The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Friday bias weakly positive, low confidence. Bull-bear ratio is 3:2
- ES pivot 1190.50. Failure to break above is bearish.
- Next week bias up.
- Monthly outlook: bias down, regardless of Fed action in September
- ES Fantasy Trader opened new long position at 1189.25.
Today the Dow basically just meandered around ahead of Bernanke's remarks, first up, then down. I guess people had their minds made up though because the ultimate downtrend began three hours before Uncle Ben even spoke. Someone get a copy in advance? Hmmm? Anyway, the futures certainly didn't like Empty Suit B.O.'s latest Speech of Nothing either, dropping 7 full points before he wrapped it up. Then they started moving higher again. Go figure.
The technicals
The Dow: While the Dow closed entirely outside its descending regression trend channel, which is bullish, it also put in a bearish dark cloud cover. However, its indicators are still oversold and the stochastic just did a bullish crossover. I think those all pretty much cancel each other out, so no points.
The VIX Today the VIX put in a funny little doji and gained 2.8%. However, it is right in the center of the Twilight Zone (the area halfway between Bollinger bands), and its indicators are also halfway between oversold and overbought. It does nothing for me, so no points either way.
VIX futures: On the other hand, the VIX futures today put in a candle that is part hanging man, part dark cloud cover and their stochastic executed a bearish crossover, all strongly suggesting lower VIX (implying higher stocks). That's about the only unambiguous technical tonight. That give the bulls +1.
Market futures: All three futures are trading higher right now, with ES up 0.21%. But today's candle was also a dark cloud cover and the overnight trade is holding below that. We can't move higher without breaking above that resistance point. So +1 bears here.
ES daily pivot: Now 1190.50. With ES at 1188.25 at 1:05 AM EDT, we need to see it break over this number for a hope of positive action tomorrow. Since its actually been drifting lower since 10:30 PM, that's +1 bears.
Dollar index: The dollar did not reverse today as I had thought, making a push higher instead. However, it's now at resistance and its stochastic is making a bearish crossover. It still looks like it's going lower Friday. Lower dollar -> higher stocks, so +1 bulls.
Oil: Now at the top of its trading range and its upper Bollinger band, oil put in its own dark cloud cover today. But its stochastic put in a bullish crossover and in the overnight it's trading higher. So I'm not feeling this one either. No points.
Morningstar Market Fair Value Index: Rose to 0.87 today. That's bullish, so another +1.
History: Not much guidance here, so also no points.
And the winner is...
The bulls, by a slim 3:2 bull-bear ratio. Since the ratio is not just close but also numerically low, that reduces our confidence in tomorrow's call. I have to say it's just a small bullish bias, and then only if we can break above the ES pivot. Watch this number early Friday morning.
ES Fantasy Trader
The ESFT went long at 1189.25 tonight although I don't have a lot of confidence in this trade.
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