Friday higher

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

• Friday higher, low confidence.
• ES pivot 1933.42.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap
Well after four consecutive days of dojis we finally got the break I was waiting for.  Only to my surprise, it was to the upside, not lower.  Blame it on the ECB or whatever, but this market seems determined to keep pushing into record territory.  I reluctantly had to let go of my ES hedge - let's go to the charts now to figure out if that was a good decision or not for Friday.

The technicals

The Dow: With Thursday's breakout, the Dow made it exactly to its upper BB on the dot, at 16,848 on a big green marubozu for yet another record close.  That was enough to curve the stochastic back around for a bullish crossover from a high level.  And with both money flow and OBV continuing to move higher,.it looks like there's more upside on the way.

The VIX: Last night I opined that "we just might get a lower VIX Thursday."  So at least I was right about something, as the VIX dropped 3.31% to fall right out of a short rising RTC and confirm Wednesday's spinning top in a big way.  With indicators still just barely overbought, it looks like more downside is possible Friday.

Market index futures: Tonight all three futures are higher at 1:04 AM EDT with ES up 0.13%.  Like the other charts on Thursday, ES finally broke out of its recent range to the upside, also closing on its upper BB.  RSI is now maxed out at 100 but both money flow and OBV continue to rise strongly.  That, plus a decent performance in the overnight demonstrate that there's still enough gas in the tank for another push higher on Friday.

ES daily pivot: Tonight the ES daily pivot jumps from 1922.92 to 1933.42.  We remain considerably above the new pivot so this indicator looks nothing but bullish.

Dollar index:  I was badly wrong about the dollar on Thursday.  Unable to capitalize on its 200 day MA breakout after an early spike, it was all downhill and it came crashing right back through the aforesaid MA for a 0.38% loss.  This is the mother of all bearish engulfing patterns and with indicators still only just off overbought, I'd say there's still room to run lower Friday.

Euro: At least I was right when I said the euro would get in gear on Thursday as it put in a giant hammer that finally broke it out of its seven day trading range and right on through its 200 day MA.  With that plus rising indicators, the euro looks higher again on Friday.

Transportation: Wednesday's doji was confirmed on Thursday forming a big morning star pattern and canceling the bearish RTC exit.  Indicators remain overbought but money flow and OBV have both turned around and are moving higher now so this chart now looks bullish.

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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67   June       2       1      1           0       0.667     35

     And the winner is...

With Thursday finally having given the market the kick it's been waiting for, the charts are now looking bullish so I'm just calling Friday higher, though probably not as much as Thursday.  See you again Sunday night!

ES Fantasy Trader

Well I gambled and lost as ES took the less likely option and broke to the upside.  I closed out my ES trade around mid-day on Thursday for an unfortunate 18.75 point loss and our first loser of the year.  I figured that the market had spoken, and there was no point in standing in front of this train any longer.  I also got out of my SH, taking an annoying 41 cent loss.  At least I can just view that as an insurance premium paid at a point where my account was hitting record highs and I didn't want to give any of it back in the event of a reversal.  Turns out it went even higher since then so I can't really complain.

BOT    10    false    ES    JUN14 Futures     1939.00    USD    GLOBEX    13:08:39
SLD    10    false    ES    JUN14 Futures     1920.25    USD    GLOBEX    JUN 4 00:18:21

Portfolio stats:  the account now falls to $112,125 after six trades in 2014, starting with $100,000.  We are now 4 for 6 total, 2 for 2 long, 2 for 3 short, and one push.  Tonight we stand aside.  I'm worried that while we may go higher on Friday, a good part of that move is already in.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1922.92.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader remains short at 1920.25..

Recap

This is like deja vu all over again.  Once again, the Dow took a dive out the gate, only to recover as the day went on.  Only this time, it managed to get back above water, thus killing my call for a lower close on Wednesday, though only by 12 points.  Foo - will the charts yield any better direction tonight?  Let's take a peek.

