Actionable ideas for the busy trader delivered daily right up front
- Friday higher, low confidence.
- ES pivot 1319.00. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader standing aside.
Whoa! In what has to be the greatest comeback since Lazarus, the Dow which was down 176 points at 2:30 PM and headed lower after an ugly open, rallied furiously to recoup all but 25 points of that in the last 90 minutes of trading, a move that turned my own day from a loser to a winner. The boards are all atwitter about market manipulation, the PPT, fraudsters and banksters, but I'm just happy that my call for a move higher was (almost) redeemed, and I made some money. DIA actually did end up on the day, though off just a bit from yesterday's close. With more interesting developments since the close, it should be a very interesting Friday.
And I'll mention that the Blogspot spell-checker has been on the fritz for two days now, so I apologize in advance for any typos. I try to proofread my text, but there always seems to be a few that slip by.
The Dow: This is what I love about the market - there's always something new cooking. It wasn't a particularly good day for swing trading, but the day traders must have had a field day. Anyway, when it was all over, we had a tall hanging man. This is a reversal sign that definitely requies confirmation. The stochastic, which finally did execute the bullish crossover I mentioned last night, suggests more upside is possible Friday.
The VIX: Last night I thought we might see a higher VIX on Thursday and so we did, with a 1.34% gain despite a late afternoon drop. This left us with an inverted hammer and a big drop in the futures that now suggest we might go lower on Friday, and that would be good for stocks.
Market index futures: Tonight, we've got a big jump in all three futures on the European news that came out this evening with ES up 1.12% at 1:20 AM EDT. Ordinarily, I'd say this would make Friday a slam-dunk, but it's only a few weeks ago that we had an almost identical setup on Spanish bank bailout news, and the rally the next day lasted all of 10 minutes before ending the day lower. The difference now is in the indicators which are much more oversold than then and in fact are right about the same level as on June 6th, when ES bounced off its 200 day MA. Also, we now have a bullish trigger on the exit from the descending RTC.
ES daily pivot: Tonight the pivot steps down from 1322.00 to 1319.00. We crossed over the old number at 10:50 this evening and are now well above the new number. This is looking good for Friday.
Dollar index: The dollar gapped up today to form the top of an evening star. And that also brought its indicators well into overbought territory. This chart looks ready to roll over on Friday.
Transportation: Last night I was very bullish on this chart and it did not disappoint on Thursday, posting a 0.76% gain as opposed to the Dow's 0.2% loss. All of the factors at work here last night are still in play, only more so. In particular, we got a bullish trigger off the exit from the descending RTC. The downtrend that began on 6/20 is over.
Accuracy (daily calls):
Month right wrong no call conditional batting average points trade
April 7 9 2 .438
May 10 7 3 2 .632 June 7 6 6 1 .571 354 +$260
And the winner is...
Tonight I'm seeing a bunch of positive signs in the charts independent of the big move up in the futures, courtesy of those pesky Europeans. The only hesitation I have is that Friday is the end of the week, the quarter, and the first half of the year and that is historically a very bearish day for the Dow. But the setups I'm seeing the the VIX and the trans are sufficiently compelling, even absent the big run-up in ES, that I'm ready to call Friday higher.
ES Fantasy Trader
This morning I was glumly watching last night's long trade slowly go down the toilet so I just walked away from my screen and ran some errands. When I came back, much to my surprise I was nearly back to break-even. So I decided to let 'er ride. Then when I sat down to write this post, lo and behold, I was positive by 10.75 points. Well that was good enough for me and I decided to get out while the getting was good. Sometimes ya just gotta know when to hold 'em and when to fold 'em.
Portfolio stats: for now the account rises to $140,375 after 48 trades (37 wins, 11 losses) starting from $100,000 on 1/1 Tonight we stand aside since my usual pattern of entering trades late at night and selling during the day has gotten out of phase. So that's my last trade of the week and the quarter. Reminder: you can track these trades live on Twitter @nightowltrader.
SLD 10 ES false SEP12 Futures 1337.00 USD GLOBEX 00:51:56BOT 10 ES false SEP12 Futures 1326.25 USD GLOBEX JUN 28 01:50:58
CUA (Commonly Used Acronyms)
BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date
Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction. All trades listed here are presented only as examples of the author's personal trading style. Investing entails significant risk and trading entails even greater risks. Deal with it.