Friday higher

The Hoot 

Actionable ideas for the busy trader delivered daily right up front

• Friday  higher, medium confidence.
• ES pivot 1494.83.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going long at 1497.75.

[ES pivot values corrected, Friday, 2/1/13, 12:24 PM]

Recap

I know I was taking a chance calling Thursday lower in view of the fact that it was the last day of January, but sometimes the logical point of view pays off as the Dow lost 50 points, defying the historical odds.  Despite this, January was a stellar month and the needle on the famous "January Barometer" spun all the way around twice and flew off.  Now let's lay some odds on Friday.  Will we roll seven or snake eyes?  Let's shake the charts for luck and find out.

The technicals (daily)

The Dow: With two consecutive equal length red candles, things aren't looking so hot for the Dow at first glance.  Interestingly though, even with that we're still inside the rising RTC, just barely.  That means we cannot yet declare the uptrend over even though the indicators have now started to come down off their pegged-oversold levels of recent days.  So this chart looks possibly, but not definitely bearish.

The VIX:  Meanwhile, the VIX actually posted a drop today, down 0.28% after forming a hanging man at the top of Wednesday's green candle.  We remain in the rising RTC here too but the indicators on this chart have been moving higher for days and are now well into overbought territory.  I'd say there's a fair chance of the VIX moving lower in a day or two.

Market index futures:Tonight all three futures are higher at 1:21 AM EST with ES up by 0.32%.  On Thursday ES traded outside its rising RTC for a bearish trigger.  However it did it on a small morning star type doji.  The new overnight candle is gapping up giving support to the doji so I'm hesitant to be too bearish here right now.  See my comments on the trans below which are painting a similar picture.

ES daily pivot: Tonight the pivot drops  from 1498.25  to 1494.83.  A rising ES in the overnight combined with this move now leaves us above the new pivot, so this becomes bullish.

Dollar index: This one surprised me.  Rather than move higher, the dollar lost again today, down another 0.13% as it following a lower BB that's now falling away.  Once that starts happening, it can go on a while so in the absence of a good reversal candle, I'm not going to call the dollar higher from here just yet.  There's no support til 54.40 on the $USDUPX anyway.

Euro: And as the dollar drops, so rose the euro.  After putting in a small green doji on Thursday, it looks like that's being rejecting with the overnight candle gapping sharply higher to remain well inside the now eight day rising RTC.  Currently at 1.3626, with no reversal candle and the upper BB now at 1.3365, this one looks to still have room to run higher on Friday.

Transportation: On Wednesday the trans crashed out of their rising RTC for a bearish setup.  Thursday traded entirely outside for a bearish trigger.  However, it did so on a green spinning top which makes me cautious about being too dogmatically bearish here.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    5      7      6           3       0.533    -101

     And the winner is...

What we have here is a market that looks like it's having second thoughts about moving lower.  What was looking bearish last night now isn't looking quite so bad.  And given the fact that the first day of February is historically very strong with both the Dow and SPX up 9 of the last 10 according to The Stock Traders Almanac, I'm not wanting to buck those kinds of odds.  So in the absence of any real bearish pin action, I'm just going to call Friday higher.

ES Fantasy Trader

I said last night that I wasn't going to take any chances with this trade and I didn't.  As soon s I saw it moving against me, I got out, and just in time to eke out a half a point profit.  And for the benefit of anyone following the live trades on Twitter - here is what greeted me when I tried to post the exit:

I'm like, huh?  Did some Middle Eastern despot get overthrown again?  Anyway, I was able to get through an hour later, but an hour is an eternity in trading ES.  So just a word to the wise - don't trust Twitter.  I'll continue to post the trades live just to prove I'm really doing it, but there's no guarantee they'll get through.

Portfolio stats: the account inches up to  $93,875 after 4 trades (3 for 4 total, zero for zero longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we're entering our first long trade of the year at 1497.75..

BOT 10 false ES MAR13 Futures 1494.00 USD GLOBEX 11:12:43

SLD 10 false ES MAR13 Futures 1494.50 USD GLOBEX 01:00:00

Thursday lower

The Hoot 

Actionable ideas for the busy trader delivered daily right up front

• Thursday  lower, low confidence.
• ES pivot 1498.25.  Holding below is bearish....
• Friday bias uncertain  technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1494.50..

