Friday higher

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

• Friday higher, medium confidence.
• ES pivot 1947.17.  Holding above is bullish.
• Next week bias higher technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader going long at 1942.50.

Recap

As that noted stock trader Maxwell Smart used to say, "Missed it by that much!'.  When I got up this morning at the crack of 11 AM, I couldn't believe my eyes - I called the Dow higher, how could it be down 150?!  Then things got worse.  And then surprise, surprise, they got better.  And better.  Until finally the Dow went positive after all.  But we finally managed to snatch defeat from the jaws of victory in the closing minutes as the Dow ended all of 3.66 points lower.  Now both the Nasdaq and SPX did end higher, but my calls are for the Dow, so that's a miss.  But it all made for some interesting charting, so let's get right to it.

The technicals

The Dow:  When it was all over, the Dow put in a giant classic textbook doji star, trading almost entirely below the lower BB.  For my money, reversal signals don't get any better than this.  We remain in a descending RTC but this is one heckuva great reversal sign for Friday.

The VIX:  .Last night I wrote that the VIX "looks ready to move lower" and so it did, down 3.29% on Thursday on a tall inverted hammer.  Indicators are now just off overbought so I'd have to guess there's more room to run lower here on Friday.

Market index futures: Tonight all three futures are higher at 12:22 AM EDT with ES up 0.21%.  Like the rest of the market, ES put in a tall doji star on Thursday and hit oversold.  The new overnight seems to be confirming it and is just exiting the descending RTC for a bullish setup.  This chart finally looks bullish to me.

ES daily pivot: Tonight the ES daily pivot drops from 1947.17 to 1934.17.  This latest fall, combined with a rising ES, finally puts us back above the new pivot so this indicator now turns bullish.

Dollar index:  Wow - is the dollar's mega-run finally over?  Could be, as the dollar lost a big 0.44% on Thursday to fall out of its latest rising RTC for a bearish setup. We do remain inside a much longer rising RTC all the way back to July but with long overbought indicators, it's looking suspiciously like the dollar may be in for some short-term retrenching.  So sez I.

Euro: And even more amazingly, the euro actually managed to put in a gain on Thursday to close at 1.2681, right on the edge of its descending RTC. Indicators remain oversold and the stochastic is bending around for an imminent bullish crossover   So I'd say the euro might have more upside in store on Friday and that would square with my call for a lower dollar.

Transportation:  And finally in some impressive bullish divergence, the trans gained a healthy 0.81% on a day the Dow basically flatlined. With a green hammer hugging the lower BB and oversold indicators, this chart really looks ready for more upside.

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       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376 October    0       1      0           1       0.500     -4

     And the winner is...

I think tonight we're finally seeing some really good reversal signs of a a higher quality than last night.  Enough so that I'm again going to just go ahead and call Friday higher.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we go long at 1942.50 having finally found what I would consider to be just about the perfect setup for my system.  They don't get much better than this.  Reminder: you can follow these trades live on Twitter @nightowltrader.

Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 1947.17.  Holding below is bearish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Whoa!  Looks like Halloween came early this year as Mr. Market started off the spooky month of October with a 238 point trick for the Dow, not treat.  I'm glad I made Wednesday a conditional call.  ES never made more than a token attempt on its pivot Wednesday and the end result was lower in a big way.  But big moves make for interesting charts so now we've got some real meat to chew on.  So let's chow down on Thursday - pass the hot sauce!

The technicals

The Dow:  On Wednesday the Dow basically just fell out of bed and never got up with a 1.4% plunge that closed way below its lower BB.  We gave up support at 17K like it wasn't even there, then 16,950, then 16,890 and finally stopping at 16,805 only because the bell rang.  That disconfirmed Tuesday's spinning top in a real big way, keeps us off the left side of the descending RTC and leaves all the indicators in confusion.  With three down in a row now, there's really nothing bullish about this chart.

The VIX: Oddly, while the VIX advanced on Wednesday, it was only up 2.45%, not much considering the slaughter on the Street.  And while we remain in a rising RTC, we now have something of a lopsided spinning top reversal warning and overbought indicators.  Still, we closed above the upper B at 16.63 making this look a lot like the end of July when it took five whole days around that level before the VIX finally gave up.  We've now got 7 out of 8, which I think is a record for the whole time I've been watching this, some 10 years now.  This can't go on forever.  Also note that VVIX put in a big gap-up evening star doji right to its upper BB and looks ready to move lower.

