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- Friday higher, low confidence.
- ES pivot 1233.58. Remaining above is bullish.
- Next week bias lower on technicals.
- Monthly outlook: bias uncertain on technicals and Europe.
- ES Fantasy Trader remains long.
Last night the only thing I wrote that proved to be correct was my closing comment in the ESFT section, "I think today's decline was really overdone and am expecting a bounce eventually.". Well we did in fact get a bounce today but it had more to do with the S&P's rating on France than yesterday's big decline. Once again the news trumps the technicals.
Since I seem to be nothing but wrong lately, I'm going to try something a bit different tonight. I'm only going to review what I think are my best indicators and I'm not going to compute the bull-bear ratio at all. Given the ongoing volatility and irrational nonsense permeating the entire market lately, there's no point in over-analyzing things just to end up being proven wrong again.
The Dow: The Dow shot up right out of the gate this morning and then spent the rest of the day oscillating about its pivot. With a close of 11,894, the 200 day MA at 11,975 and the 12K psychological level now become resistance. That's also about the 50% retracement of yesterday's drop. Assuming that took a lot of sellers out of the fray, I don't think it unreasonable to expect another run at 12K tomorrow.
The VIX: Yesterday I observed that "the VIX rarely spends more than one day at the upper BB without retreating". I should have had more confidence in my own observations because the VIX did indeed drop 9.26% today. Tonight I'll add that once the VIX has hit its upper BB and then begun a decline, it most often continues to decline at least one more day. The VIX has no support until 31.39 from today's close at 32.81 so I'm guessing it still has ate least a bit more lower to go Friday.
VIX futures: The futures also moved lower today putting in a gravestone doji candle but in the wrong place to be a reversal pattern. I do however think that this sort of indecision favors further downside from here which would be good for the markets.
Market index futures: Tonight all three are solidly in the green at 1:40 AM EST. ES is up 0.42%. This sort of follow-through on today's action looks encouraging to me.
And the winner is...
Looks like the bulls to me. I'm going to say I see more positive than negative tonight just on the overall gestalt of things, so I'll call Friday higher with the usual caveats about new/rumors out of Europe. I'll add that J-Trader, who went long yesterday and has been a lot more right than me this week, remains long tonight.
ES Fantasy Trader
We continue to hold the long position from two nights ago. My decision to hold last night was a good one and we recouped about half of the loss on this trade. With any luck, and by gosh that's exactly what's driving this market now, we should be able to recoup some more on Friday.
Portfolio stats: the account remains $173,500 after 35 trades (26 wins, 9 losses) since inception on 8/18 with $100K.