Friday lower

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

• Friday lower, medium confidence.
• ES pivot 1873.08.  Holding below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader going short at 1871.50.

Recap

Well that sure was weird.  In more than 10 years of observing the markets on a daily basis I've never seen this.  On Thursday the Dow closed exactly unchanged - down to 1/100th of a point.  This is like flipping a coin and having it land on edge.  Now here's the problem - last night I called the Dow higher.  Well it didn't close higher but it also didn't close lower.  So was I right or was I wrong?  I guess we'll just go by Blackjack rules and call it a push.  IN my defense, I'll point out that both the Nasdaq and SPX did close higher.  Ah well - no point dwelling on it - let's move on to see what Friday might have in store.

The technicals

The Dow: Last night I called this the "ah-choo" market - the sneeze waiting to happen but won't.  Well Thursday was just one more "ahh..." as the Dow formed a textbook-perfect doji.  With largely sideways motion for two days now and indicators still extremely oversold, the logical next direction remains lower.  Oh, and Thursday's trade was a bearish RTC setup.

The VIX:  Last night I said there was still no clear reversal here and while the VIX did gain 036% it did it on  a long-legged doji that simply reflects more uncertainty.  Which way this chart goes on Friday is anybody's guess.

Market index futures: Tonight  all three futures are lower at 12:34 EDT with ES down 0.07%.  ES followed Wednesday's doji with a red hanging man in dark cloud cover position.  In addition, we've finally gotten the bearish stochastic crossover I've been waiting for.  Also, the overnight is trading outside the rising RTC and that's a bearish setup.  ES would need to close above 1879.50 on Friday to cancel this.  Indicators remain highly overbought and we've been seeing some bearish divergence in both OBV and money flow which have been dropping for three days now even as ES moved higher.  To me, this all spells lower for Friday

ES daily pivot: Tonight the ES daily pivot drops for the first time in a while, from 1873.75 to 1873.08.   And we are now below the new pivot so this indicator has turned bearish.

Dollar index: Last night I called the dollar bearish and it did lose 0.07% on Thursday, but did it with a spinning top that doesn't prove much by itself.  However, with indicators now having officially topped at overbought and a newly completed bearish stochastic crossover, I'd say there's more downside to come on Friday.

Euro: Ah, it's dojis galore tonight with one more from the euro on Thursday.  Coming higher than Wednesday, it now leaves the euro in a clear, if choppy uptrend.  With a completed bullish stochastic crossover, and rising indicators not yet overbought, I'd say the euro's looking higher for Friday.

Transportation: If there's any guidance in the charts tonight, it comes from the trans which on Thursday dropped 0.42% from highly overbought levels.  That was enough to exit the rising RTC with a bearish setup and send both money flow and OBV lower.  At this point I'm willing to claim that the trans are looking lower on Friday.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      7       2      4           0       0.778    342

     And the winner is...

The number of bearish signs I'm seeing across the board has increased since last night, and the signs are becoming more unambiguous.  The market is now looking pretty toppy to me and seems to be ready to roll over.  Accordingly, we're just going to call Friday lower and call it a week.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we go short at 1871.50.

Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 1873.75.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well that's really odd, my entire post for Wednesday seems to have simply vanished into the ether without a trace.  When I hit "Publish" I kind of expect something to happen.  Oh well.  For the record, my call was for Wednesday as uncertain, which proved to be about right as the Dow lost just 13 points.  I also mentioned how the market was feeling toppy.  So let's see now if that's still the case or if we can motor higher on Thursday.  Assuming I can actually get this stuff out onto the web.  Thanks a lot Google - you big dorks.

The technicals

The Dow: OK, so this looks like an "ah-choo" market now.  You know how it is when you need to sneeze but maybe you don't and you just go "ah... ah... ah..." and everyone is waiting for the "choo"?  Well that's what this is.  We exited the rising RTC on Wednesday - unless you redraw it to account for Monday's gains, in which case we're now still inside.  Doh!  Meanwhile RSI keeps going higher, now up to 94.55.  And the stochastic has just crossover to bearish - if you can call a %K of 92.07 vs. a %D of 92.37 a crossover.  We are now literally teetering on the edge of a trend reversal but the break just doesn't seem to want to happen.