Market index futures: Tonight all three futures are actually higher at 12:25 AM EDT with ES up 0.12%.  Like everything else, ES took a pounding on Wednesday with a big red candle that traded mostly below its lower BB and remained inside its descending RTC.  But it was enough to finally drive RSI oversold.  There's actually two pieces of good news right now - first, ES isn't falling in the overnight and second, OBV has turned higher for the first time in a week.  It's not the greatest reversal sign, but it's better than nothing.

ES daily pivot: Tonight the ES daily pivot plummets from 1968.08 to 1947.17.  And even with that giant fall and ES drifting a bit higher in the overnight, we're still below the new pivot, so this indicator remains bearish.

Dollar index:  On Wednesday the dollar took a breather with a small red harami that was still good for a 0.03% gain.  But there's nothing really new here - the unstoppable uptrend just goes on and on.

Euro: And the euro just continued its slide down the banister of the lower BB on Wednesday to close at 1.2614, a level not seen in just over two year.  It's starting to look like the euro wants to have a go at its multi-year support of 1.2279 - we're not that far from it now.

Transportation: The trans had an even worse day than the Dow on Wednesday (if that's possible), tanking 2.51% on a giant red marubozu that just blasted through support at 8377, the lower BB at 8333, then more support at 8291 before finally ending at the third level of 8239.  That was enough to drive it oversold though (I should think!).  But this isn't yet a reversal candle so we can't call a bottom here by any means.

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       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376
October    0       0      0           1       0.000      0

     And the winner is...

The charts are looking pretty grim tonight.  But I will point out a few things:

• First, the SPX Hi-Lo index fell back to 19 on Wednesday.  It's only been lower three times in the last six months, and all of those marked significant bottoms.
• Second, the NYSE A/D line is now quite low, at -1566.  It's more likely to go higher than lower from here.  
• Third, bellwether IBM hit its 200 day MA on Wednesday and is quite oversold.  If I was into IBM, I'd call this a nice buy point.
• Fourth, Dr. Copper is very close to year-long support.
• Fifth, I think the VIX is ready to move lower, and
• Sixth, the futures are actually running higher this evening.

Therefore, I'm going to go waaay out on a limb and call Thursday higher.  I could be wrong.  Lord knows I am often enough.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

Wednesday depends on ES pivot

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

• Wednesday higher only if ES pivot passed, else lower.
• ES pivot 1968.08.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

The market on Tuesday made a vague meandering progression to the bell.  It was up, it was down, and in the end it was all of 28 points lower.  I'm glad I called this day "uncertain".  Now we begin a new month and a new quarter.  Will the charts tell us where we're headed?  You betcha!

The technicals

The Dow: After Monday's strange "high hammer", on Tuesday we got a lopsided red spinning top.  It comes with a bullish stochastic crossover but remains in a descending RTC,  All I get out of this is continuing indecision.

The VIX:  The VIX finished Tuesday with a 2% gain in a bullish piercing pattern.  We remain well within a rising RTC though indicators remain overbought.. Just looking at the daily candles would be confusing but if you look at VVIX, it fell 2.68% on Tuesday in an interesting bearish divergence.  It's not much to go on, but I'd be very careful about going long the VIX on Wednesday.

Market index futures: Tonight all three futures are lower at 12:29 AM EDT with ES down  0.10%.   ES continued its nervous path lower on Tuesday, influenced no doubt by end of month and end of quarter maneuvering, not to mention the latest geopolitical jitters, this time from Hong Kong.  THis lopsided red spinning top does little to provide much guidance.  The overnight is gapping down, but only to support at 1961.  And it must be noted that ES is actually drifting slowly higher and has now exited its latest descending RT for a bullish setup.

ES daily pivot: Tonight the ES daily pivot ticks up from 1967.33 to 1968.08.  ES just wasn't able to hold its pivot on Tuesday and has now sunken below the new number, so this indicator is back to bearish.

