could easily be sidetracked by some news item in the FT about how the Greek leftists can't agree on how many olives should go in a martini.  News or no news, the markets do not stay this oversold forever.  I will take advantage of the reversal higher, when and if it comes, to do my sell-in-May-ing.

As is often the case, I think the ES pivot will be key tonight.  Watch to see when you get up Wednesday morning if ES has managed to go above 1356.75.  That will greatly strengthen the case for a higher close.  If we hit that level and just bounce off, it's a lower close.

ES Fantasy Trader

Portfolio stats:  the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1  Tonight we're holding on to this long at 1365.00.  I think I was a day early with this trade, so we're going to exercise some patience with it.

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

Tuesday possibly higher

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

• Tuesday higher, medium confidence.
• ES pivot 1359.50.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1365.00.

 Quote of the Day

"The first quality that is needed is audacity."

                    - Winston Churchill

Recap

It was a funny day on Monday.  All the overnight brou-ha over the French and Greek elections ended up amounting to less than a hill of brie - rien du tout.  The SPX and Naz were both up just a tad and the Dow did close down 30 points, confirming my call.  Tonight we stir the tea leaves for our nightly look at the charts to figure out where Tuesday might go.

The technicals

The Dow: The best that can be said for today's action is that the 13K support level held despite the bears' early effort to drive the Dow lower.  The net result was a slightly misshapen red hammer.  Not quite classic, but close enough for me.  Especially given how the past four days of losses have driven the indicators all the way from overbought to oversold.  Still this is not yet a rousing reversal warning.  We'd want to see one day higher before declaring this downtrend over.

The VIX:  Ah, more funny candles.  The VIX actually lost 1.15% on a red candle lying largely above Friday's.  But that's  the classic dark cloud cover position, a powerful reversal indicator.  The futures have an even more dramatic version of this.  Add in overbought VIX indicators and you've got the stage set for a lower VIX Tuesday, implying higher stocks.

Market index futures: The market continues its mixed ways in the overnight, with NQ up a bit while ES and YM are down a bit at 1:27 AM EDT, ES being just a point lower.  ES today put in a hammerish green candle, not quite meeting the classical definition, but the family resemblance is there.  The tail pierced the lower BB before pulling back up.  The last few days have driven all the indicators down to oversold levels and the stochastic is gearing up for a bullish crossover in the next day or two.  All of these are positive signs.

ES daily pivot: Tonight the pivot actually drops from 1371.00 to 1359.50.  Even without ES drifting ever so slightly higher in the wee hours, this puts us once again above the pivot, a bullish sign.  Pivot power - a tip of the Hatlo hat the the legendary Dr. Brett Steenbarger for opening my eyes to this invaluable market tell.

Dollar index: Last night I wrote "A long bet on the dollar Monday would seem like a reasonable idea".  And so it was, with the buck gaining 0.16% today and forming 2/3 of a bearish evening star in the process on a gap up doji.  This, combined with indicators all well into overbought territory would seem to signal a lower dollar on Tuesday, good for stocks.  The euro chart supports this, with the euro having put in a big hammer today.

Transportation: Last night this chart looked ready to provide further downside.  Instead, the trans actually gained 0.34% on a spinning top that held the 5225 support line I mentioned.  I view this as a positive sign.  Also, three of my Fave Five indicators have now turned upward, another good sign.  And the stochastic is gearing up to start a bullish crossover in a day or two.


History: According to The Stock Traders Almanac, Tuesday is historically as bullish as Monday was bearish\, so that's nice.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398  12/15

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

 18  4/30       44         32        +     1403

 19  5/7        23         50        -     1350

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that my bearish call on 4/9 was right, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 12 for 15.  And of course that means that since I voted with the majority back then, the poll as a whole was also correct that week.  So the poll's accuracy rises to 80% YTD.

This week I'm switching my vote back to bearish on the 30 day outlook.  And I apparently have plenty of company as half of the other poll particpants seem to agree with me now.  It's the sharpest reversal in sentiment of the year so far, with bullish sentiment being chopped in half in just one week.