Recap

It wasn't looking too bad early on but I guess Mr. Market eventually didn't like what Uncle Ben had to say on Wednesday afternoon despite the fact that it was the same old thing he's said countless times before.  Go figure.  In any event it was good (or bad) for a 44 point drop in the Dow and another miss for me.  Tonight we release the chart-hounds and let them follow the scent of Thursday's market direction.  Arrooooh!

The technicals (daily)

The Dow: 0.32% is hardly a major decline, but it's the biggest the Dow has seen since January 8th.  Unfortunately, the resulting candle isn't quite either dark cloud cover or bearish harami and we remain inside the rising RTC.  It was enough to bring the indicators down off oversold-broken, but I need confirmation on Thursday to call a pullback.

The VIX:  Still, the on again-off again VIX does now seem to be in a new uptrend, gaining 7.59% on Wednesday, the most in over a month.  The frustrating part is that we've gone from oversold to overbought in just four days and we're now already quite near the upper BB at 14.72.  And as I've often pointed out, the VIX generally respects its upper BB very well.  So while there might be more upside left here, it's looking like it's limited.

Market index futures:Tonight all three futures are barely lower at 1:00 AM EST with ES down by just one tick, or 0.02%.  However, today's regular session drop moved ES exactly to the edge of its rising RTC for a bearish setup.  The new candle is currently outside the RTC, so unless ES can close back above 1500 on Thursday, that will be a bearish trigger.

ES daily pivot: Tonight the pivot dips  from 1500.58  to 1498.25.   For the first time in a while, this leaves us below the new pivot, a bearish sign.  However, ES seems to be interested in revisiting the new level, so it will bear watching before morning.

Dollar index: The dollar broke support at 54.71 on Wednesday and gapped down to touch its lower BB before.bouncing a bit and closing at 54.56.  This caused a bullish hammer and left the indicators highly oversold.  I'd say the dollar is likely to move higher from here.

Euro: And the euro seems to support that idea.  After putting in another tall green candle today to close at 1.3570, it's moving higher again in the overnight, up another 0.13% and remaining firmly in its rising RTC.  With the upper BB now at 1.3634, there's still some room to run here.

Transportation: Well it looks like the trans recent run is finally over with a 1.54% drop on Wednesday.  This took them way out of their long rising RTC for a bearish setup and finally brought the indicators down from their maxed out overbought levels where they'd been for two weeks now.  I'll say that now more downside is likely.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow

                                             average  points

January    4      7      6           3       0.500    -151

     And the winner is...

I know the last two days of January are historically strong, but the charts tonight seem to be suggesting that the momentum is turning, and after the monster run-up of the past few weeks, it's hardly unexpected.  This market has been more overbought than I've ever seen and yet has stubbornly refused to pull back.  Now that we're finally seeing some charts falling out of their regression channels, I'm feeling a bit more confident in calling the trend over.  Thursday will tell for sure.  In the meantime I may be jumping the gun a bit but I'm going to go out on a limb and call Thursday lower anyway.  I'll be happy to be proven wrong as I'm still long and I've not taken out any SPXS hedges yet.

ES Fantasy Trader

Portfolio stats: the account remains at $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Tonight we're going to try hitting the short side once again now that it finally looks like the uptrend is over.  It may be a bit premature, but I think that we may see a day or two of selling coming up.  I know it's risky given the seasonality, so if this one doesn't turn profitable quickly, we're just going to give it up.

Wednesday higher

The Hoot 

Actionable ideas for the busy trader delivered daily right up front

• Wednesday  higher, low confidence.
• ES pivot 1500.58.  Holding above is bullish...
• Rest of week bias uncertain  technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I issued one of my Famous Conditional Calls - " If we manage to stay above 1496.08 by mid-morning (say the 10-11ish area), then we'll close higher Tuesday".  Well ES did dip below the pivot in the wee hours but then rallied above it just before 10, and then after a vain attempt by the bears to knock 'em lower, the bulls recaptured the initiative at 10:20 and by 11 AM it was all over.  The rest of the day proceeded higher and the Dow finished up 72 points, just short of the 14K level.  So once again, the pivot prevails.  Now let's move on to Wednesday and see if we can figure out what the fickle finger of the Fed will write.

The technicals (daily)

The Dow: The Dow gave us a reversal warning Monday but it was soundly canceled with today's 0.52% advance.  So once again, the broken record plays the same old tune: rising RTC, broken indicators maxed out at overbought, solid green candles.  If we're going to get a pullback, I'll need to see it before believing it. And right now I still don't see it.