The VIX:  The VIX is no help resolving this mess either.  It did gain 0.61% on Wednesday but did it with a big gravestone doji.  We're near support and the indicators are all oversold but there is still no clear reversal here.

Market index futures: Tonight  all three futures are higher at 1:06 AM EDT with ES up 0.28%.  A perfect doji star for ES on Wednesday warns of a reversal, a notion supported by extremely overbought indicators and a stochastic that's ready to do a bearish crossover (but hasn't yet).  But the new overnight is not confirming the reversal and we do remain in a rising RTC so it is premature to calla  top right here, particularly with no resistance til 1884.

ES daily pivot: Tonight the ES daily pivot rises from 1871.17 to 1873.75.  We remain above the new pivot so this indicator is still bullish.

Dollar index: The dollar continues its weird antics, this time by losing 0.07% for a third consecutive loss on three consecutive green candles.  I don't even know the candlestick name for this - three white soldiers marching backwards?  In any event, there's a now-completed bearish stochastic crossover and indicators having peaked at overbought so let's just say this chart now looks officially bearish.

Euro: And the euro, which earlier this week looked ready to break down, climbed right back into its tight range about 1.3816.  There is though a completed bullish stochastic crossover and indicators just barely off oversold, so it looks bullish for Thursday.

Transportation: And finally in an interesting bit of bullish divergence, the trans on Wednesday gained 0.10% to the Dow's 0.08% loss.  However, that came on a spinning top that left RSI at 100 - it doesn't get any more overbought than that.  We also have a stochastic that just barely squeaked out a bearish crossover.  But both OBV and money flow continue to rise.  So this chart is somewhat conflicted but I'd say we have a good warning of a move lower now.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      7       2      4           0       0.778    342


     And the winner is...

Tonight we're once again seeing some classical reversal signs but Mr. Market is having none of it.  It may be a case where positive economic news just keeps on propping up the market enough to stave off the pullback that seems overdue.  So having learned my lesson about fighting trends, I'm just going to go way out on a limb and call Thursday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside because we had a big pop right at the close on Wednesday.  That was the time to open a trade, not late at night.  The timing was just off on this one.

Tuesday uncertain

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

• Tuesday uncertain.
• ES pivot 1862.17.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Last night I said that the logical call was for Monday higher.  Well logic prevailed as it usually does and Putinoia was held at bay long enough for the Dow gain 41 points.  Now let's see where logic might lead us on Tuesday.  Bring on the charts! (clap clap!)

The technicals

The Dow:  Last night I punted on this chart in the face of a red spinning top.  Turns out that reversal warning was canceled with a respectable 0.25% advance.  That managed to clear resistance at 16,439 and kept us inside a rising RTC.  Indicators are still not yet at overbought though the RSI has actually looked to have topped and the stochastic is curving over for a bearish stochastic crossover.So at this point this chart continues to look bullish though there's a flashing yellow caution light on now.

The VIX:  Wow - this is weird.  Last night I mentioned a rare side by side white lines pattern in the dollar index (see below).  And on Monday we got a nearly identical side by side black lines in the VIX.  So as the dollar was bullish, this is bearish, supported by indicators that are still not yet oversold.  With support still not til 13, I'd say the VIX is going to take a peek at that number on Tuesday.

Market index futures: Tonight  the futures are mixed at 12:26 EDT, with YM down 0.02%, NQ up 0.07% and ES dead even.   ES is now on a strong five day winning streak that has finally just pushed the indicators to overbought.  We need to continue moving higher now to avoid a bearish RTC exit.  Also, the stochastic is flattening out in preparation for a bearish crossover in the next few days, but not quite yet.  So for now this chart continues bullish, though the tide seems to be turning.

ES daily pivot: Tonight the ES daily pivot rises from 1856.33 to 1862.17.  Once again we remain above the new pivot so once again this indicator is bullish.

