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- Friday lower, high confidence. Bull-bear ratio is 2:6.
- ES pivot 1195.83. Watch for a bearish break below..
- Next week bias lower, rebound possible late week.
- Monthly outlook: bias up, on technicals.
- ES Fantasy Trader remains short at 1184.75.
Well after a big mistake on Wednesday's market direction, I got it right today. The Dow ended losing 41 points and while it went even lower intraday, it was unable to make any headway past the 11,500-11,550 resistance area. Is there any more downside action in store for Friday? Let's stir the tea leaves and see.
The technicals
The Dow: Put in a classic hanging man and closed outside its rising regression trend channel for the first time in 8 sessions. That's a bearish setup. The stochastic also (finally) made the bearish crossover I've been expecting for two days now. Momentum and RSI have already peaked so I'm seeing a lot of bearish sign son this chart, giving this one to the bears +1.
The VIX: Fell just a bit today, only by 0.56 and respected its summer-long support levels around 31 Its indicators are now about as oversold as they can get (RSI hit zero for the second day in a row) so any further downside from here looks unlikely. That's another +1 bears..
VIX futures: Pretty much the same story as the VIX itself, so another +1 bears.
Market index futures: All three futures are pretty much unchanged at 12:55 AM EDT. ES today put in a tall doji, and completed a full day outside its rising RTC. That's a bearish trigger. The stochastic has executed a bearish crossover and the other indicators are highly overbought. I see nothing bullish in this chart, so it's +1 bears.
ES daily pivot: Now 1195.83. ES is now actually above the pivot, partly from a little bump around midnight and partly because the pivot itself declined a bit. That's bullish unless we drop back down through it. It's too early to tell yet, so no points here right now.
Dollar index: Last night I couldn't make a call on this one. Tonight we've got some more clarity with a gravestone doji. The indicators are even more oversold than yesterday and yesterday's support was respected. At this point I think the dollar can go higher Friday and that's +1 bears.
Oil: Last night I said oil would go lower today and it did with a hanging man on overbought indicators. Oil still has room to drip lower, so +1 bears.
Morningstar Market Fair Value Index: Today the index rose for the fourth day in a row to 0.86, a level not seen since September 16th. This sort of increase is a bullish sign, so +1 bulls.
History: According to The Stock Traders Almanac, tomorrow historically outperforms, so +1 bulls.
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| It's all cyclical, folks. |
The bears with a bull-bear ratio of 2:6. I'm going to call this market lower Friday. It's now really giving me the impression of just teetering on the brink, the way a pendulum comes to a stop just before it reverses. We'll see.
ES Fantasy Trader
Today I decided once again to hold onto my short position from yesterday on the continued expectation that Friday will bring some profits.I hate nothing more than throwing in the towel at exactly the wrong moment. This trade will come in pretty soon.
Portfolio stats: the account still remains $158,500 after 25 trades (18 wins, 6 losses, 1 wash) since inception on 8/18 with $100K.
Posts
Man, these gaps up or rising markets on nothing but thin air and BS news reports is killing me. This market should have died 2 days ago...
ReplyDeleteThis is reminding me a lot of the beginning of August 2010, when the market spent a fuill six days teetering on the brink before finally rolling over.
ReplyDeleteWithout the Dow making any further headway it's hard to throw out the thesis that lower is coming soon. OTOH, I can't keep calling the market lower and being wrong again much more.
It's just a bit frustrating.