The technicals

The Dow: We now have four reversal candles in a row from the Dow - three hanging men and a spinning top - and still no reversal.  The bears keep tugging away at it but it always manages to claw its way back to its starting point, but no further.  Meanwhile the indicators are slowly sliding off extreme overbought levels, suggesting a move lower.  But we've seen this before and it hasn't happened.  And we're still well within a rising RTC.  So the best I can say at this point is that we require confirmation of any move lower.  Fool me once, fool me twice, etc..

The VIX: And the bizzaro May monkey motions continue with the VIX again rising on a day the market is up.  I've lost track of how many times this has happened - I think it's like four in the last month.  Anyway, Wednesday's 1.77% advance  came on a spinning top that pushed the VIX overbought.  So we have a suggestion of a move lower here but like the Dow, I'm going to want to see confirmation before calling the VIX lower.  Interestingly though, VVIX is already falling, so we just might get a lower VIX Thursday.

Market index futures: Tonight all three futures are slightly lower at 12:26 AM EDT with ES down  0.04%.  On Wednesday ES posted a small gain but on a hanging man, following two doji stars in a row.  Just what does it take to get this chart to move lower, an engraved invitation?  The indicators remain pegged on overbought but still no break lower.  This can't go on forever.  But I've been seeing signs of a reversal for several days now and it just doesn't want to happen.

ES daily pivot: Tonight the ES daily pivot rises once again from 1920.50 to 1922.92.  We remain above the new pivot so this indicator continues bullish.

Dollar index:  Last night I just gave up on the dollar which is just as well because I dont' see how you could have predicted the 0.14% gain on Wednesday that took it right back above its 200 day MA.  This did though also give us a bullish stochastic crossover from a high level and those are usually good for a day or two of higher action, so I'll guess that the dollar can extend its gains on Thursday.

Euro: And meanwhile the euro continued in its week-long consolidation, dropping right back to the lower end at 1.3599 on Wednesday.  With this sort of horizontal motion, there's just no calling this chart.  I think it will finally start moving after we hear from the ECB on Thursday.

Transportation: In a bit of bearish divergence, on Wednesday the trans lost 0.02% on a day the Dow was up 0.09%.  The candle was basically bearish engulfing and it dropped the trans out of their rising RTC for a bearish setup.  With indicators now falling off overbought and a completed bearish stochastic crossover this chart looks lower for 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67  
June       2       1      0           0       0.667     35

     And the winner is...

Well just like last night and the night before, the market once again technically looks to be topping.  But it's all starting to remind me of that scene in The Pirates of Penzance when the policemen sing "We go, we go!" to which the exasperated Maj. General Stanley replies, "Yes but you don't go!".  So I'm just going to call Thursday uncertain until Mr. Market decides to go, one way or the other.  Oh and this ECB announcement business has me wondering too.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after five trades in 2014, starting with $100,000.  We are now 4 for 5 total, 2 for 2 long, 2 for 2 short, and one push.  Tonight we hang on to our short at 1920.25,in the hope of eventual redemption.

Wednesday lower

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

• Wednesday lower, low confidence.
• ES pivot 1920.50.  Holding below is bearish...
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going short at 1920.25..

Recap

Well it looks like June wants to continue playing the same games May was.  After a dump right out the gate on Tuesday, the Dow crawled out of the pit to end with only a small loss.  But it made for some interesting moves, chartwise, so let's take a look.

The technicals

The Dow: Although the Dow battled back from some early losses Tuesday, it left us with a trifecta of hanging men, with the latest being the first with a lower high. The indicators remain overbought and the stochastic's on again-off again bearish crossover looks like it may finally be gaining some traction.  So I have to think this chart continues to look bearish.

The VIX: The VIX finally broke out of its magical attraction to the 11.50 level on Tuesday - sort of.  The +2.5% move was the biggest we've seen in over a week even if it was on a gap up stubby red spinning top.  But it took the indicators out of oversold so we at least have some sign that the VIX may finally be getting ready to move higher.  Unless of course Tuesday's move was just a little evening star.  That's just a good example of how this nervous market is playing its hands close to the vest.  I still think the short-term outlook is higher but we'll need some confirmation on Wednesday..