Dollar index: Last night I mentioned an unusual pattern - the side by side white lines.  And sure enough, they paid off with a 0.16% gap-up gain for the dollar on Monday.  That pulls the dollar into overbought territory but the stochastic has yet to start positioning for a bearish crossover.  With 2/3 of that big down gap from two weeks ago yet to be filled I have to think there's more upside left here for Tuesday.

Euro: I thought the euro would move sideways for a bit but instead it broke to the downside on Monday to close at 1.3794 after briefly touching its lower BB.  That left the indicators quite oversold and suggests that a reversal is on the way - if not Tuesday then more likely Wednesday.

Transportation: Last night I wrote of the trans "I'd say we're headed up to take look-see [at 7713]". Well at 7691 for a high, I'd say we got within shouting distance.  That bumps out winning streak to five, and leaves resistance at 7700 and the upper BB at 7735.  Indicators are still not overbought yet so it looks like there's still enough gas in the tank to take a run at at least one of those numbers on Tuesday.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      7       2      3           0       0.778    342


     And the winner is...

We still don't have any clear bearish signs on the charts tonight though we are starting to have a few hints of reversals.  It's not clear to me how much upside is left.  At this point, it looks like Tuesday could be a doji day.  Accordingly, I'm just going to call it uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside in view of the "uncertain" call.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1856.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Hmm - last Wednesday night I said Thursday would close lower unless ES broke above its pivot.  Well, ES did just that early Thursday morning and the SPX did indeed close higher.  However, my forecast is for the Dow and that closed lower.  On the other hand, that was entirely attributable to a sudden collapse in IBM, so I think the basic premise was still correct.  I'm sort of conflicted as to whether to call this right or wrong.  I think (since I make the rules) we'll just call this one a push and move on to Monday where hopefully we can get back into a normal market rhythm, but without the blues.

The technicals

The Dow: Last Thursday the Dow gave us a small spinning top, at least hinting at a reversal after a nice three day run.  But we remain in a rising RTC and the indicators are not yet overbought, so this one requires confirmation.  Can't say for sure right now.

The VIX:  And the VIX continued its plunge on Thursday, down another 5.78% and unable to reclaim the 200 day MA.  There's support just above 13 and I think we're going to test that on Monday.  No real reversal signs here yet.

Market index futures: Tonight all three futures are higher at 12:34 AM EDT, with ES up by 0.11%.  ES continues to look bullish after a fourth green candle in a row on Thursday.  There's no resistance til 1865 and with indicators not yet overbought I see no reason why we can't hit that number on Monday.

ES daily pivot: Tonight the pivot rises again from 1850.08  to 1856.33.  We remain above the new pivot so this indicator sis now bullish.

Dollar index: The dollar just doesn't want to retrace last week's big gap up and put in an unusual pattern - side by side white lines.  That is bullish, and the rising indicators support that.

Euro: The euro has been finding support at 1.3812 for four days now after a failed breakout attempt on Thursday.  It looks like we're in for some sideways action here for a day or two.

Transportation: And finally the trans motored on higher Thursday to extend their streak to four.  Indicators continued climbing and with no resistance til 7713 (which is also the upper BB) I'd say we're headed up to take look-see there.


Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      6       2      3           0       0.750    301

     And the winner is...

Tonight the charts continue to look bullish and in the absence of any reversal signs the logical call is simply for Monday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Thursday lower unless ES pivot passed

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

• Thursday lower if ES stays below pivot, else higher.
• ES pivot 1850.08.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Well once again the technicals prevailed as my call for a higher Wednesday came to pass.  Putinoia was held at bay and whatever it was that Aunt Janet said didn't seem to bother Mr. Market much.  Now we come to an oddball day indeed - the end of a holiday-shortened week and also op-ex.  Hmm - can the charts point the way out of this conundrum?  Let's take a look.

The technicals

The Dow: After Wednesday's gains we now have a nominally bullish three white soldiers going.  But I will observe that each day's gains have been smaller than the day before.  This may be a function of the approaching holiday, waning buying interest, or both.  Nonetheless we now have a good rising RTC going, along with rising indicators so this chart remains bullish until proven otherwise.