And why?  I can't speak for everyone else but here's what I'm looking at.  April put in a classic hanging man that failed to exceed the highs of March.  And May so far is trading largely below the body of the hanging man, providing bearish confirmation.  Add to that a stochastic just forming a bearish crossover.  The stochastic is very good on the monthly charts and not to be ignored.  these are all bad signs.

Accuracy:

Month right  wrong  no call

April   7      9      2
May     3      1      1
     And the winner is...

Whereas last night was looking lower, tonight I feel better about calling for a higher close Tuesday.  The charts and indicators are showing some classic direction changing patterns that suggest at least a day or two of higher prices.  In any event, I don't think Tuesday is the day to sell in May.

ES Fantasy Trader

Last night's long trade was admittedly some pretty risky business but sometimes audacity is its own reward.  And so we were rewarded this morning with a nice 15 point profit on a day when the market ended down.  I ended up leaving a bit on the table, but hey, it never pays to be an oinker.

Portfolio stats:  the account rises to $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1  Tonight we're going long again at 1365.00.  If this trade isn't profitable Tuesday, I believe it will be by Wednesday.

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

SLD    10    ES    false    JUN12 Futures     1364.50    USD    GLOBEX    11:15:19
BOT    10    ES    false    JUN12 Futures     1349.50    USD    GLOBEX    00:47:52

Monday looking lower

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

• Monday lower, medium confidence.
• ES pivot 1371.00.  Overextension under is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1349.50..

Recap

Last Thursday night, the market direction was too tough for me to call technically so I said to just watch the jobs numbers instead.  Well the numbers came out and they were stinky indeed, so down we went again to the tune of a hefty 168 point plunge for the Dow.  And if that wasn't bad enough, tonight comes word that the French have given le Sarkozy le boot.  Zut alors!  Should be another interesting week coming up...

The technicals

The Dow: Candlestick-wise, Friday's daily Dow chart looks awful.  A hanging man on Wednesday confirmed by a loss on Thursday followed by an even bigger solid red candle Friday.  And all that has only brought the indicators maybe halfway down from overbought.  The only good thing here is that the 13K support line was respected Friday.  But I said the same thing about 13,200 the day before, and that fell like it wasn't there.  After that, there's nothing til minor support at 12,930, then major support at 12,650.  And there's no sign of a reversal on this chart.  Just plain ugly.

The VIX:  The VIX's big move up on Friday just put it into overbought territory, but at 19.16 it is still well short of the upper BB at 20.57.  It's not a given that we'll reach that level but the futures support more upside with two solid green candles and indicators rising off of oversold levels.  All of which bodes ill for stocks.

ES daily

Market index futures: All three futures took a big gap-down dump right out the gate Sunday night on the French news.  At 1:14 AM EDT, they're all still way down, with ES lower by 0.95%.  This merits a chart.  It looks bad, but there may actually be some good in here.  Notice how ES is forming a hammer and how the last four days of negative action have brought all the indicators deep into oversold territory.

And note how we punctured the lower BB tonight and then recovered back to it.  And finally note how the recent decline has that exponential waterfall look to it.  Those are encouraging signs.  The horizontal blue line is where I went long a few minutes ago.  Tonight's gap down feels like a selling climax to me. 

ES daily pivot: Tonight the pivot, unsurprisingly, drops from 1391.08 to 1371.00.  With the gap down on the Sunday evening open, we're now way below the pivot.  Being under the pivot is normally bearish.  But being way under the pivot can be bullish, as no chart likes to get too far extended from this magic number for very long.  This, perversely enough, is a bullish sign.

Dollar index: On Friday the dollar continued a four day march higher with a strong 0.37% move.  But even that was not enough to reach overbought levels.  And tonight the euro is taking a powder on the French election news.  A long bet on the dollar Monday would seem like a reasonable idea - but bad for stocks in general.

Transportation: Two big down days here too brought us right into the Twilight Zone, halfway between the BB's.  Although there is a support level at 5225, both the candles and the indicators support further downside here.