Market index futures: Tonight all three futures are lower at 12:17 AM EDT with ES down  0.09%.  On Tuesday ES put in a doji star - exactly like the one it made on Monday.  Two of these in a row is highly unusual, and quite bearish.  We also traded outside the rising RTC again for a bearish trigger.  The indicators continue to be pegged at overbought (RSI = 99.22) so I just have to think the next move from here is lower.  The overnight seems to be confirming that in the form of a big bearish engulfing candle.

ES daily pivot: Tonight, like last night, the ES daily pivot ticks up from 1919.92 to 1920.50.  However, the slow drift lower of ES in the overnight has just put it below the new pivot, barely - but that still turns the indicator bearish.

Dollar index:  As another example of how tricky this market is, last night I thought the dollar looked higher, having just cleared its 200 day MA.  Well on Tuesday it fell right back under the MA for a 0.12% loss - but on a green candle.  Go figure.  This chart is now totally bollixed and I have no clue where it's headed on Wednesday.

Euro:Well at least I got this one right, calling the euro higher for Tuesday on the hail Mary idea that if it went lower Monday it was going higher Tuesday - and it did!  There's some sophisticated analysis for ya! But Tuesday's gain just left us still in the same week-long consolidation range.  We may see some action later this week when the ECB makes some policy announcements.  No doubt the euro is just marking time until then.

Transportation: Well the trans sure fooled me.  Last night I called them higher but the trend proved not to be my friend as they dumped 0.84% on Tuesday to fall out of their rising RTC for a bearish setup and cause all the indicators to peak at overbought.  So this chart is now looking clearly bearish.

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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67 June       2       0      0           0       1.000     47

     And the winner is...

Actually, I think the entire market is waiting for the ECB to make its move on Thursday as we see a plethora of dojis on the charts tonight.  In the meantime though, the bearish pressures that existed last night are still there tonight, and even more so, so I guess I might as well just call Wednesday lower.

ES Fantasy Trader

Last night I decided to go short.  It seemed like a good idea at the time and there were in fact multiple opportunities to get out with a small profit Tuesday morning.  Unfortunately I was still asleep, so I settled for a break-even exit and was glad I did because ES just kept creeping higher the rest of the day.  Oh well - you snooze, you lose.  Here's the trade:

BOT    10    false    ES    JUN14 Futures     1920.75    USD    GLOBEX    12:44:37
SLD    10    false    ES    JUN14 Futures     1920.75    USD    GLOBEX    00:24:08

Portfolio stats:  the account still remains at $121,500 after five trades in 2014, starting with $100,000.  We are now 4 for 5 total, 2 for 2 long, 2 for 2 short, and one push.  Tonight we take another stab at this same play, going short at 1920.25, just below the ES pivot.

Tuesday lower

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

• Tuesday lower, low confidence.
• ES pivot 1929.92.  Breaking below is bearish...
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going SHORT at 1920.75.

Recap

Out the gate Monday morning I was worried that perhaps I'd backed the wrong horse by calling the close higher.  But coming around the first turn, Seabiscuit recovered enough ground to prove me right by the closing bell.  So we now turn our attention to the next race, the Tuesday Trotters.

The technicals

The Dow: Well it was a modest 26 point gain on Monday but it came as a hanging man, the second in two days.  The indicators remain quite overbought, but so far all we have is a pattern that requires confirmation though as the saying goes, two hanging men are better than one.

The VIX: The VIX made a valiant effort to push higher on Monday but it eventually mostly failed, though it still ended up 0.70% in a bit of divergence on a day when the Dow and SPX were also higher.  The resultant long-legged red spinning top indicates massive indecision (so what else is new).  The indicators favor a move to the upside but for the time being, we remain stuck in consolidation mode around 11.50.