The VIX:  Last night I wrote of the VIX "there's still more downside on the way for Wednesday".  And was there ever, with the VIX falling out of bed in a big 9.16% gap down that sliced right back through its 200 day MA.  With a completed bearish stochastic crossover, 200 MA cross, falling indicators that are still a ways from oversold and only halfway to the lower BB, I still don't think the VIX is done falling.


Market index futures: Tonight, all three futures are lower at 12:52 AM EDT, with ES down by 0.18%.

ES daily pivot: Tonight the pivot rises again from 1830.92  to 1850.08. This bump combined with ES's sag now leaves us below the new pivot so this indicator turns bearish.  ES gave us a three white soldiers pattern on Wednesday and remains in a new rising RTC.  However, it appears to be running out of gas after such a nice three day run and the indicators seem to have peaked before even hitting overbought.  It's looking like ES may be taking a breather on Thursday.

Dollar index: Last night I wrote "the dollar's going lower on Wednesday." and it did, just barely, down 0.01% but on a green candle.  With a completed bullish stochastic crossover and rising indicators, I'm now thinking the dollar could move higher on Thursday.

Euro: I didn't call the euro last night which is just as well since it put in an inverted hammer on Wednesday for a fractional gain.  But it seems to be getting into gear in the overnight, up 0;3% so far which is bending the stochastic around to nearly form a bullish crossover.  Money flow continues to rise and we now have a bullish RTC trigger so I'd say the euro's moving higher on Thursday.

Transportation: Last night I wrote "This chart is now looking solidly bullish".  Well I'd say a solid green marubozu for a 1.67% gain on Wednesday counts as pretty bullish in my book.  This move solidified the bullish stochastic crossover, sent the indicators rising off oversold, and gave us a bullish RTC trigger.  This chart remains bullish except for the fact that we closed right as resistance on Wednesday.  But there does seem to be some gas in the tank to motor higher from here Thursday.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      6       2      3           0       0.750    301

   
     And the winner is...

Tonight most of the technicals are bullish, with the lone exception of the futures.  And why might that be?  Well it's a funny week, with a holiday on Friday and op-ex on a Thursday.  Traders might not want to be long over a long weekend while in the grips of Putinoia, possible invasions from Mars, and all the other things that they're always worrying about.  So this looks like a good time to make a conditional call: if ES remains below its pivot by mid-morning Thursday, we close lower.  But if ES breaks above the pivot and stays there by mid-morning, we close higher.  Hey it's worth a shot.  Happy Easter egg hunting and see you again Sunday night.

ES Fantasy Trader


Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Wednesday higher

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

• Wednesday higher, low confidence.
• ES pivot 1830.92.  Holding above is bullish.
• Thursday bias higher technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Whee!  Who needs Disneyland when we've got the stock market, which took us on a wild roller coaster ride on Tuesday.  First it was up, then it was down, then it was up again - it's almost enough to make me start daytrading.  Blame it on Putinoia, on op-ex, on the holiday week, whatever.  The technicals came through and that's all that counts.  So with just two more days to go in this week, let's see what Wednesday has in store, chartwise.

The technicals

The Dow: Last night I wrote "suddenly this chart turns bullish".  I was mentally writing my excuses for being so badly wrong around lunch time Tuesday but then a fierce afternoon rally saved the day.  Whew!  This left us with a fat hanging man and a bullish, if somewhat sketchy RTC setup.  We're still only just coming off oversold on the indicators and a bounce off the lower BB so I have to think there's still more upside left here.

The VIX:  Last night I wrote (I need an acronym for this, like LNIW) "there's more downside to come here on Tuesday".  And the VIX obliged, dropping 3.10% on an inverted hammer that just barely gets us off overbought and completes a bearish stochastic crossover.  Note how once again, the VIX wasn't able to hang onto its upper BB.  A tip of the Hatlo hat - they'll do it every time.  With the bearish evening star confirmed, it looks like there's still more downside on the way for Wednesday.

Market index futures: Tonight, all three futures are higher at 12: 22 AM EDT, with ES up by a respectable 0.30%.  Monday's bullish piercing pattern in ES paid off nicely on Tuesday giving us two white soldiers marching higher.  And we're getting some decent pin action in the overnight with a move that pulls ES out of a wide descending RTC back to April 4th for a bullish setup.  The indicators all continue rising so this chart continues looking bullish tonight.