History: As if it wasn't bad enough, according to The Stock Traders Almanac, Monday is historically extremely bearish.

Accuracy: 

Month right  wrong  no call

April   7      9      2 
May     2      1      1

     And the winner is...

It's a funny night.  I think the futures are going to drag the market down on Monday so I will call for a lower close on that basis.  Well, that plus some ugly looking charts as detailed above.  However, I also think that ES has gotten overextended to the downside here and a bounce is not out of the question which is why I'm going long tonight.  We'll see how that works out.  That's all she wrote!

ES Fantasy Trader

Portfolio stats:  the account remains at $142,625 after 34 trades (27 wins, 7 losses) starting from $100,000 on 1/1  Tonight we're going long at 1349.50.

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

Friday uncertain - watch jobs numbers

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

• Friday uncertain.
• ES pivot 1391.08.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I was pessimistic about Thursday unless the ES pivot held.  It didn't and so down we went, with the Dow shedding 62 points in the process.  Whither Friday?  Read on...

The technicals

The Dow: Yesterday's dragonfly doji was confirmed today with a long red candle that finally moved the indicators off their extreme overbought levels.  Offhand, this chart looks ready for more downside.  The only caveat is that the Dow has been finding some good support at 13,200 lately.  If this line isn't respected Friday, look for lower still.

The VIX:  The VIX gained 4% today on a decent green candle as I expected it might.  With indicators still just coming off oversold, there's nothing here to suggest the VIX won't go higher Friday, which would be bad for stocks.

Market index futures: At 1:26 AM EDT we've got all three futures just turning positive with ES up 0.05%.  The pattern lately has been for small move following big declines, and we've now had two down days in a row.  The indicators are still transiting from overbought to oversold, so I wouldn't expect any big gains Friday, but the downside looks limited too..

ES daily pivot: Tonight the pivot drops from 1397.17 to 1391.08.  With ES basically flat in the overnight so far, that puts us about twice as close to the new pivot as before.  Still not a particularly bullish sign though.

Dollar index: I did get this one right as the dollar gained 0.12% today.  The dollar has now managed only one green candle in the last 14, giving the impression of not really wanting to move higher.  Meanwhile the euro is giving some good signals of moving higher Friday, which would move the dollar lower and be good for stocks.

Transportation: The trans did not go higher today as I thought they might, instead completely giving back yesterday's gains.  The overbought indicators suggest more downside to come, but with the $TRAN unable to put together more than one down day in a row since April 9th, I'm cautious about this.


History: According to The Stock Traders Almanac, Friday is historically quite bearish - almost as bad as today was.

Accuracy: 

Month right  wrong  no call

April   7      9      2 May     2      1
     And the winner is...

With both the Dow and ES sitting right on support levels, we need to see if they're going to respect them on Friday morning.  A break below and we'll be looking at a lower close.  Respecting Dow 13,200 and ES 1385 though could mean a higher close.  I suspect the catalyst will be the jobs numbers.  Since I have no way of telling what they may show, I'm going to have to take a pass tonight so no call for Friday.  Maybe I'll give myself a day off.  It's good to be retired :-)  Happy trading!

ES Fantasy Trader

Today our long running short trade finally became profitable and I decided to cash out just before 9 PM.  It took a while, but patience paid off in the end.  It was admittedly only a 1.75 point gain, but considering how much heat we took on it, it was nice to get anything out of it at all.

Portfolio stats:  the account now rises to $142,625 after 34 trades (27 wins, 7 losses) starting from $100,000 on 1/1  Tonight without a discernible edge, we're just going to stand aside.

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

BOT    10    ES    false    JUN12 Futures     1385.00    USD    GLOBEX    MAY 3 20:52:26   

Thursday lower unless pivot holds

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

• Thursday lower - low confidence.
• ES pivot 1397.17.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1386.75.

Recap

Last night's call was "Wednesday higher unless pivot broken" with the hedge "If ES should drop below 1401.17 on Wednesday morning, then look for a lower close.".  ES did indeed drop below the pivot at 3:30 AM, after the Night Owl had gone to bed (hey, even I have to sleep sometime).  And that was that.  The Dow closed down 10.75 points after a late day rally.  Moving right along, let's see what Thursday might have in store for us...