The VIX:  Just when it looked like the VIX was pulling itself off the floor, it got KO'ed again on Tuesday for a 1.92% loss.  And it came in the form of a bearish engulfing pattern.  So right now I['d question if the VIX can manage to move higher again on Wednesday.  It's not looking good.

Market index futures:Tonight the index futures are mixes at 1:19 AM EST with ES down by 0.08%, YM down 0.06% but NQ up 0.02%.  Call it basically flat. I believe we were correct to be cautious about yesterday's doji in ES as that was rejected in a big way as ES closed above 1500 for the first time and the run that began on the 17th remains intact.  Tonight we're seeing something similar to two nights ago with a pause after a big up move.

I'll admit I was surprised we didn't see a pullback when the SPX hit 1500.  I think that that, plus ES closing above 1500 are both rather bullish signs.  Meanwhile, the upper BB has come down a bit but is still at 1509 and we're still inside the rising RTC, so once again I still can't call this chart lower yet.  This is like trying to catch the falling knife but in reverse.  What would that be - catching the rising balloon?  We're going lower eventually, but if it's happening Wednesday, ES isn't tipping its hand right now.

ES daily pivot: Tonight the pivot inches up from 1496.08  to 1500.58.  The story of the pivot remains the same - above the old number all day and still above the new level, so it remains bullish.

Dollar index: On Tuesday the dollar broke under its recent six day range but has not broken under its support at 54.68 on the $USDUPX.  With the indicators continuing to drop and a lower BB not til 54.58, there's still some more downside available, but this chart has been so squirrelly lately I'm not putting any money on that theory.

Euro: I missed this one for Wednesday.  Instead of dropping, the euro closed up to 1.3469, a level not seen since November 2011!  In fact, the euro is now closing in on its 200 week MA at 1.3521.  Breaking above that would be bullish indeed.  However, in the short term the stochastic is very close to executing a bearish crossover and the developing overnight candle is flirting with the edge of the rising RTC as the euro is unchanged since the close so far.  I'd say a move lower Wednesday is still not out of the question.

Transportation: Well it's sure looking like the trans are stalling out, with the 5880 level proving to be a hard nut to crack.  On Wednesday we got the third doji in a row, indicating that the bears are starting to exert some downward pressure we haven't seen for a while.  That said, we're still in a rising RTC and the indicators are still broken-overbought.  After this phenomenal run, we're going to need more evidence than that to call a top.  The best I can say at this point is that we're consolidating.  I'll need to see the pullback before acknowledging it.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.  We've now completed the stats for all of 2012 so we start over with 2013.
 

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

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

  2  1/7        47         30        +      +   1466

  3  1/14       52         15        +      +   1472

  4  1/22       50         21        +      +   1486

  5  1/28       44         26        +      +   1503

  

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that I voted bearish four weeks ago, so both I and the majority were wrong.   We therefore start the year off with an accuracy of 0 for 1, or 0%.  I expect that number to rise :-)

This week we see the majority remains bullish although the spread has narrowed since last week.  I'm agreeing with the majority that we still have some room to run on a monthly basis.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      6      6           3       0.538    -107

     And the winner is...

With nothing much having changed technically for days now, and the trend remaining up, and some room left to run before hitting resistance levels, the only logical call is Wednesday higher, even though I feel a bit uneasy saying that.  One of these days, that will be the wrong call.  But I have to calls 'em like I sees 'em.

Oh, and with the Fed expected not to make any earth-shattering announcements, I'm not looking for any big moves either way on Wednesday.

ES Fantasy Trader

Portfolio stats: the account remains at $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Now I'm glad I did not go long last night, but with the doji, it didn't really make much difference anyway.  Once again, I'm just going to sit on my hands waiting for the long overdue pullback.

Tuesday higher if ES pivot holds

The Hoot 

Actionable ideas for the busy trader delivered daily right up front

• Tuesday higher if ES pivot holds, else lower..
• ES pivot 1496.08.  Holding above is bullish...
• Rest of week bias uncertain  technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well the Dow's winning streak is snapped at six and it took my call for a higher close with it after a late afternoon slip sent us negative on the day.  But a meager 14 point loss is hardly worth writing about..  Or is it?   Let's stir up the chart anthill and see what climbs out.

The technicals (daily)

The Dow: So we got a small spinning top on Monday.  Sure it's a reversal sign, but we've seen five of these over the course of the last thirteen sessions and not a single one of them panned out.  So I'm a little skeptical of getting bearish just because of this, in particular because we remain in the rising RTC and still haven't touched the upper BB yet.  So this chart is going to have to show me a solid red candle before I believe it's a pullback.  And that means closing under 13,767 on Tuesday (the RTC edge).  Think we're in for a 114 point tumble Tuesday?  Me either.