ES daily pivot: Tonight the pivot jumps from 1818.58  to 1830.92. The monster Tuesday afternoon rally has placed us well above the new pivot so this indicator remains quite bullish for Wednesday.

Dollar index: Last night I was looking for some sort of gap-filling for the dollar but mentioned that lower was possible at some point this week.  Well we rose 0.10% on Tuesday but did it with a red hanging man.  That leaves the chart (bearish) in conflict with the oversold indicators and bullish stochastic crossover.  I think I'm goring to go with the candlesticks and claim the dollar's going lower on Wednesday.

Euro: Last night I wrote about the euro, "there's more downside left here on Tuesday" and so there was, with the euro ending at 1.3808 with a red spinning top.  The indicators are now falling off overbought with the lone exception of money flow which is rising.  And we're up 0.07% in the overnight, just crossing above the pivot.  But that all leaves this chart too conflicted to call tonight.

Transportation: Last night I wrote "this chart now has a suggestion of a move higher".  And it was an excellent suggestion indeed as the trans rose 0.86% on Tuesday, completing a bullish stochastic crossover and exiting their descending RTC for a bullish setup.  This chart is now looking solidly bullish, you betcha.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      5       2      3           0       0.714    139

   
     And the winner is...

We went a bit out on a limb last night by calling Tuesday higher based primarily on reversal signs.  But tonight we've seen those signs confirmed so I feel a bit better calling Wednesday higher.  Of course with things possibly heating up in the Ukraine, this could change quickly.  Unfortunately, my bug in the Kremlin seems to be out of order at the moment, so we'll have to go with just the technicals.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Tuesday higher

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

• Tuesday higher, low confidence.
• ES pivot 1817.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Hmm - interesting.  Last night I suspected we were nearing a reversal at some point this week but I didn't think it would come on Monday, hence I went with the patterns I saw which suggested lower.  Turns out we got our reversal after all, ostensibly on some economic news - whatever.  As I said last night, I'm always glad to be proven wrong on a bearish call since I'm always net long.  So the underlying thesis worked out but the timing was a bit off.  But then calling the bottom is probably the hardest thing to do - even more than calling tops.  So now we have to ask whether this reversal's got legs or if it's just another fakeout breakout like we got last Wednesday.  To the charts!

The technicals

The Dow: Just last night I talked about the pivot.  Had I been awake at 9:30 AM on Monday I would have seen the Dow jump above its daily pivot right out the gate.  And that was all it took as we finished with a nice 146 point pop that completely erased Friday losses.  The candle is sort of piercing line meets engulfing pattern but bouncing off the lower BB as it did, it sure looks bullish to me.  RSI looks to have bottomed and the 16K round number support was never even threatened.  So suddenly this chart turns bullish.

The VIX:  Last night I wrote "it looks like a lower VIX is coming soon" and it came sooner than I thought, down 5.4% on Monday on a big (and unusual) gravestone doji.  For my money, this completes the bearish evening star from Friday and with indicators still overbought, I now think there's more downside to come here on Tuesday.

Market index futures: Tonight, all three futures are higher at 12:18  AM EDT, with ES up by 0.07%.  On Monday ES put in a class bullish piercing pattern and money flow turned higher for the first time since April 3rd.  The stochastic is still pretty jumbled but after two days closing and then opening under the lower BB, this chart now looks positive to me.

ES daily pivot: Tonight the pivot inches up from 1817.00 to 1818.58.  Thanks to its amazing late afternoon rally, ES is now well above the new pivot so this indicator is bullish.

Dollar index: On Monday the dollar had a big gap-up but small range day that was enough to generate a nice bullish stochastic crossover.  These big yawning gaps always want refilling though some I'm going to guess that some sort of gravitational attraction will pull the dollar back modestly on Tuesday.  Longer term though, we now have a completed bullish RTC trigger so I'm looking for higher later this week.

Euro: And on Monday the euro took a dump, falling out of its rising RTC for a bearish setup and a bearish stochastic crossover.  With indicators still overbought, I claim there's more downside left here on Tuesday.