Market index futures: Unlike last night, tonight all three futures are lower at 12:21 AM EDT with ES down  0.05%.  Of all the charts in the nightly roundup, tonight ES perhaps provides the most clarity.  It gave us a classic doji star on Monday that traded just outside the rising RTC for a bearish setup. Indicators appear to have peaked at extreme overbought levels now and we have finally peeled away from the rising upper BB.  That all looks to me like a setup for a move lower.  And so far at least, the new developing candle seems to be confirming that.

ES daily pivot: Tonight the ES daily pivot ticks up from 1919.33 to 1929.92.  While we're still above the new pivot, it's now by only less than one point so the pivot is in play.  A move below would be bearish.

Dollar index:  The dollar which for all its worth looked to me like it was going lower on Monday instead gained a big 0.46% to bust through its 200 day MA and regain its rising RTC.  This move was powerful enough to bend the stochastic bearish crossover around into a bullish crossover from a high level and that is generally good for a day or two of higher prices.  So now I'm thinking the dollar looks higher still.

Euro: And so of course I got the euro wrong too - it was unable to break through the 200 day MA and on Monday gave up all of last Friday's gains and then some to close right back around support at 1.3593.  Indicators remain oversold but that doesn't seem to account for much in this crazy market.  My best guess at this point is that since we were down big on Monday, to support, that we'll reverse and go up on Tuesday.

Transportation: After a fake-out doji last Friday, the trans rejected it in a big way on Monday, gaining 0.54% to remain solidly in their rising RTC.  The trans are now 7 for 8 and the indicators are extremely overbought..  But the trend is your friend, etc. and it looks like there's nothing that can stop this train, so in the absence of any bearish signs, it's up, up, and away!

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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       1       0      0           0       1.000     26

     And the winner is...

The toppiness I spoke of in the market last night is looking more pronounced in the charts tonight.  While I don't think this is the start of a major correction or anything, I think there are enough reversal signs now to warrant calling Tuesday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we go short at 1920.75.  I know these counter-trend plays are quite risky, but the edge finally seems to be there.

Monday higher

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

• Monday higher, low confidence.
• ES pivot 1919.33.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

It was looking pretty good for my call for a down Friday until a late afternoon mini-rally took off and torpedoed my call, though the damage was minimal.  I'm not going to lie, I'm glad May is over.  What an odd month that was.  Now let's move on to see whether or not June will be bustin' out all over.

The technicals

The Dow: Friday's 18 point gain in the Dow created a classic hanging man reversal warning.. It also traded outside the rising RTC for a bearish trigger and left the stochastic within a hair of a bearish crossover, and all on the highest volume of the week.  We also stopped exactly on resistance at 16,717 from the record high last month.  Does the Dow have the mojo needed to break through on Monday?  Going by the overboughtedness of the indicators, I'd have to say no.  OTOH, Monday is the first day of June and that's historically quite bullish.  So I'm hesitant to call the Dow lower just yet, especially since my Friday call did not pan out.

The VIX: Just when you thought the VIX couldn't  go any lower - it did, down another 1.47% on Friday to close at the low, low level of 11.40.. I had to go to the weekly chart to find the last close at that level.  It was March 11th of last year.  After that, you have to go all the way back to March of 2007 to find a lower close.  And the lowest VIX I can even find with eSignal (all the way back to 1990) is 9.39 in December 2006.  Now the monthly lower BB is 11.06 and the daily is 10.96, so I'd say 11.00 looks like about the lowest I can imagine the VIX going from here.  That level is easily attained in one day and for my money that could be Monday.  I'll even guess we could get a VIX doji on Monday.

Market index futures: Tonight all three futures are higher at 12:33 AM EDT with ES up 0.10%.   On Friday ES rose again to continue crawling up its upper BB, now five in a row.  This can't go on forever.  RSI also hit an amazing 99.53 - it doesn't get much more overbought than that.  The stochastic meanwhile is plastered flat against the ceiling waiting for a break that looks like it may never come.  But we may finally be getting some action, as the overnight is now trading outside the rising RTC for a bearish setup.  But as the frustration goes on, that action is drifting higher.  If ES can close Monday above 1925, barely higher than it is as I write this, then we're back inside the rising RTC.