The VIX:  Then again, the VIX finally posted a real gain on Monday, gapping up 5.28% to send the indicators off oversold and confirming the bullish stochastic crossover.  So why isn't the market going lower? I wish I knew.  This is highly unusual.  Rob Hanna commented on this himself today in his Quantifiable Edges post here.   Perhaps people are simply anticipating the top and getting their puts in early.  

Market index futures:Tonight all three futures are just barely higher at 1:06 AM EST with ES up by 0.07%.  ES gave us a small spinning top today but the overnight doesn't seem to be confirming it.  Still, unless we can pack on a few more points, this is moving us closer to the right edge of the RTC.  If we close below 1492.50 on Tuesday, that will be a bearish setup.  Or, ES may just be gearing up for an attack on 1500.  Either way, I'm still not seeing a pullback yet on this chart.

ES daily pivot: Tonight the pivot inches up from 1493.92  to 1496.08.  The situation is almost identical to last night at this time.  We were above the old pivot all day (aside from a brief test around 10 AM) and we remain above the new number, but a bit less so.  Still, that remains bullish unless we break under.  With just a two point spread now, the pivot is definitely in play and bears watching.

Dollar index: The dollar continued its random walk today, gaining all of 0.06% and remaining range-bound.  Stuck halfway between the BB's, with indicators halfway between overbought and oversold, and without an RTC there continues to be zero guidance from this chart..Maybe there's a clue in the euro.

Euro: Hmm, there might be.  The euro put in a tall spinning top today near the top of Friday's tall green candle.  And the overnight action is headed lower, confirming (so far anyway),  the reversal candle.  The indicators here are now on the move lower off overbought, so I'd say a lower euro on Tuesday is definitely possible.

Transportation: It looks like the phenomenal rally in the trans may finally be sputtering to a halt as they managed to gain just 0.09% on Monday.  And did it on a hanging man, making it two in a row.  Volume has also been declining for three days suggesting buyers may be getting wary at these heady levels.  So I'd say we may be near a pullback, but without seeing a red candle and an RTC exit, I still can't pull that particular trigger.  We might just get some consolidation for a few days.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      6      6           2       0.500    -107

     And the winner is...

On the one hand we have the proximity of ES to its pivot tonight, a rising VIX, the fact that the Dow failed to advance on Monday, and the trans may be signaling an end to their rally.  On the other hand, we've seen this movie before and the market just picked right back up the next day.  Therefore, I'm making another conditional call tonight.  Watch the ES pivot.  If we manage to stay above 1496.08 by mid-morning (say the 10-11ish area), then we'll close higher Tuesday.  Else lower.  So sez I.

ES Fantasy Trader

Portfolio stats: the account remains at $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Now I'm glad I did not go long last night, but with the doji, it didn't really make much difference anyway.  Once again, I'm just going to sit on my hands waiting for the long overdue pullback.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1493.92.  Holding above is bullish...
• Rest of week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last Thursday I made the call that we'd go higher on Friday only if ES could break above its pivot point of 1490.75.  That happened at 2:40 AM and we did indeed close higher, with the Dow gaining another 71 points and the SPX closing above 1502 for the first time since November 2007, right when we stood on the brink of the cliff that led us into the Great Recession.

Never discount the power of the pivot.  Take a look at last Friday's SPX chart in 5 minute bars and you'll see how they made two stabs at knocking it lower, at 10:35 AM and again at 10:45 AM.  Both times the index dropped to exactly 1490.75 on the dot and bounced right off.  And right after the second failure, the bears simply packed up and went back into hibernation.

Now let's figure out how the last week of the month might play out.

The technicals (daily)

The Dow: The Dow continues its quite extraordinary rally with six solid green candles in a row and 11 of the last 12.  We've now hit my target of 1500 for the SPX and now Dow 14K is only 105 points away.  Everything I've been saying about this chart remains true and despite the length of this rally, I see nothing technically bearish here yet.  Obviously, we have to come down sometime, but so far there's no sign of it.

The VIX:  Well, there might be a sign here.  On Friday the VIX posted a 1.58% gain, unusual in view of the fact that the market was up too.  This had the effect of canceling Thursday's doji and also created a bullish stochastic crossover.  With RSI continuing to rise off oversold I'd say we have a good chance of moving higher again on Monday, and that can't be good for stocks.