Transportation: On Monday the trans posted a somewhat less impressive gain than the Dow with a little inside harami spinning top.  Having also bounced off their lower BB with oversold indicators, this chart now has a suggestion of a move higher.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      4       2      3           0       0.667     50

   
     And the winner is...

Both the SPX Hi-LO index and the NYSE A/D line rebounded nicely on Monday.  And we're seeing more concrete reversal signs of a move higher tonight than last night.  The VIX in particular is teetering on its upper BB and seems more likely to move lower than higher from here.  I think I missed Monday by not having enough conviction in my position so tonight I'm just going  say I believe that we see Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Monday lower

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

• Monday lower, low confidence.
• ES pivot 1817.00.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

The selling simply continued on Friday as no one wanted to stay long the weekend with a weak-looking technical picture.  Someone on CNBC also mentioned tax selling.  I was thinking tax-loss selling, but that's supposed to happen in December.  Then I realized he meant people simply selling stocks to raise cash to pay their taxes.  Do people really  do that?  I mean wait til the last second to sell?    There maybe something to that as I went back and checked the week before April 15th.  Going back three years, yup sure enough, the market goes lower.  Something to think about next year.  Now things get complicated as we enter a holiday-shortened week.

The technicals

The Dow: Friday's action took the Dow down to and actually below its lower BB.  Indicators are now quite oversold though not extremely so.  We broke support at 16,066 and all that remains now is the hard number at 16K even.  The 200 day MA at 15,752 is coming into view as the ultimate backstop but I don't think we'll get there this week.  Still, there's no immediate reversal sign on this chart so it continues to look bearish.

The VIX:  On the other hand, there is a reversal sign on the VIX.  On Friday the VIX gained 7.27% but did it on a gap-up spinning top to form 2/3 of a classic bearish evening star.  Reinforcing this is the fact that the VIX crossed its upper BB and even closed above it.  Once again I state that the VIX rarely spends more than a day or two above its upper BB before retreating.  Indicators are now quite overbought so it looks like a lower VIX is coming soon, though maybe not perhaps as soon as Monday.

Market index futures: Tonight, all three futures are lower at 12:28 AM EDT, with ES down by 0.15%.  ES, like the Dow put in two nasty down days to end last week.  And there seems to be no end in sight.  OBV is decidedly negative and continues to fall, and money flow has been decreasing since April 3rd.  And what was an incipient bullish stochastic crossover was short-circuited so while the indicators are now oversold, there's no sign of a turn-around.  The only ray of hope here is that the developing candle is looking like a spinning top reversal but it's generally poor practice to read too much into a half-baked candle.  ES also has no support until the round-number 1800 level, and then 1797.

ES daily pivot: Tonight the pivot tumbles again from 1839.42 to 1817.00. Even with this big drop we're still beneath the new pivot so this indicator remains bearish.  I was asked today by a reader about my use of the pivot.  There's a good introduction to pivots here: https://en.wikipedia.org/wiki/Pivot_point.  This is a concept I can thank Dr. Steenbarger for s well as many other insights into the market.  I'm afraid my use of the pivot is pretty simple, some might say simplistic, but it works for me.

I really have just two basic rules.  Price moving above the pivot from below is a bullish sign, and vice-versa.  And the second rule is that you should watch out during a trending pattern for the stock or whatever to get too far extended from the pivot as that can signal a reversal.  I guess it's just a fancy way of saying "reversion to mean" but the pivot gives you a nice anchor for where that mean should be considered to be.

I also have what I call a "conditional forecast" that uses the ES pivot.  Sometimes if ES is close to its pivot in the wee hours of the night, I'll take a guess that the market will close in the direction of the pivot crossing if it makes one before mid-morning the next day.  So if we're above the pivot and stay above, that's bullish.  But if we break down under the pivot, the market will close lower.  It doesn't always work, but it works often enough to be useful.

Dollar index: The dollar on Friday posted a 0.09% gain on a red candle.  But that was enough toe just exit the descending RTC for a bullish setup, while driving RSI down to very oversold and leaving the stochastic on the floor flat as a pancake.  With support holding it looks like we have a hint of a reversal, but on that requires confirmation on Monday.

