Thursday, July 31, 2014

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence..
  • ES pivot 1965.25.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Well that was interesting.  A lot of people were selling the rumor that Auntie Janet was going to sound more hawkish than she actually did Wednesday afternoon.  That cheered up Mr. Market, but just a bit as the Dow finished lower anyway, thought both the SPX and Nasdaq managed to end in the green.  So that takes care of one bit of news, but wait there's more.  We'll now check on how the charts sort out tonight heading into Thursday.

The technicals

The Dow:  The indecision in the Dow on Wednesday as reflected in a textbook spinning top.  However, it's sitting just off the lower BB, the indicators have now gone oversold, and the stochastic is flattening out in preparation for a bullish crossover.  So right now I'm leaning towards this candle as a valid reversal sign.

The VIX:  After a bullish engulfing candle on Tuesday, the VIX did indeed move higher on Wednesday - by all of 0.38% as it tested both its 200 day MA and upper BB and was rejected on both counts.  As the indicators continue higher, this is forming a roof on the VIX making any further headway problematic.  Nonetheless, I expect the VIX to take another stab at the MA (now at 13.57) on Thursday.

Market index futures: Tonight all three futures are lower at 12:18 AM EDT with ES down  a non-trivial 0.15%.  On Wednesday, ES put in a long-legged doji near the bottom of Tuesday's big drop.  That also drove the indicators to nearly oversold and traded just outside a steep descending RTC for a bullish setup.  That said, ES seems to be non-confirming the doji in the overnight and continues to sag lower, so I can't really call a reversal here just yet.

ES daily pivot: Tonight the ES daily pivot drops from 1968.17 to 1965.25.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  The dollar has been on fire-o all month long and continued its escalator ride up the upper BB on Wednesday with another 0.25% gain that kept it in a tight rising RTC.  RSI remains pegged at 100 for the third day in a row, but there's really no sign that the dollar is ready to roll over just yet.

Euro:  And so of course the euro continued it ride down to the bargain basement on Wednesday, dribbling down its lower BB in a tight descending RTC.  This action was significant because on Wednesday the euro broke under its 200 week MA and now has no support until 1.3359.  There's just no sign of a reversal here either.

Transportation: Much has been made in the press lately about the trans' swan dive this past week.  But no one seems to have noticed the reverse exponential shape of the curve.  These moves always end by reversing  Always.  And Wednesday may have been the start of that with a 0.72% gain on an inside harami.  The indicators are now oversold and the stochastic is maybe a day or two from a bullish crossover.  I have to think the selling is about done here for 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      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       5       4      4           3       0.667    322

     And the winner is...

I hate to say it because I want the market to go higher, but although I'm starting to see some signs of the selling abating, I'm not seeing enough good reversal signs to be able to call Thursday higher.  Accordingly, I guess the only other direction we can go is Thursday lower.  I'll be happy to be proven wrong.

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.

Wednesday, July 30, 2014

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 1968.17.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Tuesday was a good example of the kinds of weirdness I was expecting this week.  I called the close higher and we started off smartly with a nice advance that retook the 17K level for the Dow.  Things were looking good until exactly 2:20 PM when it began a big slide that ended with the Dow down 70 points, handily snatching defeat from the jaws of victory.  Only reason I could find for that had something to do with new sanctions against Russia.  When in doubt, blame the Rooskies, I always say.

So with Wednesday being a Fed day, we cut right to the chase - which is that I never make a call on these days - there's just too much headline risk.  So we're also skipping the chart run-down tonight - not much point to it, considering.  I'm sure Wednesday will provide plenty of entertainment.  Pass the popcorn!

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       8      10      3           2       0.500    132

July       5       4      3           3       0.667    322

     And the winner is...

Flip a coin.  I really think anything could happen on Wednesday.

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.

Tuesday, July 29, 2014

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher, low confidence.
  • ES pivot 1969.92.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

I called Monday lower and while the Dow did once again fall right out the gate, Mr. Market changed his mind right at the 10 o'clock reversal hour, regained the pivot, and then bobbed along there for the rest of the day and a modest gain despite some arguably worse than expected home sales numbers.  Go figure.  Let's continue our navigation of this tricky week as we study the charts for clues to Tuesday.  Reminder - I'm already calling Wednesday as "uncertain" due to the impending Fed announcement.  That's always a market mover and the battery in my bug in the Fed's conference room is still dead.

The technicals

The Dow: The Dow ended the day with just a 22 point gain, but also a classical hammer whose tail nearly touched the lower BB.  The indicators are all over the place - RSI and momentum are moving higher, money flow and the stochastic are moving lower and OBV is sideways.  All that really leaves us with is the candlestick.  Hammers that touch the lower BB  after a big decline are usually pretty good, but the conservative in me says wait for confirmation.