Market index futures:Tonight all three futures are mildly higher at 1:11 AM EST with ES up by 0.12%.  Like the Dow, ES is on a roll and after putting in two strong green candles to end last week remains firmly in its rising RTC.  The indicators also remain broken at overbought levels and with ES continuing higher once again in the overnight, there really isn't any sign of a pullback here either.

ES daily pivot: Tonight the pivot rises from 1490.75  to 1493.92.  We were above before and remain above, though  only by half as much, but that's still undeniably bullish.

Dollar index:The dollar dropped 0.23% on Friday as it continues to bounce around between 55.10 and 54.85 on the $USDUPX.  We got a morning star but also a bearish stochastic crossover.  But with this chart literally all over the place and no visible trend, I'm still not going to hazard a guess as to where this is headed Monday.

Euro: The euro had a good day Friday, hitting its upper BB and closing at 1.3469.  In the overnight we're just sort of meandering near the top of Friday's candle so there's really little to be gleaned from this chart.  The weekly chart though continues to look bullish for a while, though I note the nearby presence of the 200 week MA at 1.3521 that might provide some resistance before long.

Transportation:The trans seem just unstoppable, packing on another 0.26% on Friday to continue a streak that began way back on January 9th.  We did get a hanging man - but we also got one last Tuesday and that came to naught.  RSI remained pegged at 100 for the third straight day but still no sign of this rally ending.  The most we can do is see if this hanging man is confirmed on Monday.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      5      6           2       0.545     -93

     And the winner is...

As much as I want to be bearish simply because it feels like this rally has now gone on far too long without any pullback, I'm still not seeing it in the charts.  I do think that since we managed to close above SPX 1500 that the next stop is Dow 14,000.  And if that holds, then we're going to revisit the all time highs of 2007.  I figured we'd pull back at SPX 1500 and that didn't happen.  The VIX is inching higher but the market's not going down.  I'm not sure what's going on here, short-squeeze, dumb money, PPT, name your usual suspects, but we all know that fighting the trend is a bad idea.  Therefore, while SPXS looks attractive at these levels, I'm going to hold off on my desire to hedge until the market shows me the top.

Um, oh yeah, so where are we going Monday?  Well in the absence of anything bearish-looking, I've got to say that it looks like Monday higher.

ES Fantasy Trader


Portfolio stats: the account remains at $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Tonight we're standing aside simply because I don't want to get on the bus just before it reverses direction , and I just can't shake the feeling that this is going to be happening Any Day Now.

Friday higher only if pivot passed

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

• Friday higher only if ES pivot passed, else lower
• ES pivot 1490.75.  Holding below is bearish...
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

I think I was right to call Thursday uncertain.  The Dow advanced once again but with a changed pattern, and the SPX was flat, giving us a perfect doji.  And the Nasdaq of course was dragged into negative territory by the 800 lb. gorilla known as Apple.  So once again like the kids in the back seat we have to ask, in regard to a top, are we there yet?  Don't make me stop these charts!

The technicals (daily)

The Dow: Yes the Dow gained another 46 points on Thursday but it did it on an inverted hammer, the first reversal sign we've seen in six sessions.  We are indeed up five in a row and 10 for 11, which is getting to be quite a long rally without a pullback.  While the indicators are still pegged on overbought and we're still in a rising RTC, I'm getting the feeling that people are looking for an excuse, any excuse to move things lower.  This inverted hammer may be it.  I'd not be going long right now.  I'll also note that the Dow came to within 2 points of its upper BB today.

The VIX:  The VIX posted its second day of admittedly small gains, gaining just 1.85% on a long-legged doji.  We remain inside the descending RTC but the stochastic seems to be trying to set up a bullish crossover.  So support around 12.50 continues to hold and with today's close just above that I wouldn't be surprised to see a further move higher on Friday.

Market index futures:Tonight all three futures are lower at 1:10 AM EST with ES down by 0.17%.  On Thursday ES gave us a candle that resembled the Dow's inverted hammer more than the SPX's doji so that alone is not a reversal warning.  What is one though is the new candle which right now is trading outside the rising RTC for a bearish setup.  ES is going to have to close above 1492 on Friday to cancel that one.  So far, one part of my prediction last week has come true - the SPX hit 1500 and retreated.  That alone makes me cautious for Friday.