The technicals

The Dow: The Dow put in a tall skinny hanging man, almost a dragonfly doji with its small decline today.  With indicators that have been overbought for three days now and just keep getting more so, the Dow is due for a break any day now.

The VIX:  The VIX managed a 1.69% gain today but remained stymied by resistance at 17.25.  To me, this is starting to look like an ascending triangle so one might expect the VIX to pop up over this resistance fairly shortly.  The fact that today put in a higher low puts the kabosh on my theory last night that the VIX might be going lower.  Now I'm thinking higher is more likely.

Market index futures: Today's ES candle pretty much copied the Dow, with a tall hanging man that topped out at yesterday's close.  And the indicators are all quite overbought now.  At 1:28 AM EDT all three futures are just barely lower, with ES down only one tick.

ES daily pivot: Tonight the pivot drops from 1401.17 to 1397.17.  With ES virtually unchanged in the overnight so far this now leaves us just barely below the pivot, but it's already acting as resistance.  If ES is unable to break above this level by morning, that will be a bearish confirmation.  As I write, ES is tracking exactly along this line.

Dollar index: Last night this chart was too tough to read.  Well the confusion melted away today and the 200 day MA proved no obstacle as the dollar just blasted through it to gap up for a 0.34% gain.  The bullish stochastic crossover is complete, the indicators are now rising from oversold and the euro dropped out of a two week rising RTC.  To me, thsi all spells higher dollar on Thursday and that's bad for stocks.

And while we're on the subject, an alert reader asked today where to find the dollar index, $USDUPX, that I use here.  This is the symbol in eSignal for the Deutsche Bank US Dollar Index.  If you don't have eSignal, you can view it here from Bloomberg.  Or you can simply watch UUP, the PowerShares ETF that tracks this index.

Transportation: People often look to the trans as market predictors.  Well look at this - on a day when the Dow was down 0.08% and the S&P lost 0.25%, the trans were up 0.92%.  And that was on top of a similar size gain yesterday.  The indicators are just now becoming overbought and the upper BB is still 23 points away.  Two strong green candles is never a reversal warning, so one more day higher is not out of the question, and that would be good for the broader market.

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

Accuracy: 

Month right  wrong  no call

April   7      9      2
May     1      1 

Performance - another view:

My broker has come out with an interesting tool called "Portfolio Analyst" that lets you benchmark your results versus other metrics with a single click.  Here's my graph for April.  The purple line is my account.  The black box is where I redacted my account number. The Sharpe ratio here is 4.15.

     And the winner is...

Tonight, the majority of the charts seem to be getting tired, if not outright pessimistic.  Still, just before 2 AM, ES has broken above the pivot.  Therefore I'm going to make another conditional call.  If we're still above the pivot by morning, a higher close Thursday is likely.  But if ES sinks back under the pivot, watch for a lower close.  The majority of the evidence suggests lower, but you really can't ignore these futures moves about the pivot, especially around 2 AM.

ES Fantasy Trader

Portfolio stats:  the account still remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are still not giving up on this trade and remaining short at 1386.75.  I know it's frustrating just holding on and doing nothing, but that's one thing about trading - doing nothing can also be doing something.  I have a feeling this trade will end up being profitable before too long.

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

Wednesday higher unless pivot broken

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

• Wednesday higher - low confidence.
• ES pivot 1401.17.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1386.75.

Recap

They say "Sell in May" but they never say when in May.  Clearly, today was not the day.  After being up triple digits for a while, the Dow pulled back in to close up a still respectable 65.7 points on the strength of some unexpected (by me at least) ISM numbers.  And in so doing, it also finally cleared the 13,250 resistance level that has plagued us all year so far.  In fact, I had to go all the way out to the monthly chart to find the next resistance level, and that looks like 13,925 way back in November 2007, just short of the all-time high of 14,198 in October 2007.  Yowsa!  So are we headed back up to those rarified altitudes, or are the emergency oxygen masks about to drop?  The Night Owl (who admittedly got it wrong again today) continues to press on in search of market truth.