The VIX: OTOH, the VIX chart is quite the sight.  A tall inverted hammer here exactly touched both the upper BB and 200 day MA, which coincidentally just happen to be in the same spot - RE-jected!  The trading was outside the descending RTC so that's nominally a bullish trigger, but I'm not too sure about that.  The descending trend wasn't all that well-behaved. and with a similar inverted hammer in VVIX, I'm going to claim the VIX goes lower from here.

Market index futures: Tonight all three futures are lower at 12:23 AM EDT with ES down  0.05%.  On Monday, ES gave us an even bigger hammer than the Dow.  Indicators remain overbought but one cannot discount this sort of candle.  The indicators are just now exiting overbought and the overnight is trading outside a short, narrow descending RTC for a bullish setup.  So there's at least a suggestion here that the selling may be over, but one that requires confirmation.

ES daily pivot: Tonight the ES daily pivot drops from 1973.42 to 1969.92.  That's enough to put ES back above the new pivot for the first time in several days, so this indicator turns bullish.

Dollar index:  Last night I wrote "there's a bigger chance of a move lower from here than higher" but it was a push, with the dollar finishing Monday exactly unchanged.  But with the bounce off the upper BB confirmed and with RSI now at 100 (doesn't go any higher) I still think the next move is lower.

Euro: Last night I wrote "there's no sign of a move higher here" and indeed there wasn't as the euro finished Monday unchanged just like the dollar.  But with a doji star and oversold indicators, the next move now seems likely higher, an idea that's being confirmed in the new overnight.

Transportation: In a bit of understatement, last night I wrote "this chart looks bearish for Monday".  And wow - the bears roared on Monday as the trans dove 1.13% on a long red marubozu that capped three days of accelerating losses to form a classic inverted exponential waterfall.  The indicators are all now moving lower though still not yet oversold.  But this kind of chart looks to me like a reversal is pretty close.  What goes down, must come up.

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       8      10      3           2       0.500    132
July       5       3      3           3       0.727    394

     And the winner is...

With the VIX seemingly out of gas and bullish candles in both the Dow and ES, I think I'm seeing just barely enough signs to call Tuesday higher.  But with more economic news coming out and a Fed announcement due Wednesday, I'm not expecting any big moves in either direction.  I think we're going to be in wait&see mode.

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.

Monday, July 28, 2014

Monday

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1973.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Finally.  After four days of reversal warnings and no reversal, the break came on Friday and it was lower.  Friday's big move should at last give us something we can sink our talons into so let's get right to the charts and figure out Monday's direction as we begin a week that's jam-packed with economic news that will certainly generate lots of action.  Oh, and let me note right now that with a Fed announcement on Wednesday, my Tuesday night call will be "uncertain" as per my long-standing policy.

The technicals

The Dow:  On Friday the Dow took a big dump right out the gate and never really recovered..  We gave up the 17K level again and finished just above support at 16,947.  This move also finally gave some real direction to the indicators and they're now all traveling lower and getting close to oversold.  So while that all looks bearish, there's still the chance of a DCB on Monday following such a big drop - that happened four out of the last four times we had a similar triple digit one day loss.  So we can't just call this one lower.

The VIX:  Interestingly, on Friday the VIX broke out of a descending RTC with a 7.18% green marubozu for a bullish RTC setup.. The stochastic has also curved around nicely and is on the cusp of a bullish crossover.  Also, RSI and momentum appear to have bottomed and are moving higher.  There's a similar pattern in VVIX which has now broken above its 200 day MA.  So net net, this chart looks bullish.

Market index futures: Tonight all three futures are lower at 12:27 AM EDT with ES down  0.15%.  On Friday, ES exited its rising RTC for a bearish setup.  That move also sent all the indicators lower and formed a bearish stochastic crossover.  That all spells bearish in my book, and the overnight pin action so far seems to be confirming that.

ES daily pivot: Tonight the ES daily pivot drops from 1981.08 to 1973.42.  We remain below the new pivot so this indicator remains bearish

Dollar index:  After three days of crawling up its upper BB, the dollar on Friday decided to skip walking and instead just leap 0.20% with a gap-up spinning top that busted resistance at 55 (on $USDUPX) like it wasn't there.  Indicators remain extremely overbought and now that we have a reversal candle sitting on the upper BB making 2/3 of an evening star, I'd say there's a bigger chance of a move lower from here than higher.

Euro: The euro's two-week downtrend continued unabated on Friday with another stairstep leg lower that  was stopped at 1.3430 only by the 200 week MA.  If we break this, there's no more support til 1.3380 and with two black crows on the weekly chart, there's no sign of a move higher here.