ES daily pivot: Tonight the ES daily pivot rises from 1914.42 to 1919.33.   Once again we remain above the new pivot, so once again this indicator remains bullish.

Dollar index:  In a potentially telling sign, the dollar on Friday fell out of its rising RTC with a 0.17% loss for a bearish setup.  That also confirmed the bearish stochastic crossover so with indicators remaining overbought, this chart looks lower for Monday.

Euro: I was badly fooled by the euro on Friday.  I thought for sure we were going lower but instead we got a bounce that reclaimed the 200 day MA and nearly took us out of a descending RTC.  The tell will be the overnight, if it can hang on to the MA and push higher  or bounce off.  The indicators, still oversold along with a bullish stochastic crossover suggest the former.

Transportation: In a bit of bearish divergence and perhaps foreshadowing, on Friday the trans dropped 0.07% on a small doji star to break a six-day winning streak.  Though we remain in a rising RTC, we're now peeled away from the rising upper BB and the indicators are all now highly overbought so my guess is that the trans go lower on Monday.

Performance:

With May now closed, here are my cumulative 2014 YTD trading results so far, compared to the Dow, my benchmark.  I continue to include the results of my traditional IRA too.

        Trading    IRA       Dow
Jan.     0.50%             -5.30%
Feb.     3.94%             -1.94%
Mar.     6.01%    6.14%    -0.72%
Apr.     8.22%    8.46%     0.02%
May      9.20%    9.96%     0.85%

As in April, the first half of May started off pretty flat for me, but we made up the difference in the last two weeks.  However, my equivalent annual run rate dropped from 24% to 22%, reflecting the lost time in May.  I'm not too concerned about this since there's still plenty of time to make it up and in any case, 22% is still pretty respectable.

Accuracy: 

We end May with our first losing month of the year, predictionwise, though not by much.  It reflects just how odd the month was, directionwise, an observation many others have  already made.

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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67

     And the winner is...

While I'm seeing signs of overextension in the charts tonight, there are only scattered bearish warnings - not enough to call Monday lower, even though I think lower is coming soon.  And given the historical advantage to the first day in June, I'm going to go with the trend, call Monday higher, and speculate that it could be a topping day.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside.  I'm not committing any money here, not even play money until I get some real clarity.  Just like in Vegas, where there is no law that you have to sit down at the blackjack table and place bets.  You're free to wander around and watch.

Friday lower

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

• Friday lower, low confidence.
• ES pivot 1914.42.  Breaking below is bearish.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well I guess the trend is your friend after all.  Last night I was thinking hte market looked toppy but I couldn't call it lower in the absence of any outright bearish signs.  And that proved to be a good decision since the Dow was up 0.39% on Thursday and the SPX even more.  But I must say, this market is making me more nervous right now than I've felt in a long time.  I'll be glad to see May done with, and Friday's the end of the week and the month so let's do those charts and head for the beach.

The technicals

The Dow: That resistance at 16,678 just melted away on Thursday as the Dow managed to punch through with a 66 point gain.  But that still leaves it short of the record from a few weeks ago and the upper BB at 16,745.  And oddly, RSI just dropped off overbought, though the stochastic continues slowly narrowing in on a bearish crossover.  So despite Thursday's gains (on shockingly low volume I might add) I still think there's more downside risk than upside potential here.

The VIX: Meanwhile the VIX remains stuck in the basement and can't find the stairs, down another percent on Thursday, but with a doji star.  The trade was outside the descending RTC so that's a bullish trigger and the indicators are hovering just off oversold.  It looks like the VIX wants to go higher but simply can't find its mojo.  But with the VIX now at 11 and a half, there really seems to be a lot more room to run higher than lower, cf. everyone lately buying VIX calls.

