Friday, April 20, 2012

Monday looking lower


The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower, low confidence.
  • ES pivot 1376.00Holding under is bearish.
  • Next week bias lower technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader going short at 1372.25.

Oh man, wrong again  My call for a higher close today was looking good - until 10:40 AM.  Then it was all downhill from there to end with a disappointing 69 point loss for the Dow.  At least I did say it was a low-confidence call.  Let's see tonight if I can't do better than flipping a coin.

The technicals

The Dow: Today's red candle took us just outside the right edge of the rising RTC from 4/11.  That's the bearish setup.  The stochastic looks to be gearing up for a bearish crossover though its not quite there yet.  In any case, this chart tonight looks more likely to go lower than higher on Friday.

The VIX:  Compounding the confusion was a VIX that dropped along with everything else today.  The long-legged doji shows this indecision nicely.  A slightly bigger picture seems to show a developing symmetrical triangle, not perfect, but the general idea is there.  And since those resolve in the direction of entry about 75% of the time, that favors another leg higher for the VIX.  The futures seem to support this idea and that would be bad for stocks.

Market index futures: The futures seem to have their own symmetrical triangle going here.  All three are up just a tad tonight with ES gaining a single tick at 1:12 AM EDT.  Since the entry of this ES triangle was from above, the expected resolution is down.  And this triangle is would up about as far as it can go so I'll expect a resolution Real Soon Now, like either Friday or Monday at the latest.  A freshly completed bearish stochastic crossover supports this view.

ES daily pivot: Tonight the pivot drops again, from 1380.92 to 1376.00.  And just like last night, ES has been mostly directionless in the overnight, leaving us still under the new number, though not by quite as much.  Still, it's bearish unless ES can break above the pivot.  There's no sign of that right now.

Dollar index: The dollar, along with everything else is totally confused right now.  We've now got two almost identical side-by-side red candles with today's finishing up just 0.04%.  The only clue here is that the stochastic is just about to execute a bullish crossover suggesting a move higher and that would be bad for stocks.

Transportation: Last night this chart was too tough to call.  Well the market spoke and it was down big, by 1.41%.  This provided the bearish confirmation to yesterday's doji.  With the stochastic just forming a bearish crossover, it looks like the $TRAN is ready to move lower again on Friday, which is bad for the market as a whole.

History: According to The Stock Traders Almanac, Thursday is historically fairly bullish, with the Dow up 12 of the last 15.


Month right  wrong  no call
April   5      5      1

     And the winner is...

I',m thinking tonight has a bit more clarity than last night.  I'm seeing some definite bearish signs in the charts and not really anything bullish so I'm going to call for a lower close Friday.  Keep in mind that Friday is options expiration, so that could generate some unexpected gyrations, but right now things are looking down.

ES Fantasy Trader

Despite the Dow ending down, today we took some profits while the taking was good to lock in a 2.75 point gain before the sell-off got into gear.

Portfolio stats: the account rises to $131,500, after 31 trades (24 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1372.75.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

SLD    10    ES    false    JUN12 Futures     1384.00    USD    GLOBEX    11:19:05    
BOT    10    ES    false    JUN12 Futures     1381.25    USD    GLOBEX    01:08:45

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