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- Friday uncertain.
- ES pivot 1369.50. Holding above is bullish.
- Next week bias higher technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
Well last night everything was looking down, but sometimes you just can't lose for winning as the Dow turned in a 28 point gain instead of a loss today. But it somehow still felt like a loss to me, retreating from a mid-day excursion into 13K land on slightly less than average volume. And so the sideways action continues as we remain stuck in the 12,950-13,000 range. Let's see if tomorrow might bring more of the same.
The technicals
The Dow:Yesterday's candle looked like a bearish engulfing. While today did close with a gain, today's close was under yesterday's open, leaving us with a slightly sagging chart. It certainly has the look and feel of a market about to turn, but it's just not happening. I really need to see some confirmation before calling this one lower. And this time I mean it :-) I'm starting to feel like Charlie Brown who keeps trying to kick the football only to have Lucy yank it away every time.
The VIX: Yesterday's green candle in the VIX was for naught as today the slide resumed, dropping 6.35% and establishing a new descending RTC. The indicators also turned back down without ever having reached overbought levels. Once again, the VIX was unable to put together two consecutive green candles. Compare this to last July when the VIX rose for 10 out of 12 sessions. There seems to be no fuel in the VIX tank anymore.
Market index futures: Tonight the NQ is barely up while ES and YM are both barely down, ES dropping 0.05% at 1:26 AM EST. However, we note that ES has been trending downward slowly since 7:15 PM. Despite this, we remain at the top of the solid green candle ES put in today and that keeps us solidly inside the rising RTC.
ES daily pivot: Tonight the pivot toook another step up from 1366.17 to 1369.50. Despite this and the ES drift lower, we remain four points above the pivot. Unless we break under in the rest of the overnight, it's not looking too bad.
Dollar index: Today the dollar gave us a small doji, forming 2/3 of an evening star. If it goes lower tomorrow, look for lower still next week which would be good for stocks.
Morningstar Market Fair Value Index: Yesterday the index fell to 0.92. The fact that after spending so long stuck at 0.96 the next move was down is negative for stocks.
History: According to The Stock Traders Almanac, Friday is historically neutral for the Dow. March on the whole ranks as the 5th best month for the Dow.
And the winner is...
I refuse to kick the football again. Without solid evidence of a downturn, I'm going to go with the prevailing winds and right now those winds are blowing in an upward direction. The day-to-day action doesn't seem to be as important as the overall trend so far this year. It feels like I'm just forecasting the noise.
But I note that the transportation index broke out of its month-long descending RTC two days ago, signaling an end to that trend. If you believe that a rising $TRAN is good for stocks, that's a point of support.
Unfortunately, when you have a series of small range days with little price movement as we've had lately, producing a technical forecast becomes extremely difficult. Too hard for me in fact. So despite my feeling that tomorrow might go a bit higher, I'm making no official call tonight, for the second time this week. Sometimes that's just how it is. Watch the ES pivot and see how the market reacts around it for a clue to Friday morning.
Performance
Trading Account
Month Month % change YTD % change
Jan. +7.41% +7.41%
Feb. +3.67% +11.35% ES Fantasy Trader
Yesterday's short did not work out in a big way. I was torn between hanging on, waiting for it to go lower, and just packing it in. As it turns out, I waited too long and ended up with an even bigger loss. Oh well. Tonight, we're standing aside.
The account falls to $101,500 after 17 trades (12 wins, 5 losses) starting from $100,000 on 1/1.
SLD 10 ES false MAR12 Futures 1359.25 USD GLOBEX MAR 1 01:40:27
BOT 10 ES false MAR12 Futures 1372.00 USD GLOBEX FEB 28 01:14:08 
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