Market index futures: Tonight all three futures are lower at 12:39 AM EDT with ES down 0.14%.  I really thought Thursday was going to be the turn for ES.  Silly me.  The move to 1918 kept us right in  a steeply rising RTC as we climb the upper BB for an amazing four in a row now.  Tonight though the chickens may finally be coming home to the rooster as ES seems to be stalling out with a move lower that has now taken it out of the aforementioned rising RTC for a bearish setup.  The stochastic has also finally squeaked out a bearish crossover.  IN sum, this chart now looks ready to roll over.

ES daily pivot: Tonight the ES daily pivot rises again from 1909.17 to 1914.42.  With ES drifting lower in the overnight, that still leaves us above the new pivot but just barely.  It won't take much to test the pivot and a break below would be bearish for Friday.

Dollar index:  Last night I looked at the dollar and claimed that "a reversal is coming Real Soon Now".  Well real soon proved to be Thursday with the dollar down 0.10%, though on a funny green marubozu.  Still that was enough to eke out a bearish stochastic crossover and with RSI now quite overbought, I'm going to go right back and claim there's more downside to come on Friday.

Euro: After blasting through its 200 day MA (down) on Wednesday, the euro found a modicum of support at 1.3595 on Thursday to end with a small gain.  Indicators remain quite oversold but we also remain in a two week declining RTC so until I see a reversal candle, it's look out below, euro.

Transportation: And finally the trans kept right on rocking in their railroad-straight rising RTC with another 0.43% gain on Thursday as they climb the upper BB, four days in a row now.  The stochastic is  threaded out but it's at levels from which down moves typically come Very Soon.  So despite a six day winning streak (or perhaps because of it), I just can't get on board this runaway train.

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      9       3      5           0       0.750    482
May        6       6      6           0       0.500    -49

     And the winner is...

The last day of May is historically fairly weak.  I'm also seeing the reversal signs strengthening in the charts.  It's still not a given, but I'm going to take a chance and go out on a limb and call Friday lower.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside.  But so far my SH at 24.07 isn't looking like such a great buy though I still have hopes for it.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1909.17.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night I called the market uncertain despite a four day rally based in part on an "ES chart that is starting to look a bit toppy".  I think Wednesday's action bore me out with the SPX down 0.11% and the Dow down a quarter of a percent.  Now the question becomes, is this a top  or a one-shot?  We search the charts for clues to Thursday as we do this and every night, until victory.

The technicals

The Dow: The Dow meandered about on Wednesday before ending down 42 points.  It didnt' seem like much but it was enough to not only put an end to the rally but also just drop out of a rising RTC for a bearish setup.  Indicators remain overbought and the stochastic is curling over for a bearish crossover.  This failure of the Dow to take out this month's earlier highs concerns me, so this chart now looks bearish..

The VIX: Last night I wrote "the next move here is higher".  And so it was, with the VIX up 1.48% on Wednesday in a move that's approximating a rising triangle.  We also just barely got a bullish stochastic crossover and we broke out of the descending RTC (finally) for a bullish setup.  So that just reinforces my belief that the VIX is not yet done going higher.  A nearly 4% bump and bullish stochastic crossover in VVIX reinforces that belief.

Market index futures: Tonight all three futures are higher at 12:20 AM EDT with ES up 0.10%.  On Wednesday ES clearly did not pack the gear to serve in the bulls' corps as it pooped out around the 1910 level with a classic red spinning top.  That also just dropped it out of its rising RTC for a bearish setup.  We are also on the verge of a bearish stochastic crossover.  But the overnight doesn't seem to be confirming any of that, at least so far, with a non-trivial gain.  So it's too soon to call a top here.

ES daily pivot: Tonight the ES daily pivot rises from 1905.42 to 1909.17.  ES's Wednesday gains were enough to keep it above the new pivot so this indicator remains bullish.

Dollar index:  Last night I was figuring the dollar for a move lower on Wednesday but it was not to be, though I might just have been a day early as the buck put in a classic hanging man after being repelled by its 200 day MA.  Indicators continued higher to very overbought and while we remain in a rising RTC I'm going to stick to my guns and claim a reversal is coming Real Soon Now.