Transportation: On Friday the trans conclusively exited their rising RTC for a bearish setup.  The uptrend back to July 8th is now over, Jack  In fact after last Wednesday's record peak, we now have  anew descending RTC going.  With indicators continuing to come off overbought, this chart looks bearish for Monday.

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       8      10      3           2       0.500    132

July       5       2      3           3       0.800    416

     And the winner is...

With futures guiding lower and the VIX looking higher, the charts overall have a rather bearish cast to them.  Accordingly, I will simply call Monday lower.

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.

Friday, July 25, 2014

Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower, low confidence.
  • ES pivot 1979.00.  Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Hmm - last night's conditional call worked - if you're going by the SPX.  ES broke above the pivot at 4 AM Thursday and the SPX finished up 0.05%.  Unfortunately, my benchmark is the Dow and a random dip in the closing minutes caused a three point loss on the day there.  Oh well - it's still not a bad theory.  So now we move on the Friday as we approach the end of July.

The technicals

The Dow:  The Dow remains in its summer doldrums, putting in a small spinning top on Thursday that means very little.  If you squint real hard, you can sort of see a rising triangle going on.  But honestly, yet again, there's not much meat to chew on here.

The VIX:  And there's also little clarity in the VIX which gained 2.78% on Thursday, rejecting Wednesday's doji.  At least here we do have something of a downtrend going and we remain inside this RTC.  Remember the other day how I noted an 8-day pattern between bottoms here lately?  Thursday was day 6.  So in the absence of anything better, I think the VIX could still go lower for a day or two.

Market index futures: Tonight all three futures are lower at 12:24 AM EDT with ES down  0.08%.  On Thursday ES gave us a perfect doji star that just touched its upper BB before backing off.  The new overnight so far seems to be confirming that and the indicators seem to be waking up a bit, all having turned downwards simultaneously just shot of reaching overbought.  We're also right on the edge of the rising RTC for a bearish setup, and the overall tenor of this chart is now leaning bearish.

ES daily pivot: Tonight the ES daily pivot ticks up from 1979.00 to 1981.08.  We've now dipped back below that so this indicator now turns bearish.

Dollar index:  Last night I wrote "you just can't call this one lower yet" and it's a good thing too because eon Thursday the dollar continued to crawl up its upper BB, gaining  0.06% in the process.  With three white soldiers and indicators broken at overbought, there's still nothing bearish about this chart.

Euro: The euro remains similarly undecided, putting in a nice star on Thursday centered about Wednesday' action.  The lower trend remains lower but for the past two days we're just looking for a direction.  The fact that we've finally peeled off the lower BB could be interpreted as bullish but that remains to be seen.

Transportation: And finally on Thursday the trans were similarly afflicted with nothing-itis, dropping a mere 0.02% on a small lopsided spinning top.  We remain inside a decent rising RTC, indicators are just barely coming off overbought, so the net takeaway is only mildly bearish 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       8      10      3           2       0.500    132
July       4       2      3           3       0.778    293

     And the winner is...

The market is still not really giving many good directional signals, but tonight I'm seeing just enough of a bearish edge, particularly in the VIX and the futures, to cautiously call Friday lower.  That's all she wrote.  See you again next 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.

Thursday, July 24, 2014

Thursday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher if ES remains above pivot, else lower.
  • ES pivot 1979.00.  Holding above is bullish.
  • Friday bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Well I still think my VIX idea for calling Wednesday higher was a good one, and the SPX did in fact gain 0.18%.  Unfortunately, I base my calls on the Dow and that closed down 0.16%, so that counts as a miss, though only by 27 points.  So we just move on to the closing week of July and see what Thursday may bring.

The technicals

The Dow: On Wednesday the Dow took a dump out the gate and never recovered, though the damage was limited.  The resulting fat hanging man reinforces the week-long resistance just above 17K.    And that's about all the guidance we get since the indicators remain completely opaque.  If anything, there's now a slight bias lower, but that remains to be seen.

The VIX:  My whole thesis last night was posited on the assumption that the VIX would go lower on Wednesday and surprise - it did!  Down almost 6% on a spindly gap-down star.  That's a reversal candle right there but with the odd randomness of the charts lately, it's hard to tell.  Still, I think there's a chance of a move higher on Thursday.

Market index futures: Tonight ES and YM are lower at 1:11 AM EDT with ES down  0.06%.  ES had a decent day on Wednesday, just touching its upper BB before falling back a bit.  But that may have been the third rail and the overnight is making no further headway.  Indicators continue indecisive.  The new candle is forming as a bearish inverted hammer, but again, it's only half-baked.  So all in all, another ambiguous night.