In Passing...

The Night Owl sees all, and tonight what caught my eye was a most kind mention of my blog in the blog dancingnakedonwallstreet.com.  This is one I was not familiar with, so I took some time to check it out.  I like the author's concise, practical approach to the markets in a weekly format.  I recommend my readers take a look.  And I should mention that there was no quid-pro-quo whatsoever involved here.  I just saw my name, visited the site, and liked what I saw.  So a tip of the Hatlo hat to RJ for some good work.  And I might mention that the Night Owl is a girl owl, not a boy :-)

The technicals

The Dow: Well we did close above 13,250 today but not by enough to put it convincingly behind us.  Right now I'm looking at the indicators.  RSI - overbought.  Momentum - declining for the third day.  Money flow - overbought.  OBV - overbought and at the same height from which previous market declines have occurred.  And the stochastic is also overbought and trying to form a bearish crossover but it's getting "threaded out" with the %K and %D lines pretty much just overlapping instead of crossing.  Still, today's big gain pretty much canceled last night's bearish RTC warning.  All of which sadly  leaves us without a clear technical picture of where the Dow may go next.  That's why we look at more than one chart every night.

The VIX:  The VIX continued its wayward ways today, dropping 3.21% on a fat hanging man that pretty much completes the bearish evening star pattern I mentioned last night.  And that is as good an indicator as any that the VIX could continue lower on Wednesday.  The VIX futures put in an even bigger drop relatively speaking today, supporting this view.

Market index futures: If there's any guidance to the future, tonight it comes from, well, the futures.  Today ES pierced its upper BB and then retreated, leaving us with a solid body conforming to a three day trading range.  While yesterday's losses were completely retraced, we didn't make any real headway.  And the indicators, which were already overbought, are now really overbought.  This chart just doesn't look quite as optimistic to me as the daily Dow.

On the other hand, it is impossible to ignore the fact that at 1:29 AM EDT all three futures are up by non-trivial amounts, with ES gaining 0.21%.  And since the upper BB is at 1408.38, we still have a few more easy points possible here before encountering more serious resistance at 1412.

ES daily pivot: Tonight the pivot jumps from 1395.25 to 1401.17.  Because ES has been wobbling upward in the overnight, we're still above this new number, so ES remains bullish.

Dollar index: The dollar, which respected support at 54.60 today (recall that I'm using $USDUPX rather than $DXY), managed to bounce right back up to its 200 day MA at 54.73 which is where is closed, on the dot.  This is most interesting.  You don't often see the Dow up and the dollar up on the same day.  And you can't blame the euro today either, since it just put in a spinning top.  Technically, the dollar's in limbo here.  It's stochastic suggests a move higher, but it's hemmed in by the 200 day MA.  The irresistible force versus the immovable object.  Which one will give in first?  No idea - we'll have to see how this resolves on Wednesday.

Transportation: The trans had a great day along with everything else today.  But they were nonetheless unable to break out of a five day range featuring support at 5220 and resistance at 5300.  The indicators are all confused right now and this average has alternated between gains and losses every day for a week now.  So the only conclusion we can draw is that since we're now at the top of the range, Wednesday's likely to be lower.  But if we can break above 5300, that would be bullish indeed.


History: According to The Stock Traders Almanac, Wednesday is historically almost as bullish as Tuesday, which was truly outstanding.

Accuracy: 

Month right  wrong  no call

April   7      9      2
May     0      1

     And the winner is...

While the charts aren't looking all that great tonight, the charts also haven't been too kind to my predictions lately.  So I think tonight I'm going to go with the futures which have put in only one red candle in the last seven, and call for a higher close Wednesday.  Still, this market can't remain overbought forever without going lower.  But it's just not right to keep calling for a lower close until it finally happens.  We are clearly due for lower sometime soon.  I'm just going to guess it won't be Wednesday.