ES daily pivot: Tonight the pivot rises from 1488.67  to 1490.75. Like last night, we threaded about the old number earlier this evening but remain below the new pivot thanks to this gain.  But ES does seem to be showing some interest in taking a look at ti and now we're only a point and a half below.  That puts the pivot in play for Friday.

Dollar index:The dollar index continues its random bouncing around and gained just 0.02% on Thursday.  We're now overbought and nearly out of the rising RTC, but the action here is so chaotic I'm not getting much utility from this chart right now. .

Euro: Same story with the euro.  It continues to trade in a range of 1.3300 to 1.3400, moving from the lower end to the upper end on Thursday.  But as has been the case lately, in the overnight, we're heading back down again.  Last night I wrote this, and I'll say it again, "expect more sideways motion until this chart makes up its mind which way it wants to go."  Doesn't look like that's happened yet.

Transportation:While the Dow was giving a possible reversal sign on Thursday, the trans were having none of it, posting a big 1.66% gain on a green marubozu.  This actually broke us out of the left edge of the rising RTC, something that can be a bearish sign as that is the behavior you get when a stock goes exponential on you.  And RSI is now at 100 for the second day in a row.  They say what goes up must come down, but you'd never know it from this chart.  I'm wanting to call it lower on general principles, but honestly, there's still no reversal sign here, and that is good for the market.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      5      6           1       0.500     -93

     And the winner is...

Tonight we're seeing a bunch of dojis all over the place warning of possible reversals.  Frustratingly, they all require confirmation.  We now have a long-running rally that's overdue for a pullback but we still have a fair amount of momentum, both qualitatively and quantitatively (the latter stands at 22.25).  So I'm becoming increasingly nervous about continuing to call this market higher but also unwilling to fight the tape by going short in the absence of a definitive top.  Therefore, I'm going to make a conditional call: if ES breaks above its pivot of 1490.75 and stays there by mid-morning Friday, then we close higher.  If ES tries to break above and fails or just drifts lower then we close lower.

ES Fantasy Trader

Portfolio stats: the account inches up to $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).  Tonight I'm not seeing enough of an edge either way to commit, so we're standing aside.

Thursday uncertain, doji possible

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

• Thursday uncertain, doji possible.
• ES pivot 1485.33.  Breaking below is bearish...
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1486.50.

Recap

Doh!  Well that's what I get for trying to call the top.  The market was obviously having none of it, as the Dow posted yet another gain, making it 9 for 10 now.  I should have known better.  I'm about ready to sign up for TFA - that's Tape Fighters Anonymous.  At least I'm always net long, so I'm still making money.  And since that's why we're all here, let's see where the money might be headed on Thursday.

The technicals (daily)

The Dow: Gosh, I should just cut & paste last night's comments here.  Same green candles, same rising RTC, same off the scale overbought indicators, still no sign of a reversal, etc.  I do find it curious that volume declined once again on Wednesday.  But that alone isn't enough to call a top, so we continue waiting.  I still think we're going to touch 14K and then head lower.  That's just over 200 points from here now.  The amazing thing here is that the Dow just executed a bullish stochastic crossover on the monthly chart. 

The VIX:  After yesterday's matching low lines, we did in fact get a gain in the VIX today, slight as it might be at just 0.24%.  And you wouldn't even know it just looking at yet another red candle.  But so far, that support around 12.48 seems to be hanging in there.  The trend is still down though and today's move hardly inspires much confidence in a VIX rally, so I'm going to have to wait til I see a real green candle on an RTC exit before calling the VIX higher.  Fool me once, etc.

Market index futures: Tonight all three futures are lower at 1:27 AM EST with ES down by 0.34%.  Wednesday's candle was a clear doji.  But the overngiht is busy forming yet another green candle.  We're now right on the edge of the rising RTC and the indicators look like they may finally be topping.  But we've seen this movie before.  This is the zombie chart that refuses to die.  I'll believe it's lower when I see it.  And right now I'm still not seeing any really good bearish signs yet.

ES daily pivot: Tonight the pivot rises again from 1485;33  to 1488.67.  After threading about the old number this evening following a drop at the close on Wednesday, we're now three points under the new pivot thanks mostly to its higher level.  But that's still a bearish sign.

Dollar index:The dollar continued its Brownian motion today gaining just 0.02% on a green candle sitting largely below Tuesday's.  The indicators are now trending higher off oversold though and we remain in a rising RTC, so I can at least guess that there's more upside ahead for ye olde greenback on Thursday.

