Actionable ideas for the busy trader delivered daily right up front
- Friday higher, low confidence
- ES pivot 1243.42. Holding above is bullish.
- Next week bias lower early, rebound possible later.
- Monthly outlook: bias down, on politics and technicals.
- ES Fantasy Trader went long at 1247.75.
Exactly as I expected, today we got a small range day with the Dow finishing down just 26 points. In the absence of any major new announcements from Europe, this is pretty much what one would expect following a spectacular gain like we saw yesterday. This now leaves us at an important juncture.
So let's get right to the technicals and see how they sort out for Friday.
The Dow: More significantly perhaps is the fact that despite a small decline, today the Dow managed to hold above both the 12,000 support level and its 200 day MA at 11,948. The Dow now has no resistance until 12,190 and two good support points just below today's close at 12,020. That's not a bad spot to be in.
And while the indicators are now all looking overbought, remember that they become distorted whenever the market makes a sudden large move like we saw yesterday. I don't think we're truly as overbought right now as the indicators, uh, indicate.
The VIX: The VIX finally broke back under its support at 30 yesterday on a big gap down. Today it moved lower again, just a bit to close at 27.41. This makes two days now its been tickling the lower BB. The VIX rarely spends much longer than that there without rebounding, so I'm looking for it to start moving back up again soon. This bodes poorly for the early part of next week.
Market index futures: At 1:05 AM EST all three are in the green by non-trivial amounts. ES is up 0.42% and NQ is up exactly half a percent. Whenever we see the pattern of big tall green candle followed by tiny doji just hanging at the top of the big gain, one has to wonder if the next move isn't going to be back down again.
ES still has a big barrier right in front of it, the 200 day MA at 1255.08. Next stop would be 1271 and then 1284. Thing is, the doji is only a potential reversal indicator and requires confirmation. And so far, we're getting some fairly convincing non-confirmation. And there's still some room to run before that resistance.
ES daily pivot: Now 1243.42. Despite taking another big jump up, the continued upward pressure on ES keeps us above the pivot one more night and that continues to be positive.
History: According to The Stock Traders Almanac,December is the no. 1 S&P and no. 2 Dow month of the year. Then there's the time-honored Santa Claus rally to consider. Now ol' St. Nick doesn't always show up, and sometimes he just leaves a piece of coal in our stockings, but right now I'm thinking this year he just might be bringing some presents to all the good little traders out there.
And the winner is...
This is another tough call. We're at a critical juncture here, poised on the brink of a breakout but also sitting on some big gains that could easily be retracement fodder. Today's doji reflects that. Nevertheless, I'm giving this one to the bulls. I do think we're going to see some more upside return on Friday, particularly if the jobs numbers come in BTE, which I'm guessing they will. If not, look for lower.
ES Fantasy Trader
Today the ESFT was on the sidelines. .With ES finishing the day off down just 0.02%, there wasn't much to be gained trading either way. With a bit more clarity now, tonight we're going long at 1247.75.
Portfolio stats: the account remains $160,250 after 36 trades (26 wins, 10 losses) since inception on 8/18 with $100K. The portfolio will reset to $100K cash on January 1st, to make year-over-year comparisons easier.