Euro: And on Friday the euro put in a classic doji star right at the top of Thursday's green marubozu after four straight days of gains.  The overnight is seeming to confirm this doji, trading sharply lower and creating a bearish stochastic crossover, and making Monday look like a loser for the euro.

Transportation: On Friday the trans pretty much reflected the Dow so the same comments apply here too - oversold but no immediate reversal in sight.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      4       1      3           0       0.800    196

   
     And the winner is...

The SPX Hi-Lo indicator I use comes from stockcharts.com and they're showing a reading of zero tonight which I'm pretty sure is wrong.  I think it's more like 35 which is still pretty low but frustratingly not low enough to be a major reversal sign.  Also the NYSE A/D line continues to put in lower highs and lower lows - a bearish sign.  And the Morningstar Market Fair Value Index has now fallen to 1.01, its lowest level since January 27th (on the way down) - and that wasn't the bottom back then either.  There's only a tiny smattering of hope in the charts tonight making me think we might see a reversal later this week but I don't think it's going to be Monday, hence I'm regrettably calling Monday lower.  I'll be happy to be proven wrong since I'm always net long.

ES Fantasy Trader

Portfolio stats:  the account remains at $105,625 after two trades in 2014, staring with $100,000.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Friday uncertain

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

• Friday uncertain.
• ES pivot 1839.42.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Last night I wrote "I'll just creep out to the very end of the limb and nervously call Thursday higher."  Well, looks like the limb snapped out from under me as the Dow dove an ugly 267 points to finish near session lows.  There was just something about last night I couldn't quite put my finger on.  Too bad too, because it seems like I always pick the really bad days to be wrong.  I'm still trying to sort this out.  Going over last night's charts in retrospect I still don't see any technical signs of this kind of dump.  But from the chatter on CNBC, it sounded like no one else had a clue either.  Oh well, such is the nature of the beast.  So we'll see how this changes the picture as we head to the end of the week.

The technicals

The Dow: On Thursday the Dow plunged all the way to its lower BB in a move that left the indicators oversold and the stochastic threaded out lying on the floor.  Wednesday's bullish RTC setup was canceled in a big way.  OBV kept rising though and money flow was actually higher.  I have to think that if nothing else we're due for a DCB here on Friday.

The VIX:  On Thursday the VIX resumed its love affair with its 200 day MA, shooting right back above it with a big 15% pop.  That lef the indicators overbought but the stochastic is now totally confused and threaded out.  We're also still short of the upper BB so it isn't clear that there still isn't at least a bit more room to run on Friday.

Market index futures: Tonight, all three futures are higher at 12:23 AM EDT, with ES up by 0.11%.  ES had a dreadful day on Thursday, plunging all the way to its lower BB with a dark cloud cover.  But even that didn't drive the indicators much lower than they were on Wednesday.  And the modest move higher in the overnight suggests the possibility of at least a DCB on Friday as traders figure out that Thursday' move was overdone.

ES daily pivot: Tonight the pivot dives from 1858.33 to 1839.42. We're still under the new pivot so this indicator remains bearish.

Dollar index: Last night's chart looked bearish to me though it wasn't the bottoming day I thought.  It was just down, another 0.13%.  The dollar stopped right on support just above its lower BB with oversold indicators.  So I'm going to be a bit more conservative and simply claim that I think the downside form here is limited.  It may or not be a bottoming day on Friday.

Euro: At least I got this much right.  Last night I wrote "it looks like there's more upside left on Thursday" and indeed the euro continued its climb ending at 1.3889, making it a four day winning streak.  Ad now being in a strong uptrend with no resistance til the upper BB at 1.3933, I see no reason why the euro won't hit that level Real Soon Now.  It is in fact continuing to inch higher in the overnight so far.

Transportation: The trans really got hammered on Thursday, giving up all of Wednesday's gains and then some, and canceling the bullish setup with a bearish engulfing pattern.  The indicators all turned downward though they're not yet oversold.  We're near support at 7412 now so Friday could be a bottoming day. 

