Friday uncertain, slight bias up

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

• Friday higher, low confidence.  Bull-bear ratio is 4:2..
• ES pivot 1153.50.  Current price is now below that.
• Next week bias higher on technicals.
• Monthly outlook: bias up on technicals.
• ES Fantasy Trader standing aside on lack of clear direction.

Recap

Last night I called for the market to go higher unless the Germans voted nein on the Greek TARP (the GARP).  Well the world according to GARP is still here and the Dow did indeed finally manage to finish with a 143 point gain (after being up big, then down big, then up big... well with the VIX at these levels, you get what you get).   Tonight we roll the dice to see if we throw a seven on Friday or snake eyes.

The technicals

The Dow: Seems to be channeling those crazy days in August when we have four days of violent up/down swings.  Monday was up, Tuesday was down, today was up.  There's absolutely nothing to learn from such candles.  Even the indicators are all mumbling rather than speaking clearly.  I can't figure out what kind of points to award for this sort of bad behavior.


The VIX: Put in something of a gravestone doji today in the process of retreating back under 40.  It's also formed a symmetrical  triangle on the daily chart and most of the time these resolve in the direction from which the triangle started, in this case lower.  And since its indicators are still all oversold, I give this one to the bulls, +1.

VIX futures: Looks again a lot like the VIX itself.  Put in a shooting starish candle, though not high enough to actually qualify.  More telling is the indicators still oversold implying lower futures.  And that's good for stocks so +1 bulls.

Market index futures: All in the red at 1:55 AM though not by much, ES down just 0.17%.  Interestingly ES is also putting in a symmetrical triangle, this one entering from above.  However, it's also suffering from wandering indicators and I can't really call it either way, so no points.

ES daily pivot: Now 1153.50.  ES is just barely above this at 1154.00 so the pivot is in play once again.  We just passed above it so the staying above is bullish.  However, ES is taking another run at it.  Watch this level carefully Friday morning for a break under.  2:00 AM update, ES just broke under the pivot pretty dramatically, so I'm giving this one to the bears.

Dollar index: Last night I called for a lower dollar today.  Wrong again, two days in a row.  Hmmm. but putting in a hanging man with indicators that are declining rather than advancing, I'm going to call for the dollar to go lower Friday again.  Hey, I've got to be right one of these day.  +1 bulls.

Oil: Last night oil was too slippery to call.  Today's gain provided enough clarity for me to want to go long on the basis of rising indicators, a bullish engulfing pattern, and a successful test of support.  With oil still in sync with the market, that's +1 bulls.

Morningstar Market Fair Value Index: Today the index took a big drop back from 0.83 to 0.80.  A declining index is bearish, so +1 bears

History:  To finish off the week, recall that the week as a whole performs poorly.  Since we've finished the middle three days that tend to outperform according to The Stock Traders Almanac, that should favor the bears.  On the other hand, Friday is the end of the week, the end of the month, and the end of the quarter all in one.  If there's any window dressing to be done this is the day.  Since these two sort of cancel out, no points here either.

     And the winner is...

The bulls, by a bull-bear ratio of 4:2..From what I'm reading on the net, no one seems to have a real good feel for Friday and I have to agree.  Although the bull-bear ratio is positive, the numbers are small reflecting the indecision going around.  So I'm going to call the market higher Friday on a whim but I'm not at all confident about it, certainly not enough to be putting on any trades in advance.  Tonight is honestly just too tough to call.  Hey, sometimes that happens.

ES Fantasy Trader

Standing aside again.  A lack of clear market direction makes any trade more like gambling than trading.  And we save the gambling for Vegas, baby.