Euro: The euro on the other hand is plagued by indecision, putting in a second doji in a row on Wednesday.  And the overnight continues basically flat, trading around 1.3323.  Without any signs of trends, I guess all we can say is to expect more sideways motion until this chart makes up its mind which way it wants to go.

Transportation:The trans just keep on rocketing up into the stratosphere.  The indicators are all pegged at overbought (RSI hit 100 today) but nothing seems to matter.  We just keep on trucking higher.  Never seen anything like it.  The only indication of an end to this is that today's candle was a star.  It's still inside the rising RTC so we'll need confirmation on Thursday if this is a top or not.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      5      5           1       0.500     -93

     And the winner is...

A very mixed picture tonight.  I keep thinking that like Kansas City, we've gone about as far as we can go, and I keep getting proven wrong.  The trans are screaming hot and Dr. Copper looks like he's gearing up for a move higher.  I'm not seeing any really bearish signs but I'm also not seeing much incentive to keep moving higher.  And with a short-term rally that's getting long in the tooth and some employment numbers coming out, I think I'm just going to take a pass and call Thursday uncertain.  If I had to guess, I'd call it a doji.

ES Fantasy Trader


Bracck brack brack.  That's the sound of the Night Owl imitating a chicken, which is what I got while watching my short profits melt away this evening like a snow man in May.  After my last stinging loss, I didn't want that to happen again, so I got out while I was still in the black, taking my meager half a point and being glad I got that much.

Portfolio stats: the account inches up to $93,625 after 3 trades (2 for 3 total, zero for zero longs, 2 for 3 short).

BOT    10    false    ES    MAR13 Futures     1486.00    USD    GLOBEX    21:25:18
SLD    10    false    ES    MAR13 Futures     1486.50    USD    GLOBEX    00:50:46

Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1485.33.  Breaking below is bearish...
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1486.50.

Recap

Going with the flow sure proved to be the thing to do on Tuesday as the Dow just kept on piling on the points, up this time another 0.46%.  OK, enough of that.  Will Wednesday bring more of the same?  Let's check it out.

The technicals (daily)

The Dow: It's three straight now for the Dow, giving us a bullish three white soldiers pattern and keeping us in the rising RTC.  Indicators remain overbought-broken, so this chart is just as bullish tonight as last night.  With one exception - volume fell dramatically on Tuesday compared to Friday.  I don't know if this is just some post-holiday effect or if we're running out of buyers. at these levels.  Word to the wise...

The VIX:  The VIX once again lost ground on Tuesday but this time by just 0.24%.  And it did it on a very interesting candlestick pattern called matching lows.  We have two red candles both closing at nearly the same price with the second one smaller than the first.  This is a bullish pattern which suggests support around 12.5.  We still remain in a fairly wide descending RTC and the indicators continue to be of little use, so this one requires confirmation, but if I had to guess I'd say the VIX will be moving higher very soon.

Market index futures: Tonight the index futures are mixed at 12:54 AM EST with ES down by 0.18 %. and YM down 0.15% but NQ higher by just 0.05%.   Tuesday's impressive gain in ES keeps us in the latest rising RTC.  However, tonight's decline, the first we've seen at this hour of the night is a while now, is forming a dark cloud cover.  It's also moving the indicators off their overbought pegged levels.  RSI and OBV are .actually declining  This is not the look this chart has had lately and it's feeling a bit on the bearish side if you ask me.  Even if you don't ask me.

ES daily pivot: Tonight the pivot rises once again from 1476.83  to 1485.33.  We were above the old number all day Tuesday but with this gain and ES drifting lower in the overnight, we're now just barely over one point above the new pivot.  This puts the pivot in play.  ES appears interested in testing the new number.  If we break under, that will be a bearish sign.


Dollar index:The bearish evening star I pointed out yesterday was completed today as the dollar gapped down for a 0.18% loss. .  But wit indicators rising off oversold and a somewhat chaotic rising RTC established, it would be premature to call the dollar lower again on Wednesday.  This one could go anywhere.

Euro: Last night I didn't have much direction for the euro and I guess it didn't either, as it finished today with a perfect doji right in the middle of its recent range.  With more aimless wandering in the overnight, there continues to be little guidance here.  In the absence of any reversal signs, I'd say we're in for some more sideways movement.

Transportation:I'm just about running out of superlatives to describe the trans lately.  Yesterday's green hanging man was demolished on Tuesday as the trans gained another 1.09% on a green marubozu.  We're in record territory, we're still inside the rising RTC and the indicators are all still pegged at overbought.   So all I can do at this point ansd shrug and saywith no bearish signs on the horizon yet, we've got more upside to go here.  N.B. - the upper BB isn't til 5804.