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      4       1      2           0       0.800    196

   
     And the winner is...

With Mr. Market seemingly having picked up a bad case of the jitters, it's tough to make any iron-clad predictions.  I still have no good explanation for what happened on Thursday and that bothers me.  Therefore, I want to step back and let the market sort itself out.  So I'm just going to call Friday uncertain and see what happens.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account now rises to $105,625 after two trades in 2014.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.

Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 1858.33.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

The technicals worked out nicely on Wednesday and the Fed minutes were just the icing on the cake as the Dow had a tasty 181 point pop.  We also confirmed the SPX's support at 1850.  That's about all there is to say about that so let's move on as always to the nightly charts and see where Thursday's headed.

The technicals

The Dow: The Dow on Wednesday finished at session highs for a jolly green marubozu that confirmed Tuesday's reversal candle and more than retraced all of Monday's dive.  It also gave us a bullish setup on an admittedly short descending RTC,  The stochastic continues to move into position nicely for a bullish crossover and the indicators are still less than halfway to overbought so this chart now looks bullish.

The VIX:  Last night I wrote that I was going to "guess that the VIX is going lower on Wednesday."  Good guess, because the VIX fell 7.19% and sliced right back through its 200 day MA with a gap-down two black crows.  This left the stochastic ever so close to a bearish crossover with RSI and momentum continuing to decline, never even having reached overbought.  There's weak support at 13.61 and stronger support at 12.94 and I would not be surprised to see at least one of those levels hit on Thursday.

Market index futures: Tonight, all three futures are barely lower at 12:15 AM EDT, with ES down by a single tick - call it essentially flat.  Wednesday's tall green marubozu provided a bullish RTC setup as well as a bullish stochastic crossover.  However, money flow has not been rising over the past two days and the lack of pin action tonight makes me wonder if we're not in for a pause on Thursday.

ES daily pivot: Tonight the pivot jumps from 1841.58 to 1858.33.  And even that big move still leaves ES above the new pivot, just less so.  But this indicator is still bullish for Thursday.

Dollar index: ore downside is not out of the question.Last night I wrote "more downside is not out of the question" for the dollar and indeed the dollar lost another 0.35% on Wednesday.  That leaves it close to support at 54.05 and its lower BB at 54.02.  Even so, the indicators have only just gone oversold and the stochastic is nowhere near forming a bullish crossover.  The failure to even attempt filling Tuesday's gap down is also bearish.  But with support near, Thursday might be a bottoming day.

Euro: Tuesday's resistance proved futile to the euro as it just motored higher on Wednesday, and then right through the next resistance at 1.3835.  With three white soldiers now marching ahead, indicators still not overbought, and a new rising RTC established, it looks like there's more upside left on Thursday.

Transportation: I didn't want to commit to this one last night and it's too bad because the trans had their best day in over a month on Wednesday, up 1.64% with a big green marubozu that bent the stochastic around almost into a bullish crossover and gave us a bullish setup on  descending RTC exit.  So with rising indicators I have to think we're going higher again on Thursday.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      4       0      2           0       1.000    463

   
     And the winner is...

Tonight, all of the charts seem to be pointing higher except for the futures, and I wonder why.  I'm always reluctant to go against the futures but with everything else lining up I guess I'll just creep out to the very end of the limb and nervously call Thursday higher.  I'm not expecting a big move like we had Wednesday though.

ES Fantasy Trader

Finally the ESFT makes a second trade in 2014 and we have a winner.  I surely left a bunch of money on the table Wednesday but I decided I didn't want to face the headline risk ahead of the Fed minutes.  I'd rather leave a little behind than watch my existing profits evaporate.  Anyway, 5.25 points overnight is nothing to sneeze at.  Reminder - I post these trades live on my Twitter feed @nightowltrader.

SLD    10    false    ES    JUN14 Futures     1851.25    USD    GLOBEX    11:54:58
BOT    10    false    ES    JUN14 Futures     1846.00    USD    GLOBEX    APR 8 19:55:11

Portfolio stats:  the account now rises to $105,625 after two trades in 2014.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.