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- Friday higher, low confidence..
- ES pivot 1437.67. Holding above is bullish.
- Next week bias higher technically.
- Monthly outlook: bias uncertain.
- ES Fantasy Trader standing aside.
Last night's call worked out really well as the Dow reversed course today to finish up by 72 points even after a mid-afternoon slide off its intraday highs. With just one trading day left to the month, I'd say that this September has shown surprising strength for what is normally the worst month of the year for the Dow. Even this week which is usually the worst week of the month hasn't been all that bad so far. Now there's just one question mark left for the last day of the month and the quarter - up or down? Let's do our usual rundown and see what's what.
The technicals (daily)
The Dow: The Dow completely retraced yesterday's losses and then some today on a candle that's almost a bullish engulfing pattern. While we're still inside the descending RTC, RSI has now clearly bottomed at oversold and the stochastic is now very close to forming a bullish crossover. While none of that guarantees continued higher, that seems more likely than a move lower at this point.
The VIX: This one fooled me today. I figured we'd get more upside here but instead the VIX plunged nearly 12% today on a big red marubozu that caused RSI to form a top and the stochastic to line up for a bearish crossover, possibly tomorrow. It also dumped us out of an admittedly short descending RTC, another bearish sign. So now I'll say that we could see more downside here on Friday.
Market index futures: Tonight the futures are essentially flat at 1:24 AM EDT with ES up by just 0.03%., YM up only one tick and NQ down 0.04%. ES gave us a tall green candle almost identical to the Dow's. RSI has bottomed, and we've now just gotten a bullish stochastic crossover. The overnight candle so far is sitting right on the edge of the descending RTC for a bullish setup. Right now this chart's looking in pretty good shape.
ES daily pivot: Tonight the pivot bumps up from 1430.25 to 1437.67. That still leaves us above the new number, though not as much as before. Still, unless ES goes below the pivot by morning, it's a positive sign.
Dollar index: The dollar dropped 0.45% today on a gap down red candle that completes the evening star pattern and send us completely out of the rising RTC for a bearish setup. And RSI has now topped out at overbought, and the stochastic has just executed its bearish crossover. That's four bearish signs for the price of one. I'd say the dollar's going lower on Friday which should be good for stocks.
Euro: And as the dollar fell the euro rose today enough to exit its descending RTC and give us a bullish setup. When further gains in the overnight, the new candle is signaling a bullish trigger.. The euro, now at 1.2940 would have to fall below 1.2848 on Friday to cancel that, not very likely.
Transportation: Today the trans confirmed yesterday's doji with a respectable 0.56% gain that exited the descending RTC for a bullish setup. Any close here on Friday above 4845 will result in a bullish trigger. Considering that RSI has bottomed at oversold and the stochastic is primed for a bullish crossover, continued higher seems entirely possible here.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
April 7 9 2 .438
May 10 7 3 2 .632
June 8 6 6 1 .600 632
July 11 2 6 1 .857 917
August 8 6 8 1 .600 -78
September 8 5 5 0 .615 30
And the winner is...
Well normally the last day of Q3 is pretty poor, but I have to say that tonight the charts are generally looking pretty positive. I'll add that copper had an impressive 1.8% gain today, the TLT dropped 0.71% and the Swiss franc has turned upward. While I'm feeling a bit nervous about saying it, I'm going to call Friday higher anyway.
ES Fantasy Trader
Portfolio stats: with no trade last night the account remains at $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we stand aside once again, in light of the historical risks associated with the last day of the quarter.
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. Act accordingly.