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 final cumulative list for 2012.
 

Wk.# Week   % Bullish  % Bearish  NightOwl SPX  Accuracy

  1  1/3        46         21        +     1258   1/1

  2  1/9        56         37        +     1278   2/2

  3  1/17       41         33        +     1289   3/3

  4  1/23       46         32        +     1315   4/4

  5  1/30       48         31        +     1316   5/5

  6  2/6        56         30        +     1345   6/6

  7  2/13       48         31        +     1343   7/7

  8  2/21       44         32        +     1361   8/8

  9  2/27       48         24        +     1366   9/9

 10  3/5        43         26        +     1370  10/10

 11  3/12       46         32        +     1371  11/11

 12  3/19       46         29        +     1404  11/12

 13  3/26       39         29        +     1397  11/13

 14  4/2        42         21        +     1408  11/14

 15  4/9        25         46        -     1398  12/15

 16  4/16       26         48        -     1370  13/16
 17  4/23       30         48        -     1379  14/17

 18  4/30       44         32        +     1403  14/18

 19  5/7        23         50        -     1350  15/19

 20  5/14       32         44        -     1353  16/20

 21  5/21       30         52        -     1295  16/21

 22  5/29       35         42        -     1318  16/22

 23  6/4        32         48        -     1278  16/23

 24  6/11       28         40        -     1326  16/24

 25  6/18       39         26        -     1343  16/25

 26  6/25       38         46        -     1335  16/26

 27  7/2        41         40        -     1362  16/27

 28  7/9        42         38        -     1355  16/28

 29  7/16       44         32        -     1357  16/29

 30  7/23       33         42        -     1363  16/30

 31  7/30       43         22        +     1386  17/31

 32  8/6        52         28        +     1391  18/32

 33  8/13       43         21        +     1406  19/33

 34  8/20       46         31        +     1418  20/34

 35  8/27       39         29        +     1411  21/35

 36  9/4        31         38        +     1407  22/36

 37  9/10       54         29        +     1438  23/37

 38  9/17       63         22        +     1466  23/38

 39  9/24       52         30        +     1460  23/39

 40  10/1       39         39        -     1441  24/40

 41  10/8       52         34        +     1461  24/41

 42  10/15      41         32        -     1429  25/42

 43  10/22      38         41        -     1433  26/43

 44  10/29      36         43        -     1412  27/44

 45  11/5       44         33        -     1414  27/45

 46  11/12      38         46        -     1380  27/46

 47  11/19      52         34        +     1360  28/47

 48  11/26      48         26        +     1409  29/48

 49  12/3       57         21        N     1416  29/49

 50  12/10      46         29        N     1418  29/50

 51  12/17      52         28        -     1414  29/51

 52  12/26      52         26        +     1430  30/52

 

  1  12/31      40         48        - -   1402 

  2  1/7        47         30        + +   1466

  3  1/14       52         15        + +   1472

  4  1/22       50         21        + +   1486

  

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 I voted bullish four weeks ago, so that was correct.  Therefore, as we fill in the last call for 2012, I ended the year with a score of 30 for 52 or 58%. Beginning next week, we'll just be running the 2013 numbers.  And recall that starting with 2013, I'm splitting the vote into two columns - the first is how I voted, the other is how the majority of the poll voted.

This week we see that I once again voted with the majority, and the majority remains quite bullish, though bearwish sentiment is beginning to creep up.  This bears watching.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    4      4      5           1       0.556     -26

     And the winner is...

I really think that ES is headed for 1500 and the Dow for 14,000, but not in a straight line.  My feeling is that Wednesday may be a small pullback day to provide the wind-up for the final assault on the next round numbers.  Meanwhile, I can't help looking at the SPX Hi-Lo indicator which is still pegged on 100.  That can't go on forever.  I'll also note that the great and awesome J-Trader is going short so who am I to argue.  So it's Wednesday lower for me.

And I'll bet anything that there are great big bunches of sell orders and short limit orders set to go off at 1500 and 14,000.  It will be interesting to see what happens when (or if) we get there.

ES Fantasy Trader

Portfolio stats: the account now drops to $93,125 after 2 trades (1 for 2 total, zero for zero longs, 1 for 2 short).  Call me crazy, but tonight we try going short again at 1486.50.