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- Thursday uncertain: slight negative bias pending Greek news.
- ES pivot 1344.50. Holding above is bullish.
- Friday bias uncertain technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
Recall that last night I said "we're closing higher on Wednesday". Well it sure wasn't looking good early on, but once again, as we've been seeing so often lately, the bulls blocked the bears and battled back for a win in all three major averages. Admittedly, the Dow gained just 6 points, but hey, green is green. Tomorrow is likely to be tricky - let's try and figure it out.
The technicals
The Dow: Some crazy session today, eh? At 10:20 AM it was looking like the rally was kaput. But after marching downhill for just an hour, the Dow came in for a landing and then took off right back up again, to end with yet another hanging man. That makes, in the last three days, hanging man, star, hanging man. I hate to sound like a broken record, but none of these reversal warnings are giving us a reversal. In an ongoing uptrend like this, I will absolutely require confirmation before calling the Dow lower. And so far, I'm still not seeing it.
When it comes, and it will come eventually, I will have missed the top. But that's much better than calling for a reversal every day and not getting one.
The VIX: I got this one plain wrong last night - I thought we had a shot at a lower VIX today but instead it gained 2.89%, coming with a bullish stochastic crossover. Now I'm thinking the VIX goes higher Thursday and that's bad for stocks.
Market index futures: All three futures just turned negative at 1:27 AM EST. Like the Dow, ES has been rife with reversal warnings lately. Today it gave us its third hanging man in a row. But all three have been higher than the ones before. And ironically, the overnight action so far anyway is also forming, yes, yet another hanging man. And the indicators are all oversold-broken.
So you can't believe the candles, you can't believe the indicators, what can you believe? The regression trend channel to the rescue. Right now, we've moved right the the edge of the rising RTC from 2/1. That is a bearish setup.
ES daily pivot: Rose from 1340.75 to 1344.50 tonight. And we are once again above even this number. As long as we hold above it, there's no reversal coming.
Dollar index: Actually closed higher from a gap-down open. That signals at least the possibility of higher Thursday, but it's far from certain.
Morningstar Market Fair Value Index: For the third day in a row the index remained at 0.96. The fact that it appears to be pooping out at this level now is cause for at least a bit of concern.
History: According to The Stock Traders Almanac, Thursday is historically only very slightly bullish.
And the winner is...
Very very tough to say. The technicals seem to be starting to show at least a few signs of weakness, though no outright reversal just yet. But right now we're pretty much just waiting for those freakin' Greeks again. After kicking their latest can down the road for four days straight, we're supposedly going to get some sort of news (again) on Thursday that will resolve the question of whether or not the Greeks will accept retiring at age 50 instead of 49 or whatever the hold-up is. I think that's really what all these dojis have been about all week so far. And with all that uncertainty in the air, it would be foolhardy of me to call anything right now without technical confirmation.
So it's really pretty simple: Greece reports good news, market goes up. Greece reports bad news, market goes down. Greece keeps kicking the can, market goes nowhere. On Thursday, don't watch the charts, watch the news.
ES Fantasy Trader
I held on and held on to this trade as long as I dared, finally giving up at 1:11 AM with a quarter point profit. But hey I'll take it - that still beats a quarter point loss. Tonight, we're going to stand aside. This may be an ES fantasy trade, but it's not wild gambling. I'm not putting on any trades where I don't feel I have an edge and tonight's one of those times.
Portfolio stats: the account is now $108,375 after 11 trades (8 wins, 3 losses) starting from $100,000 on 1/1.
SLD 10 ES false MAR12 Futures 1,347.000 USD GLOBEX 01:10:49
BOT 10 ES false MAR12 Futures 1346.75 USD GLOBEX FEB 8 01:38:53 
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