Dollar index:  Another day, another jump as the mighty dollar, faster than a speeding bullet, able to leap tall resistance levels in a single bound, gapped up another 0.38% on Tuesday, clambering up its upper BB like a monkey up a palm tree. I now have to back out to the monthly chart to find the last time we were at these levels - it was September 2010, yes four years ago.  I'm not sure how much longer this can go on, since the dollar has hits its upper BB and looks likes it's going exponential on the monthly chart - and that's saying a lot, Jack.

Euro: Similarly, the euro continued, yet again, its relentless excavation to zippo on Tuesday closing at 1.2635.  I have to look at the monthly chart here too to find the last time we were at this level - September 2012.  Interestingly, the euro is going inverse exponential on the monthly chart and has now hit its lower BB there.  This is all making me think that a major currency reversal is on the horizon before too long, like in a month or so - just sayin....

Transportation:  So much for bullish divergences - on Tuesday the trans dropped 0.55% to give up all of Monday's gains and leave us right at something of a support level at 8450.  But the indicators are just off oversold and the stochastic has a shallow bullish crossover going so I'm no sure the trans have much more downside left to them on 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       8      10      3           2       0.500    132
July       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      5           2       0.571    376
     And the winner is...

Tonight we've got some conflicts in the charts.  This is often the case as we near a bottom.  It's also worth nothing that the Morningstar Market Fair Value Index hit 1.0 for only the third time this year.  The last two times were 2/5 and 8/6 - and both those dates marked the bottom of the two biggest downtrends we've seen so far in 2014.  The SPX Hi-Lo index and NYSE A/D line also both continue to hover around levels indicative of a bottom.

Now far be it from me to call a bottom.  Bottom calling is a fool's errand and just one step removed from catching the falling knife.  But if I had to guess, I'd say we'd be due for a rally sometime this week.  Will it be on Tuesday?  Hard to say.  The first day of the month is generally bullish and that holds for October, though not as much by far as other months.  The market seems to be signalling a readiness to rise, but it's hard to tell until someone hits the starter.

Therefore, I'm going to do another conditional call: if ES can break above its pivot in the wee hours, or no later than mid-morning (say 10:45 AM-ish), then Wednesday will close higher.  If we stay below the pivot, or make a false breakout and fall back below, then we close lower.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

Tuesday uncertain

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

• Tuesday uncertain.
• ES pivot 1967.33.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night we called for the market to close higher only if ES could break above its pivot by mid-morning Monday, ie. around 10:45 AM.  ES did make a half-hearted attempt to break out, but not until 11:10 AM and just bounced off its upper BB and right back below the pivot.  And that was that - the Dow finished down 42 points.  We now close out the month with one last forecast for September before moving on to October.

The technicals

The Dow:  The Dow too was stymied by its pivot on Monday, bumping up against it after a big drop right out the gate (apparently due to a large number of Hong Kongians angry, very angry at the Chicoms (and rightfully so)), and then two more times before ending the day parked right on it..  The result was a tall hammer but one sitting at the top of Friday's big gain, not at the bottom the way we'd like to see it.  Last night's incipient bullish stochastic crossover was short-circuited and the indicators continue to decline without yet having hit oversold.  So overall there really isn't much positive about this chart, other than the fact that support at 17K held.

The VIX: Shoot - I really thought the VIX was ready to go lower on Monday.  Instead, it gained 7.61% but did it with a curious red hanging man, almost identical to last Friday's.  I looked for this "double hanging man on the upper BB" pattern.  Searching back to 2007 I only found four matches for this and in every case, the next day was higher.  Just sayin....

Market index futures: Tonight all three futures are modestly higher at 12:22 AM EDT with ES up 0.04%.  On Monday, ES like the Dow put in a hammer floating at the top of Friday's green candle.  That leaves us inside the descending RTC though the overnight seems to be trying to gear up for some sort of rally on Tuesday.

ES daily pivot: Tonight the ES daily pivot falls from 1970.58 to 1967.33.  That finally puts ES back above the new pivot so this indicator now turns bullish.

Dollar index:  On Monday the dollar took a bit of a break, down just 0.06% on a tiny little star.  No trend change is remotely evident though and the uptrend remains intact. We now have to go back to the end of November 2010 to find the last time the dollar was this high.