But I will hedge that by noting that we are still pretty close to the ES pivot.  If ES should drop below 1401.17 on Wednesday morning, then look for a lower close.

ES Fantasy Trader

Portfolio stats:  the account still remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are still not giving up on this trade and remaining short at 1386.75.  This truly defines the meaning of "taking the heat".  But if this one doesn't go our way soon, I'm just going to have to pack it in.  You know the old saying, "If at first you don't succeed, try try again.  Then give up.  No point being a damn fool about it."

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

Tuesday maybe lower

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

• Tuesday lower - low confidence.
• ES pivot 1395.25.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1386.75.

Recap

I'm starting to think that whatever direction I think the market is going the next day, I should just announce the opposite and I'd get better results.  Heck, at this point, flipping a coin would give better results.  At least the Dow tried to end on a positive note today and a 14.7 point loss isn't that bad.  Still a miss is a miss.  Maybe the market will settle down in May.

The technicals

The Dow: Today the Dow confirmed yesterday's bearish shooting star with a hanging man.  Its indicators are also all now topping out at overbought levels.  And finally, we traded entirely outside the rising RTC - a definite bearish sign.  All indications of a chart that's going lower.

The VIX:  The VIX continues to pop corn its way along, today gapping up for a 5% gain on the makings of a bearish evening star.  A move lower tomorrow would confirm this.  However, its stochastic just formed a bullish crossover today, suggesting more upside Tuesday.  The futures seem to support this idea.  And a higher VIX would be bad for stocks.

Market index futures: Tonight we're seeing a mixed picture with ES and YM up a bit and NQ down a hair.  ES is up 0.11% at 1:43 AM EDT.  The picture is muddied a bit by the news tonight that Australia is lowering interest rates.  That caused a brief spike in ES but that was quickly retraced.  Today's candle was a bearish engulfing pattern that confirmed yesterday's spinning top.  And like the Dow, ES is now outside its rising RTC and has indicators that have topped at overbought.  This all suggests a move lower.

ES daily pivot: Tonight the pivot dips from 1396.00 to 1395.25.  We were below the pivot most of the day and we're still below the new level, except for a brief blip when the Australian interest rate news hit the wires.  In any case, holding below the pivot is never a good sign.

Dollar index: Today the dollar gained 0.12% but did it on a red candle that kept it below the 200 day MA which is now resistance.  With the recent advance in the euro stalling out, this could encourage the dollar to move higher - if it can get past the 200 MA.  Tuesday will tell the tale.

Transportation: Here we got a bearish engulfing pattern today and a stochastic that's about to form a bearish crossover.  Looks like more downside to come for $TRAN.


History: According to The Stock Traders Almanac, Tuesday is historically very bullish.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398

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

 18  4/30       44         32        +     1403

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 4/2 was wrong once again, though just barely, the S&P now being a bit lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 14.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  Despite being wrong three times in  a row now, 11 for 14 still isn't that bad.

This week we see a dramatic change of fortunes, with the bull and bear numbers just about trading places.  And I was one of those who switched their vote back to bullish this week.  What was looking like a fairly ominous monthly candle for the SPX ended up being  more of a hanging man rather than a dark cloud cover.  Although that still indicates a possible reversal, the stochastic ended the month by unwinding what looked like a near certain bearish crossover.  And while anything's possible, right now it looks like the earlier threat has receded, at least for the time being.

Performance:

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

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

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

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

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

It's interesting to see the risk/reward in action.  My IRA, which I treat most conservatively, has the lowest return, whereas the ESFT, which I trade with reckless abandon (since it isn't real money), has the highest.

Accuracy:

Month right  wrong  no call

April   7      9      2

It was clearly a difficult month for forecasting with more consolidating than trending going on, making daily calls treacherous.  At least we're still making money, and that after all is the name of this game.

     And the winner is...

I'm almost afraid to write anything at all here after being so consistently wrong lately, but given the look of the charts tonight, I'm going to have to call for a lower close Tuesday, interest rate cuts or not.  The damage may be limited though, in view of the fact that tomorrow is the first of the month, historically a bullish day.