Euro: And so of course I missed the euro too on Wednesday.  Instead of bouncing off its 200 day MA, it simply sank right though, glub glub to remain in a now two-week downtrend.  And despite oversold indicators, I see no reversal signs so there's no other choice than to call the trend my friend and say the selling isn't over yet.

Transportation: Unlike the rest of the market, in a bit of bullish divergence the trans rose 0.72% on Wednesday to remain in their rising RTC and continue crawling up their upper BB.  Indicators pushed further into overbought territory but with no reversal signs here I can't call this chart lower yet.

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      9       3      5           0       0.750    482
May        6       6      5           0       0.500    -49

     And the winner is...

We are now seeing some signs of trends ending, a down one for the VIX and an up one for hte Dow.  However, the overnight futures don't seem to be confirming any of this and our reversal signals are the sort that require confirmation.  So that all leaves us frustratingly just about where we were last night.  The market still looks toppy but also not quite ready to roll over.  Accordingly, all I can do is once again call Thursday uncertain.  Maybe after that we'll get some clarity.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside.  However, I have taken out an insurance policy in the form of some SH at 24.07.

Wednesday uncertain

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

• Wednesday uncertain.
• ES pivot 1905.42.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Interesting article of the day

There was an interesting article in Seeking Alpha today here entitled "Is This The Next 10 Years Of The Dow Jones Industrial Average?" by Seth Walters about a simple model that can apparently predict the market surprisingly well.  It's not long or overly mathematical and well worth a look.  Like they say down at the Public Library, check it out.

Recap

Well the SPX had another record close on Tuesday, but the Dow did not.  It just seems to go along with the overall confusing tenor this month has had.  How the market looks seems to depend a lot on what you're looking at.  So tonight we look at the usual charts to figure out where Wednesday is headed.

The technicals

The Dow: The Dow made it four in a row on Tuesday with a 69 point gain that kept it railroad-straight in a rising RTC.  Indicators are now overbought but there's no resistance til the upper BB at 16,720 which is coincidentally the same as the all-time high from earlier this month.. So I'd say we're getting close to a doji here, hanging-man style.

The VIX: Once again we had an unusual divergence form the VIX which gained 1.32% on a day the Dow was also higher.  The inside harami candle with oversold indicators and bouncing off the lower BB makes me think the next move here is higher.  And the stochastic is now well-positioned for a bullish crossover Real Soon Now.  However, VVIX continues to move lower slowly refilling a big gap from two weeks ago, so a higher VIX on Wednesday isnt' entirely assured.

Market index futures: Tonight all three futures are ever so slightly higher at 12:22 AM EDT with ES up 0.03%.  Now last Friday ES closed right on its upper BB..  Then on Tuesday it closed above the BB to extend its winning streak to four.  However, the indicators have now gone overbought and the new overnight candle is forming as a doji star sitting right on the edge of the rising RTC, making me a bit cautious here.

ES daily pivot: Tonight the ES daily pivot rises from 1895.25 to 1905.42.  That's the first time we've ever seen the pivot this high but even at that we're still above the new number so this indicator remains bullish.

Dollar index:  After a hanging man on Friday in evening star position the dollar moved lower on Tuesday by 0.06% with a long-legged doji.  But with indicators still quite overbought and a fair gap up remaining unfilled, it looks like the next move is more likely lower than higher.

Euro: After some indecision a couple of weeks ago the euro resumed its march lower until finally hitting its 200 day MA on Friday.  Then on Tuesday it bounced right off with an asymmetric spinning top and a stochastic trying to maneuver itself into a bullish crossover.  And although we're still in a descending RTC, it looks to me like the euro is trying to set up a move higher on Wednesday.

Transportation: Like the SPX, the trans hit a record close on Tuesday, also with a four day winning streak as they climbed the upper BB.  The indicators are now fairly overbought but we're still solidly in a rising RTC and without a reversal candle it's too early to call this chart lower.

