Friday, April 13, 2012

Friday maybe slightly lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower, low confidence.
  • ES pivot 1378.50.  Holding above is bullish..
  • Next week bias uncertain technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader standing aside..

Last night the market looked ready to move higher today and so it did, with the Dow tacking on181 points to close just below 13K.  Things were looking up earlier this evening for Friday until the China GDP numbers came out.  They missed, though not by much, but that was enough to throw a money wrench into the outlook for Friday.  We'll quickly run down the technicals anyway, bearing in mind that they may get skewed (or maybe skewered) on Friday.

The technicals

The Dow: Today's tall solid green candle just about exactly retraced 50% of the decline from the April 2nd top and left us just short of 13K which is once again resistance.  That said, the indicators are all in a wonderfully bullish position, with the stochastic having completed a bullish crossover from a very oversold position.  There's nothing to suggest a move lower on this chart.

The VIX:  This VIX took a big tumble today dropping 14.1%.  I told you it doesn't like hanging around the upper BB for long.  Even after that, it's still overbought and looks likely to go lower still on Friday, which would be good for stocks.

Market index futures: Today's tall solid green candle was big - almost too big.  It's pretty common for the market to take a pause after big up days like this and that's sort of what we're seeing now at 1:52 AM with all three futures in the red and ES down 0.2%.  This was admittedly helped along by the poor China numbers, but I think it was already in the cards.  The developing overnight candle is a red star, no doubt paying homage to the Chicoms and reflecting a market teetering on the edge.

ES daily pivot: Tonight, the pivot jumps from 1364.00 to 1378.50.  ES was comfortably above the old number, but this rise along with the hit ES took on the China data now leaves us less than five points above the pivot.  That's still OK, but bears watching.

Dollar index: Last night I wrote "more downside to come Thursday" and the dollar obliged, gapping down for a 0.68% loss.  Even at that, it remains overbought so I think there's still room to run lower on Friday.

Transportation: The trannies also had a big day today, like just about everyone.  Like the Dow, we now have a completed bullish stochastic crossover and other rising indicators.  No sign of a reversal here either.

History: According to The Stock Traders Almanac, Thursday is historically fairly bullish for the Dow, only so-so for the SPX.


Month right  wrong
April   4      3

And speaking of accuracy, I came across this interesting post, Guru Grades over on  They give a long list of more than 60 well-known market forecasters along with their accuracy.  It's too long to reprint entirely here but I will note that they claim that
 "The overall accuracy of the group based on both raw forecast count and on the average of forecaster accuracies (weighting each individual equally) is 47% (48%)."
Now the Night Owl has never claimed to be a guru and has somehow inexplicably been left off this list, but I will simply note that since I started tracking my daily calls this month, my current average is 57%, which puts me tied for third place.  And this is just a short sample.  I humbly believe I'm better than this.  (Now watch, I'll be wrong for the next two weeks).

     And the winner is...

Wow - a very tough one tonight.  I'm almost feeling like taking a pass on this call but ultimately I think I'm going to go for a lower close Friday.  I'm thinking that the China numbers will weigh on the market and people are going to want to take some profits ahead of the weekend after two nice up days.  Nevertheless, I'm bothered by the VIX and the dollar which both really look like ready to head lower.  So I'm not looking for a big dump on Friday, but I'd be really surprised to see another day of gains like the last two.

ES Fantasy Trader

Tonight I threw in the towel on my long trade from last week for a disappointing 15.5 point loss.  Still, we were down more than double that at one point, so this feels like a victory.  Still I think I'd be pushing my luck to hold onto this much longer, so I'm just going to give up on it.  They can't all be winners.  Portfolio stats: The account takes a hit down to  $130,000, after 29 trades (22 wins, 7 losses) starting from $100,000 on 1/1  

Tonight we're simply standing aside amid the uncertainty over the China numbers.

SLD    10    ES    false    JUN12 Futures     1381.50    USD    GLOBEX    00:47:21    0001f4e5.4f875c76.01.01        20.10    null

Went long at 1397.00 on April 5th - since this is over a week ago, I don't have the line item for it anymore and I'm not digging up the daily report from IB to find it.  I just need the number, which I gave on the post for that day.

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