ES daily pivot: Tonight the ES daily pivot rises from 1973.58 to 1979.00.  After bumping along just below the new pivot, ES seems to be making an attempt as I write to break above.  That would be bullish.

Dollar index:  Darn - I was sure the dollar was going higher on Wednesday but it had other ideas - down 0.096%on a stubby little candle that crawled up the upper BB.  Indicators remain extremely overbought but without a reversal candle or RTC exit, you just can't call this one lower yet.

Euro: At least I got this one right last night, and I did say I had more confidence in this than my dollar forecast.  The euro continued lower from Tuesday's dump, closing below its lower BB at 1.3459 as the indicators reach extreme oversold.  So the selling appears to be getting played out and the overnight seems to support that idea.  I'd look for a move higher pretty soon.

Transportation: Well here's some bullish divergence, Dow theory-size - maybe.  The trans gained 0.16% on a day the Dow was down by the same amount.  But the candle was a fat hanging man high above Tuesday's close.  With indicators now overbought, this doesn't inspire a lot of confidence 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       8      10      3           2       0.500    132

July       4       1      3           3       0.875    296

     And the winner is...

Mr. Market seems to be suffering a sort of existential malaise at the moment.  The charts are in the doldrums and there' still not much to go on.  With ES hugging the new pivot though, that give me the opportunity to make one of my famous patented conditional calls: if ES stays above the pivot by mid-morning Thursday, we close higher.  Otherwise, we close lower.

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.

Wednesday, July 23, 2014

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher, low confidence.
  • ES pivot 1973.58.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.
Recap

Last night I was ready to call Tuesday higher just because the past fours days have alternated directions.  But that seemed too easy.  Turns out that was it after all as the Dow gained 62 points on Tuesday for no apparent reason.  Now let's see if this action created any more clarity as we go into Wednesday.

The technicals

The Dow: This is really the Brownian Motion Market, as we alternate between gains and losses for no apparent reason.  Great for the day traders - not so great for the swing traders.  And sadly, there's not much that stands out about Tuesday's green candle, or about the indicators which continue to hover between overbought and oversold..  Breaking the previous two days highs is de facto bullish, I guess, but other than that, there's still not much to chew on here.

The VIX: I wouldn't commit to this chart last night either, as there was no way to see Tuesday's  gap down 4.45% loss, but on a green candle, coming.. The 5 minute chart is even stranger with a big gap down at the open followed by a lot of noodling around and then a big pop at 4:10 PM - what was that all about?  So technically, I guess this is a bullish chart, but who knows.  VVIX did hit its 200 day MA on Tuesday so if you believe in that, a bounce off it could move the VIX higher on Wednesday.  But that's pretty speculative at this point.

Market index futures: Tonight all three futures are dead even at 12:24 AM EDT.  FWIW, the trend has been for a slow drift higher all evening.  Resistance at 1976 remained intact on Tuesday despite a nice rally in ES that rejected the hanging manning thingy from Monday.  So with the indicators still wandering around between overbought and oversold, we have once again little to go on tonight. 

ES daily pivot: Tonight the ES daily pivot ticks up from 1965.58  to 1973.58.  Once again we remain above the new pivot so this indicator continues bullish.

Dollar index:  And another chart with gappage, as the dollar took a monster 0.30% pop on Tuesday to break it supper BB and close just below it.  Indicators remain highly overbought and the dollar respects its upper BB pretty well, so on that basis I call it lower on Wednesday.

Euro: While it wasn't a gap down the euro still cratered on Tuesday with a big red marubozu to close way under it slower BB at 1.3468 (who do we appreciate). The indicators are now extremely oversold, my guess that the break would be higher is trashed, support back to February is broken, and the 200 week MA is coming into view.  Yikes - things aren't looking good in euro-land.  But either this or my dollar call is wrong, since they can't both go lower.  Overall, I'm more confident about this one.

Transportation: The trans outperformed the Dow on Tuesday by a factor of four with a tall green marubozu that saved the rising RTC while leaving the indicators still just barely overbought.  With the rejection of Monday's spinning top, this chart now looks bullish.  Unless the up/down/up pattern holds, in which case Wednesday will go down.

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       8      10      3           2       0.500    132
July       4       0      3           3       1.000    323

     And the winner is...

Gosh, I just can't call this damn market uncertain three nights in a row, so here's what I'm gonna do.  I note that the VIX has been bottoming at regular intervals every 8 or 9 sessions since the beginning of June.  If this pattern holds, then the VIX should move lower for around four more days, and that would imply a market move higher.  'S all I've got, but hey, it's a theory.  So I'll go waay out on my speculative limb and call the market higher Wednesday.

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.