Friday, March 30, 2012

Friday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher, low confidence.
  • ES pivot 1396.17Breaking above is bullish.
  • Next week bias higher, technically.
  • Monthly outlook: bias up.
  • ES Fantasy Trader goes long at 1401.50.

Well we did finally end up going a bit higher today, though it came right down to the wire.  Still I guess a 19.6 point gain counts.  Of course, the Naz and the SPX did end a bit lower.  I don't think there's much to be learned from this - call the market basically flat today.  Where does this leave us for Friday and the end of the quarter?  Let's try and figure it out.

The technicals

The Dow: Today's close at 13,146 gave us a tall hammer candle.  But it also caused a bearish stochastic crossover.  I can't remember the last time, if ever that I saw a situation like this.  In addition, money flow is going down but the RSI is going up.  They don't come more conflicted than this.  I just throw my hands up over a chart like this.  Let's move on and see if there's something less schizophrenic elsewhere.

The VIX:  After a big gap up this morning, the VIX finished the day with a big dark cloud cover type red candle, ending up just 0.01 on the day.  Going all the way back to last August, the last seven times we had such a big red candle, the next day was lower.  (The eighth time was in the middle of last summer's insanity over Greece, and the VIX went higher the next day).  The futures support this with a similar looking candle pattern.  So going lower Friday isn't out of the question, which would be good for stocks.

Market index futures: Tonight all three futures are trading in the green, and not by trivial amounts, with ES gaining 0.2% at 1:04 AM EDT.  Today's candle was a strange long asymmetrical spindly dojiish star that isn't by itself a reversal warning.  However, the developing overnight candle is coming across as a bullish engulfing pattern, generally very positive.  It's also trading outside the admittedly short but steep three day descending RTC we find ourselves in.

ES daily pivot: Tonight the index dropped from 1401.50 to 1396.17.  This.combined with a mid-evening move up in ES now leaves us above the pivot for the first time in a while, by about five points.  That is reason for encouragement.

Dollar index: Last night, I though the dollar would go higher today, and it did by 0.07%, but in keeping with this crazy day, it did it on a gap-up red candle.  It sure looks like this dollar is not wanting to go higher, but all the indicators have now bottomed at oversold levels and are headed back up.  Another chart I don't know what to make of.

Morningstar Market Fair Value Index: Yesterday the index dropped, not unexpectedly for the third straight day back to 0.96.  This is something of a support level so it will be interesting to see if we can hold this line.

History: According to The Stock Traders Almanac, Friday is historically quite bearish, in fact the weakest day of the week.

     And the winner is...

So what's it gonna be?  Window dressing or profit taking?  Recall that last year we got a small loss on the last day of March.  But by then we were considerably overbought.  We're not at this point this year.  With the Dow and the dollar charts completely opaque, tonight I have to go with the VIX and the futures.  And those are looking like there might be some upside in store Friday.   So I'm going to give this one to the bulls and call for a higher close Friday.

ES Fantasy Trader

Portfolio stats: With no trade once again last night, the account remains at $129,375, after 25 trades (19 wins, 6 losses) starting from $100,000 on 1/1.  Tonight we go long right at Thursday's pivot, 1401.50 at 1:16 AM.

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