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      9       3      5           0       0.750    482
May        6       6      4           0       0.500    -49

     And the winner is...

The last three times ES has hit its upper BB it has moved lower in just one or two days.  ES is now more overbought than the last time we were in this situation.  There are no overtly bearish signs in the charts tonight other than a VIX that looks like it wants to go higher and an ES chart that is starting to look a bit toppy.  But those aren't enough to warrant an outright bearish call.  So I guess I'll just have to settle for calling Wednesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 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 1889.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

This Memorial Day evening we present an abbreviated version of the Night Owl, primarily because I spent it watching TCM instead of the stock market.  I saw two great movies, Twelve O'Clock High and arguably the best movie ever made, The Best Years of Our Lives. That's one of the nice things about being your own boss - you can goof off and no one's going to give you a hard time about it.  So I'm just going to cut to the chase and present my prediction for Tuesday without the usual chart rundown..

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      9       3      5           0       0.750    482
May        6       6      4           0       0.500    -49

     And the winner is...

It's of course always somewhat problematic doing predictions for holiday shortened weeks, but the day after Memorial Day is historically pretty strong and the futures seem to be supporting that idea tonight.  So does last week's higher close on building momentum and other rising indicators.  So I'm just going to call Tuesday higher.

Friday higher

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

• Friday higher, low confidence.
• ES pivot 1889.00.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Quote of the Day

  "The stock market is in a particularly moronic phase of its life right now"

                                   - Jim Cramer

Recap

Poor Mr. Market, who just gets no respect.  At least we managed two consecutive up days in a row, even if Thursday was just 10 points for the Dow.  So as the madcap month of May merrily marches on, let's see now how the week before Memorial Day might end.

The technicals

The Dow: After a big gain on Wednesday the Dow put in a small spinning top on Thursday, warning of - surprise - a reversal for Friday.  Against that we have a second day outside the descending RTC and that's a bullish trigger.  Also the stochastic now clearly has a bullish crossover.  So overall I'd say this chart is still looking higher for Friday..

The VIX: The weirdness just continues as the VIX put in yet another day of positive correlation with the market, gaining 1.01% on Thursday.  This isn't all that big a surprise considering the strength of support at 12 and the fact that we touched the lower BB on Wednesday.  Anyway, Thursday's clear hammer is a bullish sign for Friday.

Market index futures: Tonight all three futures are higher at 12: AM EDT with ES up %.  ES made it two in a row with a small gain on Thursday that brought it near resistance at 1895.    But the indicators are not yet overbought and the upper BB is at 1896, so there's still some room to run left here.  The overnight action so far seems to support this idea.

ES daily pivot: Tonight the ES daily pivot rises from 1879.33 to 1889.00.  After being above the old number all day Thursday we remain above the new pivot, and although it's not by as much this indicator remains bullish.

Dollar index:  Ah, that tall inverted hammer on Wednesday sure fooled me.  The dollar did not go lower on Thursday but gained 0.19% to continue a week-long uptrend.  This move also formed a bullish stochastic crossover so it now looks like there might be some more upside available here.

Euro: At least I got the euro right which continued its recent slump on Thursday to close at 1.3650.  That consolidated our bearish crossover from a low level which is usually good for a day or two of declines.  And with the 200 day MA at 1.3627 now in easy striking distance, I expect the euro to take a peek at that number on Friday (and possibly bounce off).

Transportation: Well I missed the trans too which did not go lower on Thursday, gaining instead a decent 0.53% for another record close.  This comes even as the indicators were descending off overbought. With two white soldiers and an upper BB now at 7972, the way seems clear for at least a bit more upside 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      9       3      5           0       0.750    482
May        5       6      4           0       0.455   -112

     And the winner is...

With a big holiday coming up next week, I expect trading to be on the light and choppy side Friday as the big players helicopter off to the Hamptons or guide their Gulfstreams to the Bahamas for the long weekend.  But with some bullish signs on the charts and no negative ones, I'm just going to call Friday higher.  Happy Memorial Day to all and see you again Monday night.

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside.