Friday lower

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

• Friday lower, low confidence
• ES pivot 1948.83.  Breaking below is bearish.  Switching to the "U" contract tonight.
• Next week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Dow daily, 6/19/14

At the risk of committing the deadly sin of market hubris, I'm going to point out that last night I wrote "I'm going to go ahead and call Thursday higher, with the caveat that I don't expect a large move and it might end up as a doji day."  Now take a look at this little snippet of the daily Dow chart and notice Thursday's candle on the right hand edge.  A classic hanging man.  I rest my case.

So with that said, I batten down the hatches in anticipation of Mr. Market's revenge for thinking of myself as the world's greatest trader.  Meanwhile maybe we can get lucky again and call Friday right.


The technicals

The Dow: Since I've got the Dow chart up, you can clearly see the bullish RTC exit on Tuesday, and it was up, up and away from there.  You can also see the exponential look to the chart, and those always come to an end eventually.  And you can see Thursday's nice little hanging man, warning of a reversal on Friday.  However, the indicators are still a long way from overbought, so this is only a warning.  Had it been a real reversal, you would have been told to sell sell sell.  And with strong resistance just 30 points above, it's not clear to me that the Dow can push higher on Friday.

The VIX: Last night I also wrote about the VIX  "my expectation would be for some sideways motion rather than any further down."  And that was about it on Thursday with a scant 0.09% gain on a small green spinning top that just touched the lower BB which is now falling away.  It looks like a DCB but at these levels there seems to be more upside potential than downside risk.  So like the Dow we have another doji here.

Market index futures: Tonight all three futures are lower at 12: AM EDT with ES down  %.  Like the other charts, ES had a doji day on Thursday with a small green spinning top sitting on top of Wednesday's action.  The indicators are, somewhat surprisingly still not yet overbought and the stochastic hasn't even begun curving around for a bearish crossover.  And we're still well inside a rising RTC.  But the overnight is guiding lower so that has to give one pause.

ES daily pivot: Tonight the ES daily pivot rises again from 1942.83 to 1948.83.  The failure of ES to make any headway in the overnight now leaves us precariously less than one point above the new pivot, but still just barely bullish for the time being.  Note that we have now switched to the "U" contract.

Dollar index:  Last night I thought the dollar had a chance to move higher but refused to call it, opting instead to wait for confirmation.  Good thing too, since the dollar instead  plunged 0.34% on Thursday with a gap-down green hammer that was stopped only by the lower BB.  It drove RSI oversold but did not set up the stochastic for a bullish crossover.  Still, with 2/3 of a morning star now in place, we have to wonder if Friday might now come in higher.

Euro: And last night I also wrote "this chart still looks bullish".  And indeed, the euro gapped up on Thursday to just touch the 200 day MA before closing at 1.3611 on an inverted hammer.  This, to me, looks like the blow-off of the past six days of action featuring tiny gains one after another.  Now we have RSI overbought, though the stochastic has not graced us with a bearish crossover yet.  And there's no RTC going either so this chart remains uncertain for Friday.

Transportation: The trans on Thursday were pretty much a carbon copy of the Dow with a small doji, spinning top in this case on top of Wednesday's monster pop.  And although the indicators are amazingly still not yet overbought, we at least have a reversal warning here.

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       7       3      3           2       0.750    176

     And the winner is...

Ah, there's a whole army of dojis marching across the charts tonight, all warning of an impending reversal.  But all of these signs require confirmation.  And to confuse the issue further, Friday is triple-witching.  According to The Stock Trader's Almanac, the Dow is exactly 50/50 on this day.  But we also have a VIX that looks ready to turn and futures that are lower in the overnight so far - not what we've been seeing the past few nights at this hour.

My best guess is that traders are going to want to lock in some of their profits from Wednesday and Thursday and not be long into the weekend given the latest geopolitical crisis in the Middle East.  So accordingly I'm going way out on a limb and calling Friday lower.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside given the expected uncertainty.

Thursday higher

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

• Thursday higher, low confidence
• ES pivot 1951.00.  Holding above is bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Well Mr. Market heard Aunt Janet speak Wednesday afternoon, and hey, he likes it!  With the Dow ending up 98 points - yowsa!  And, ahem, do note that last night I said we had a bullish bias to the market.  But nothing ventured, nothing lost.  And so now with that little bit of excitement out of the way, let's get back to the technicals and figure out where Thursday's going.

The technicals

The Dow: It was pretty classic on Wednesday.  The Dow spent the morning in a holding pattern until the Fed announcement and then it was cleared for takeoff.  That's really all you need to know about today's action.  Technically, it was out biggest bump since the fifth. and it firmly consolidated the rising RTC,  And with indicators now all rising off oversold, and with no resistance until 16,952, it looks like there's still room to run on Thursday.

The VIX: Last night I wrote about the VIX  "In my book, that spells lower."  "That" being a bunch of technical mumbo-jumbo.  But, whoa!  The mumbo worked, to the tune of a whopping 12% gap-down red marubozu crater for the VIX that busted through resistance at 10.76 and stopping only at the lower BB at 10.61.  Holy moly - this was the biggest one-day drop since February 6th.  And the bearish stochastic crossover is confirmed in a big way.  The thing is,  having now hit the lower BB, my expectation would be for some sideways motion rather than any further down movement.  We'll see!

Market index futures: Tonight all three futures are slightly higher at 12:21 AM EDT with ES up just 0.04%.  Like everything else, ES had a big day on Wednesday, blasting through resistance at `1952 into record territory.  Indicators are still not yet overbought and we remain in a rising RTC.  So that's all bullish.  But the look of the chart is exponential and we're off the left edge of the RTC, so a pause might be in order here on Thursday.  The pattern for now at least doesn't look bearish.

ES daily pivot: Tonight the ES daily pivot jumps from 1938,75 to 1951.00.  So even with only a small gain in the overnight, we still remain above the new pivot so this indicator remains bullish.

Dollar index:  Last night I couldn't get a read on this chart and hey, it closed down just 0l06% on Wednesday with a wide-ranging doji star centered about its 200 day MA.  That's about as indecisive as it gets.  We did trade just outside the descending RTC for a bullish setup, but that's not enough for me to call this chart higher.  Once again, I need some confirmation.

Euro:  Last night I wrote simply enough "Wednesday should be higher".  And the euro did indeed closed up a bit, though there seems to have been some sort of delayed reaction as the new overnight posted a big gap up.  In any event, with the indicators continuing higher, this chart still looks bullish.

Transportation: Last night I wrote "this chart looks set to move higher to me."  I should say so, as the trans also had an outsized day, up 1.51% on a jolly green maruboz for their best day since May 12th.  This rocketship provided us with a bullish RTC trigger, sent all thr indicator up off oversold and confirmed the bullish stochastic crossover.  And with the upper BB not til 8262, there's still room to run here.

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       6       3      3           2       0.667    161

     And the winner is...

Tonight we see signs that perhaps the winning streak is getting ahead of itself a bit.  I note too that the NYSE A/D line is approaching toppy levels.  On the other hand, we don't see any outright reversal signs, so I'm going to go ahead and call Thursday higher, with the caveat that I don't expect a large move and it might end up as a doji day.

ES Fantasy Trader
 
Portfolio stats:  the account now rises to $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

Wednesday uncertain

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

• Wednesday uncertain - Fed announcement.
• ES pivot 1938.75.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Seems like the dog days of summer are here, with a sleepy session on the Street though tomorrow's Fed announcement is more likely the key more than the weather.  And in the absence of any earth-shattering news, the technicals prevailed and the Dow closed up 27 points.  I'll take 'em.  We'll do the nightly chart run-down as usual, though I'll warn you right away, I never make predictions ahead of the Fed.

The technicals

The Dow: Taken in context of the past two days, the Dow didn't do too badly on Tuesday.  We now have three up in a row and a bullish RTC exit.  Even better we got a newly completed bullish stochastic crossover, so this chart just looks bullish tonight..

The VIX: Last night I wrote "I'd lay better than even odds that the VIX goes lower on Tuesday."  Too bad I couldn't find any takers, because the VIX dumped 4.66% on Tuesday, its biggest daily loss in a month.  Just look at it - we got a tall red marubozu that bounced off the upper BB and then broke out of the rising RTC for a bearish setup, and caused a bearish stochastic crossover.  In my book, that spells lower.

Market index futures: Tonight all three futures are higher at 12:20 AM EDT with ES up 0.06%.  Like yesterday, tonight traders seem to be sitting on their hands waiting for whatever Auntie Janet has to say on Wednesday.  Technically, we're in decent shape with a fat hammer followed by two successive rising spinning tops.  That gives us a new rising RTC and a freshly minted bullish stochastic crossover.

ES daily pivot: Tonight the ES daily pivot rises again from 1934.58  to 1938.75.  We're still above the new pivot so this indicator remains bullish.

Dollar index:  Well I missed this one.  I thought the dollar was going lower but it surprised me by staging a 0.18% rally right back up through the 200 day MA it crashed through on Monday.  It also curved the stochastic around to prepare for a bullish crossover (though not quite) and the close keeps us in a descending RTC.  So this chart is playing coy and we have no opinion.

Euro: Last night I thought the euro looked higher technically but wouldn't call it because of a sharp drop around 8:30 PM.  That was indeed the killer as the euro ended at 1.3547 just about where it began Monday.  The weekly trend is vaguely higher but the best pattern I see here now is alternating up and down days, five in a row now.  So by that logic, Wednesday should be higher.  For what it's worth.

Transportation: Interesting patterns in the trans too on Tuesday with a 0.41% gain that caused a bullish stochastic crossover and just popped up out of the descending RTC for a bullish setup.  With RTC now officially oversold, momentum increasing, and a bullish engulfing candle, this chart looks set to move higher to me.

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       6       3      2           2       0.667    161

     And the winner is...

Technically, we're looking fairly bullish tonight.  However, it is my policy to never make calls on Fed days.  There's just too much headline risk and the last two times I tried it I got my head handed to me.  Fool me once, fool me twice, etc.  So tonight we settle in, relax, and get ready to enjoy the show - Wednesday uncertain.

ES Fantasy Trader

Last night I saw an opportunity and went for it.  We were rewarded with a modest 1.75 point gain but hey, I'll take it, particularly since the market is in holding mode ahead of the Fed.  I did say I'd be out win or lose.  ES seemed to be encountering some resistance around lunch time so I figured I'd just get while the gettin' was good.

Here's the trade:


SLD    10    false    ES    JUN14 Futures     1941.25    USD    GLOBEX    12:48:32
BOT    10    false    ES    JUN14 Futures     1939.50    USD    GLOBEX    00:49:34

Portfolio stats:  the account now rises to $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside ahead of the Fed.

Reminder: I post all of these trades live on Twitter where you can follow them @nightowltrader. 

Tuesday higher

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

• Tuesday higher, low confidence.
• ES pivot 1934.58.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going long at 1939.50..

Recap

Well on Monday the Dow actually spent more time in negative territory than positive, so I think the call for a lower close wasn't all that bad.  It's just a little bitty push in the last ten minutes that caused a positive close - all of five points.  So basically, we just meandered about aimlessly all day.  War in Iraq, Fed jitters, phase of the moon, whatever.  Who knows, who cares.  That's why I stick to the technicals.  Se now let's see what TA has to say about Tuesday.

The technicals

The Dow: So the Dow finished Monday with a little wishy-washy spinning top sitting at the high of last Friday's green candle.  There's little directional info from this.  Of more import is that it took the indicators lower, to nearly oversold and it move us close to the right edge of the descending RTC , from whence bullish setups occur.  So the general takeaway here is vaguely bullish..

The VIX: It's lucky I didn't try calling this chart last night because we got  another one of those weird days where the VIX is up (3.86%) but the rest of the market is up too.  And this one came in the form of a gap-up doji star, for 2/3 of an evening star.   And with indicators nearly overbought, and having just touched the upper BB on Monday, I'd lay better than even odds that the VIX goes lower on Tuesday.

Market index futures: Tonight all three futures are higher at 12:41 AM EDT with ES up 0.13%.  On Monday ES put in a slightly lopsided green spinning top indicating indecision.  But the overnight seems to be providing some resolution as it is trading entirely outside the descending RTC for a bullish setup.  And the stochastic is about to produce a bullish crossover too.  OBV is rising and money flow has stopped declining.  So all in all, this chart looks bullish to me.

ES daily pivot: Tonight the ES daily pivot ticks up from 1933.08 to 1934.58.  Having broken back above the pivot earlier Monday, we remain above the new number so this indicator is bullish.

Dollar index:  Last night I wrote "I'm going out on a limb and claim the dollar goes lower on Monday."  And I guess I picked a sturdy limb because the dollar dropped 0.22% on Monday with a move that sliced right through the 200 day MA like buttah.  With a completed bearish stochastic crossover and a serious descending RTC going, this chart still has room to run lower.  There's a modicum of support at 54.68 (on $USDUPX) but plenty of ballast to push lower.

Euro: And last night I wrote "I'd look for a move higher on Monday".  And so it was, after three days of alternating down/up/down, on Monday the euro (surprise) went higher, to close at 1.3572, its best finish in a week.  The bearish RTC is officially kaput, a bullish stochastic crossover is complete, and the indicators are rising.  However, the overnight is moving lower, so possibly something happened this evening that may drag the euro lower on news.  Technically though it looks higher.

Transportation: After an exponential run-down last week, the trans are still ringing (in the electrical engineering sense) in the aftermath.  After a gain on Friday, we got a 0.25% drop on Monday.  This is still a search for equilibrium.  It also sent the indicators back lower towards oversold.  And despite the almost dark cloud cover implications of the candle, the stochastic is curving around to form a bullish crossover, maybe in a couple of days.  So this chart is looking for direction but I'd not be surprised by 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67  
June       5       3      2           2       0.625    134

     And the winner is...

It looks to me like we're seeing some good reversal signs tonight.  I'm not expecting a big move on Tuesday ahead of the Fed, but it does look like enough to call Tuesday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $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 go long at 1939.50.  I just missed getting in at the .25 too - dang.  I'm basically liking the bullish RTC exit and bullish stochastic crossover in ES.  That is a good high-probability play.  Win or lose, we'll exit on Tuesday as I don't want to be playing ahead of the Fed.

Monday lower

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

• Monday lower, low confidence.
• ES pivot 1933.08.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

At 10:30 AM last Friday ES broke above its pivot and we closed the day higher, even if ES did dip back under for a while later in the day.  Still, I consider this conditional call a success.  We now begin a new week, fraught with an abundance of geopolitical rumblings.  This nice thing is that this stuff is generally reflected in the charts, so we now give them the eagle eye for Monday's direction.

The technicals

The Dow: ON Friday the Dow retrace almost half of Thursday's losses but remained in a descending RTC that along with falling indicators spells continued bearish.

The VIX: Last Thursday night I was looking for something of a topping move in the VIX.  Well on Friday, it did try moving higher but never quite made the upper BB before falling back with a 3% loss and a bearish harami.  But we remain in a rising RTC so this reversal sign requires confirmation.  I can't really call this one.

Market index futures: Tonight all three futures are lower at 12:19 AM EDT with ES down a non-trivial  0.36%.  ES found support at 1930 on Friday, retracing about a third of Thursday's losses on increased volume.  But the Sunday overnight is seeing a breakdown and with all the indicators continuing lower but still not yet oversold, and remaining inside a descending RTC, this chart looks fairly bearish for Monday.

ES daily pivot: Tonight the ES daily pivot dips from 1934.33 to 1933.08.  But with the overnight drop in ES, we're now a good five points under the new pivot so this indicator is bearish for Monday.

Dollar index:  To my surprise,  last Friday the dollar bounced off its 200 day MA and finished with a 0.09% gain on a little doji star.  It did generate a bearish stochastic crossover though, so I'm going out on a limb and claim the dollar goes lower on Monday.  Another test of the 200 MA seems in order.

Euro: Last week's big slide int he euro has clearly been arrested as the currency finds support in the 1.3542 neighborhood.  Now we peeled off the falling lower BB three days ago and Friday's trade gave us a bullish RTC exit despite the lower close.  So with indicators now rather oversold,I'd look for a move higher on Monday.  The Sunday overnight action seems to be confirming that, for now at least.

Transportation: On Friday the trans fooled me with a relief rally good for a 0.75% gain. It was enough to cause the indicators to bottom but we're still waiting for a bullish stochastic crossover and we're still in the falling RTC, so it's not possible to call Monday higher from this.

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       5       2      2           2       0.778    139

     And the winner is...

With a triple witching op-ex week and a Fed meeting coming up, things are bound to get interesting.  Tonight, we see the charts having made a half-hearted attempt to rally from two big losing days last week.  I'm not quite sure they've succeeded.  I tend to put more emphasis on the futures on Sunday nights because that data is fresher than last Friday's candles and tonight, they're looking bearish.  So given that, plus the absence of any clear bullish reversal signs, I'm going to call Monday lower.

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

Friday depends on ES pivot

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

• Friday higher if ES breaks above pivot, lower if it stays below..
• ES pivot 1934.33.  Breaking above is bullish..
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

The conditional call last night worked a treat on Thursday as ES seemed to be rising above its pivot in the overnight, then tested it in the wee hours before finally breaking under at 8:15 AM and then it was all over, Jack.  The Dow closed down 110 points.  QED.  The predictive power of the pivot is not to be discounted.  So let's move on to Friday and see how the week may finish off.

The technicals

The Dow: It was pretty much a rerun of Wednesday in Dow-land on Thursday with another triple-digit loss.  The net effect was to finally drive the indicators off their extreme overbought levels where they'd taken up seemingly permanent residence.  With everything now pointing lower, we can call this chart bearish with a bit more confidence..

The VIX: Last night I wrote "it looks like there's still more upside to come on Thursday."  And sure enough the VIX took off on Thursday for an 8.26% gap-up jump that nearly took it to its upper BB.  It also nicely completed the bullish stochastic crossover and sent all the indicators well on their way from oversold to overbought.  Now if you look at the recent trajectory of the VIX it has the feel of an exponential run-up, so that makes me think a reversion is on the way soon.  But in the absence of any true overboughtedness yet, I'll say the VIX still has room to run, atr least up to the upper BB at 13.06.  Then look for a move lower.

Market index futures: Tonight all three futures are higher at 12:44 AM EDT with ES up 0.4%.  On Thursday ES had its biggest down day since May 15th.  That helped se3nd the indicators on their way from overbought to oversold and established a new descending RTC.  When will the selling end?  Well there's some support at 1922 but we'll need to see some more definitive signs than that.  Until then, there's nothing bullish about this chart - except for the small hammer now forming at the base of the sell-off, suggesting a reversal in the works.

ES daily pivot: Tonight the ES daily pivot drops from 1944.50 to 1934.33.  We're still below the new pivot, though by a lot less now.  Still, unless ES can make a successful attack on the pivot, this indicator remains bearish.

Dollar index:  The dollar had me stymied last night but it took a big hit on Thursday down over a quarter of a percent, eventually finding support at its 200 day MA.  But this move sent all the indicators lower and prompted a bearish stochastic crossover.  So I don't think the MA will hold and I'm looking for more downside on Friday.

Euro: Last night I wrote "the selling may be over for now".  And almost like I knew what I was talking about, the euro had a good day on Thursday, rising back to 1.3564 after bouncing off its lower BB.  That also set up the stochastic for a bullish crossover (but not quite).  And this action caused a bullish RTC setup do overall I'd say we're headed higher again on Friday.

Transportation: And finally last night I wrote "everything now points to lower again on Thursday."  And it was a good point because the trans got hammered, down nearly two percent on a tall tall red marubozu with increased volume.  But even that wasn't enough to send the indicators oversold.  So in the absence of any reversal signs, I'd have to guess the selling here isn't done 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       7      6           0       0.462    -67  
June       5       2      2           1       0.714    139

     And the winner is...

When we get into the sequence of accelerating losses, I like to look at the SPX Hi-Lo index.  And what we see there is interesting.  Two days ago, this index took a huge drop, to nearly zero.  The last time we saw this was April 11th, after another two-day back-to-back sequence of big down days.  These sorts of moves in the index often presage a recovery.  Similarly, the TRIN hit 1.69 on Thursday.  The last time we were this high was May 20th, also after a big drop - and the next day was higher.

Also, while the NYSE A/D line took a hit on Thursday, it has not been exhibiting the bearish pattern lately of lower highs and lower lows.

And also, the Morningstar Market Fair Value Index, which hit a YTD high of 1.05 on the 9th., just before this latest dip, came back in to 1.04 on Wednesday (I wish they'd update these numbers to show the current day).

And also, Dr. Copper hit oversold on Thursday and looks to be getting ready to move higher.

That said, the overall gestalt of the charts tonight is still quite bearish.  What to do, what to do?  OK, here's what I think.  We haven't seen more than two consecutive days of selling all year.  As soon as Mr. Market figures out that the fact that one band of religious lunatics who hate us killing another band of religious lunatics who also hate us does not actually constitute the end of the world, we should see the selling dry up.  And as I pointed out above, there are already some signs of this, including the overnight futures.  So let's do a conditional again: if ES can break above its pivot and stay there by mid-morning Friday, we close higher, but if it doesn't we close lower.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $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.

Thursday depends on the pivot

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

• Thursday higher if ES stays above pivot, lower if it stays below..
• ES pivot 1944.50.  Sitting on the pivot is uncertain.
• Friday bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

The nice part about calling the close as "uncertain" is that you never lose money that way.  The not-so-nice part is that you also never make money.  In this case, the technicals looked pretty bearish to me last night but I was reluctant to commit, having been burned on counter-trend calls more than once this year.  So I decided to play it safe - and let 102 Dow points get away.  But that's all part of the game, so we simply move on to the next inning to see if we can get on base Thursday.  Batter up!

The technicals

The Dow: Gosh darn it - I knew this chart looked bearish.  And sure enough, Monday's spinning top (reversal warning) was followed by Tuesday's hanging man (reversal warning) and bearish RTC exit (that's right), and then to what should have been the surprise of absolutely no one, the Dow lost 102 points on Wednesday.  So that takes care of the rising RTC and leaves the indicators overbought.  Net-net, this chart still looks bearish.

The VIX: Last night I opined in no uncertain terms, "this chart now looks bullish."  And thus it was, with the VIX up 5.55% on Wednesday with a big gap-up spinning top and a completed bullish stochastic crossover..  So it looks like there's still more upside to come on Thursday.

Market index futures: Tonight all three futures are just barely higher at 12:18 AM EDT with ES up just a single tick.  On Wednesday ES gave us a big hanging man after two days of reversal warnings.  Trading entirely outside the rising RTC, this is a bearish trigger.  But note that we've not seen any substantive decline of more than two successive days in ES all year long.  So although the indicators remain overbought, it's not clear how much muscle the bears have at this point.  While Wednesday's sell-off was the largest move in three days, it lacked conviction and the overnight action so far indicates further indecision.  And though the chart remains technically bearish, keep in mind that we haven't had a single instance of more than two consecutive days of declines all year so far.

ES daily pivot: Tonight the ES daily pivot drops from 1948.42 to 1944.50.  With ES more or less flat at the moment, this drop puts it exactly on top of the new pivot.  As I write, ES is trying to decide which side of the fence to come down on.

Dollar index:  I missed the dollar night night though in retrospect I'm wondering why.  On Tuesday the dollar hit its upper BB in a gap up.  Well sure enough, it bounced off on Wednesday for a 0.05% loss, though on a small hammer.  The stochastic is now rising but RSI and momentum are falling so that's a wash.  No call here tonight.

Euro: Last night I was anticipating the end of the euro sell-off, just a bit early though as the euro hit its lower BB at 1.3531 on Wednesday.  But that did drive the indicators oversold and started the stochastic curving over for a bullish crossover.  So I guess I'll just claim again that the selling may be over for now.

Transportation: And finally, last night I wrote "this chart now looks bearish for Wednesday."  Yes indeed, the trans dropped 0.76% in a big red candle that took them just off overbought and completed a bearish stochastic crossover.  So everything now points to lower 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67 June       4       2      2           0       0.667    139

     And the winner is...

While the charts look bearish tonight from a purely technical viewpoint, I'm concerned about he "buy the dip" mentality that has come into play in these instances all year long so far.  And with ES sitting right on the pivot point, we have a dilemma.  Accordingly, tonight seems to be a good time to make a conditional call: if ES breaks below its pivot by mid-morning Thursday, we will close lower.  But if ES breaks above the pivot, we close higher.  This play doesn't always work, but it has a reasonable success rate.

ES Fantasy Trader

Portfolio stats:  the account remains at $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 in the face of uncertainty.

Wednesday uncertain

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

• Wednesday uncertain.
• ES pivot 1948.42.  Holding above is bullish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

In retrospect, my original call of Tuesday being uncertain was better than the change I made to a lower close.  Although we did open lower, we continued with the pattern we've been seeing so often later with the market clawing its way back above water, though in this case by less than three points.  That said, I'll note that the SPX did close lower but my forecasts are for the Dow.  Oh well.  So let's look into how this changes the picture for Wednesday.

The technicals

The Dow: After a lopsided spinning top on Monday the Dow gave us an absolutely classic hanging man on Tuesday.  It also closed just barely outside the rising RTC for a bearish setup.  We also didn't reach the upper BB and with indicators remaining extremely overbought, you'd think that there would be a down day coming Real Soon Now.

The VIX: Ah, the poor poor VIX.  This chart is the poster child for the "I've fallen and I can't get up" movement.. After bouncing back on Monday from a big dump last Friday, the VIX was totally unable to make any headway (much to my surprise).  Instead we followed a bullish harami with a bearish engulfing pattern.  Witht eh lower BB still falling away, this chart reverts to bearish.

Market index futures: Tonight all three futures are lower at 12: 17 AM EDT with ES down  a modest 0.06%.  With a tall hanging man on Tuesday ES is clearly having problems breaching 1950.  Worse yet, this action took us just outside the rising RTC fore a bearish setup and a bearish stochastic crossover.  And FWIW, the new overnight candle is forming up as a bearish engulfing pattern, though with the usual caveat about reading into half-baked candles.  Still, on a purely technical basis, this chart now looks bullish.

ES daily pivot: Tonight the ES daily pivot dips from 1950.25 to 1948.42.  That is just enough to bring us back above the new pivot despite a slight overnight sag, so this indicator now turns bullish.

Dollar index:  At least I got this one right when I wrote "there could be more upside from here" last night.  There sure was, with a 0.20% gap up on Tuesday, right to the upper BB.  That also gave us a bullish stochastic crossover and with the indicators still rising I'd say there's still more upside available on Wednesday.

Euro:I also nailed the euro last night, writing "we have a good shot at going lower again on Tuesday."  That took the euro clear to its lower BB for a three day losing streak.  After this and with the 200 day MA now history, I'd have to wonder if that might not mark the end of the selling.

Transportation: On Tuesday the trans underperformed the Dow, losing 0.13%  I noted the reversal warning last night and it was borne out on Tuesday with a tall hanging man.  That also just gave us a new bearish stochastic crossover so this chart now looks bearish for Wednesday.

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       4       2      1           0       0.667    139

     And the winner is...

The market continues to look technically toppy to me, even more so than last night.  But lately bearish sentiment and fifty cents will buy you a phone call (if you can still find a pay phone anymore).  So tonight I'm going to stick with what my original plan was last night.  In the face of bearish signs that require confirmation, I'm just calling Wednesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains at $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 as we wait for a new trend to develop.