Euro: On Monday the euro put in a small green spinning top after last Friday's big drop.  But the indicators all remain broken oversold and we just continue cascading down the lower BB so we can't really say this is a reversal warning.

Transportation: Here's a bit of good news - on Monday the trans showed some positive divergence, gaining 0.16% on a day the Dow was down.  We've exited the descending RTC for a bullish trigger and the indicators remain quite low, just off oversold.  The lower BB has provided support for three days running now so I'm thinking there's more upside potential than downside risk here on Tuesday.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        6       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      4           2       0.571    376

     And the winner is...

The last day of September is historically quite week due to mutual fund end of quarter restructuring.  It was indeed so last year, but then we were in the middle of a strict downtrend, not the sort of herky-jerky random bobbing we've seen the past week - the Dow is now exactly in the same place it was four days ago.

Then the SPX Hi-Lo index remains quite low, though recovering from the 30 reading we got last week, a bullish sign.   We also note the NYSE A/D line which has just now apparently broken a bearish month-long pattern of putting in lower highs and lower lows, also a bullish sign.  And the VIX may be headed lower, and ES is putting in a few bottoming signs.

So there you have it.  I'd like to make a bullish call based on the technicals, but I don't like the end of month/end of quarter timing.  And with all the choppy trading lately, I think the wisest course is to simply declare Tuesday uncertain.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

Monday depends on ES pivot

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

• Monday higher only if ES stays above pivot, else lower.
• ES pivot 1970.58.  Bouncing off is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Sometimes it seems like my best calls happen when I'm the most nervous and I was very nervous indeed last Thursday night calling Friday higher after such a big tumble int he market.  But it paid off nicely in the end as the Dow rallied hard on uh, I think it was housing numbers (who can remember that far back) to end the day with  a handy 167 point advance.  Now let's see if we can make any sense of this coming week.  Bring on the dancing charts! (clap clap!)

The technicals

The Dow: The Dow has now alternated down/up for four straight days now but despite this remains in a shallow downtrend.  The only notable difference tonight is that we're close to making a bullish stochastic crossover, though none of the other indicators is oversold yet.  So despite the 1% gain on Friday, I'm going to need more signs than that to call the Dow higher on Monday.

The VIX:  I was too cautious last Thursday night, worrying that the VIX might not hold to its normal "bust the upper BB then retreat" paradigm.  But down it went after all, losing 5% on Friday with a dark cloud cover that also provided a bearish stochastic crossover and closed (just) back under its upper BB.  This makes me want to think the VIX goes lower on Monday, yes it does.

Market index futures: Tonight all three futures are lower at 12:17 AM EDT with ES down  0.28%.  ES remains in a descending RTC despite Friday's gain.  Its indicators are all broken oversold so there's little to go on here other than the new overnight which seems to be guiding lower.

ES daily pivot: Tonight the ES daily pivot barely budges from 1970.25 to 1970.58.  With the drift lower int he overnight that now leaves ES sitting exactly on the new pivot so this indicator is very much in play.

Dollar index:  Last Thursday the dollar was giving an ominous red reversal candle but it all came to nought on Friday as it resumed its long-running uptrend, up another 0.54% to hit its upper BB and remain in its rising RTC.  There's really nothing bearish on this chart tonight.

Euro: And of course the euro took yet another step lower on Friday on its march to zero to hit levels not seen since November 2012 now. With that gone, there's now no support til 1.2410.  We remain in a steep descending RTC, the indicators are all lying flat on the floor and there's absolutely nothing bullish about this chart tonight.

Transportation: On Friday the trans had a decent day, up 0.54% to just touch their upper BB and remain in a solid rising RTC.  Indicators are now broken overbought so we need to wait a day and see if we're going to bounce off the BB or start crawling up it.  That's just how it is sometimes.

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       6       4      4           3       0.692    639
August     8       7      2           2       0.588     81
September  6       6      4           1       0.538    376
     And the winner is...

Well that wasn't much of a chart dance I must say.  There's not a whole lot to go on here.  But as I write, ES is testing its new pivot and for the moment it seems to be holding.  So this is a perfect setup to make a conditional call: if ES can remain above its pivot by mid-morning Monday, we close higher.  But if it breaks below in the wee hours and stays there by the same time, then we close lower.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.