ES Fantasy Trader

Portfolio stats:  the account remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are still not giving up on this trade and remaining short at 1386.75.

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

Monday maybe higher

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

• Monday higher - low confidence.
• ES pivot 1396.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1386.75.

Recap

One thing about the market - there is no better place in the world to learn humility.  Being wrong again on Friday reminds me of that lesson.  I'm not really sure what's driving this market higher, but I'm not about to fight the tape.  Still it's important to keep an open mind about what's coming next.  We'll see tonight if the charts can shed any light on the subject.

The technicals

The Dow: Friday's 24 point advance was marked by a bearish shooting star.  This sort of pattern does require confirmation though so it would be premature to call this chart lower on that basis.  We're also still just barely hanging on to the rising RTC and the indicators, though high, have yet to suggest a top.

The VIX:  On Friday the VIX put in a green candle for the first time in nine straight sessions, gaining half a percent.  On the other hand the weekly chart generated a big bearish engulfing pattern that also took it outside the rising RTC - a bearish setup.  Along with a weekly stochastic forming a bearish crossover, this would seem to suggest a lower VIX this week which would definitely be good for stocks.

Market index futures: OK, so Friday gave us a spinning top warning of a reversal.  But so far, we're not seeing that with all three futures up at 1:58 AM EDT and ES up by 0.14%.  Still, the indicators are getting fairly overbought by now and although we haven't seen an RTC break yet, the channel is quite narrow so it wouldn't take much to generate a bearish setup here.

ES daily pivot: Tonight the pivot rises from 1392.00 to 1396.00.  With ES pretty much just wandering around in the overnight so far, this now cuts the distance to the pivot in half.  While not cause for concern yet, we want to watch for any attempts to dive bomb that level.

Dollar index: The big development here is that on Friday the dollar broke under its 200 day MA following five straight days of declines and ten straight red candles in a row.  The dollar has some support coming up around 54.50 but we're not quite there yet.  A lower dollar would help stocks.

Transportation: This daily chart is now too choppy to figure out.  Even the weekly chart has been channeling in the 5200-5300 area for five weeks now.  Again, I think this reflects the recent political events in Europe more than anything.


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

Accuracy: 

Month right  wrong  no call

April   7      8      2
     And the winner is...

Well as I said at the start, you can't fight the tape and right now the tape is running higher.  While a lot of charts look like they're getting kind of extended, there are really not yet any really clear reversal signs.  So instead of trying to outsmart the market and second guess the top, I'm now just going to go with the flow and that means a higher close Monday.  (Watch - now the market will tank - no, just kidding).

ES Fantasy Trader

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

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

Friday possibly lower

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

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

Recap

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

The technicals

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

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

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

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

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

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


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

Accuracy:

 

Month right  wrong  no call

April   7      7      2
     And the winner is...

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

ES Fantasy Trader

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

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

Thursday maybe lower

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

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

Recap

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

The technicals

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

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

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

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

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

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


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

Accuracy:

 

Month right  wrong  no call

April   7      6      2
     And the winner is...

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

ES Fantasy Trader

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

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

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

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

Wednesday higher

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

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

Recap

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

The technicals

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

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

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

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

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

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


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

Accuracy: 

Month right  wrong  no call

April   6      6      2
     And the winner is...

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

ES Fantasy Trader

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

No call for Tuesday - star possible.

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

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

Recap

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

The technicals

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

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

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

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

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

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

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


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

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  Here's the updated cumulative list for this year:

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408

 15  4/9        25         46        -     1398

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

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that my bullish call on 3/26 was, for the second time this year, wrong, the S&P now being lower than then.  I'm using the column "Accuracy" to track my calls.  So now I'm 11 for 13.  And of course that means that since I voted with the majority back then, the poll as a whole was also incorrect that week.  Despite being wrong twice in  a row, 11 for 13 still isn't bad.

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

Accuracy: 

Month right  wrong  no call

April   6      6      1

    And the winner is...

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

ES Fantasy Trader

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

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

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

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