Friday, October 5, 2012

Friday uncertain, bias higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain, bias higher..
  • ES pivot 1452.50Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.

I feel a bit vindicated now, having gotten two in a row right.  The Dow had its highest close in eight sessions, breaking above resistance thanks in part to ol' Mitt's debating skills.  But there's no debating that the market moves on and we need to be on the right side of it.  So let's debate the charts and find a winner.

The technicals (daily)

The Dow: :Last night I noted that the Dow had formed a symmetrical triangle and that "I'd expect the exit to be on the up side."  That turned out to work quite nicely today as the Dow popped out of the triangle with a decent 81 point run.  This green candle was enough to set up a new rising RTC.  It's not the best, with a Pearson's of only 0.892, but that should provide some guidance and right now it shows no signs of anything but continued higher.

The VIX:  I called the VIX correctly too, as it posted its biggest dump in five days, down 5.7% to bring it back below 15 and sending the indicators down to about the halfway point between overbought and oversold.  So with still no support in sight and futures down too, I'd say that one more down day is not out of the question.

Market index futures: Tonight all three futures are up at 1:20 AM EDT with ES higher by 0.12%.  It's not quite the move we saw last night, but up still beats down.  Today's rise in ES keeps it solidly inside its rising RTC and like a few other charts here tonight, just into overbought territory.  More significantly, we're now back to the 1457 resistance line that stymied ES when it tried, unsuccessfully, to break above it for six straight days last month.  The first assault back then was on September 13th and I'll note that today we are a lot less overbought than we were back then, implying there's more gas in the tank for a push higher this time.  Also back then, we were actually already above the upper BB; today the upper BB is at 1472, over 10 points away.  I've been hearing noises lately about SPX 1500.  I think if ES can clear (and hold) 1457, then we're going higher.

ES daily pivot: Tonight the pivot rises again from 1443.00 to 1452.50.  With ES just a bit higher in the overnight we remain above the new number but by a lot less than before.  Still, as long as ES can stay above this level it's a positive sign.

$USDUPX daily
Dollar index: This is important, so I'll say it again - last night I noted that "the last eight times the dollar gapped up on the daily chart, it was lower the next day."  Well today we can make that nine times.  Look at this dollar chart.  Yesterday we gapped up; today we gapped down, and with a tall red candle good for a 0.76% loss.  Note also that we tumbled right out of the rising RTC (the parallel red, black, and blue lines).  That's a bearish setup and it's so deep I'm tempted to call it a trigger.  Note also the stochastic (bottom row) just completing a bearish crossover.  There's no support now until 54.40, so it looks like it's going to be 54.40 or fight.

Euro: And of course with the dollar chart performing nicely the euro is too, posting its biggest one day gain since September 14th with a tall marubozu that rocketed right out the top of the rising RTC.  I've now redefined the channel to include this.We're now finally just barely back to overbought levels in the indicators but like with the trans (see below), the stochastic is nowhere near setting up a bearish crossover so I'd have to guess there's still more upside left for the euro.  Maybe not very much after this big run-up today but there are no reversal signs on this chart.

Transportation: The trans posted another solid day, up 0.94% on a second green marubozu that just barely put the indicators into overbought territory.  But the stochastic, which is cycling nicely lately, still has a way to go before even thinking of forming a bearish crossover.  So I'd have to guess that the trans have more room to run up on Friday.

Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                            average  points

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      6      5           0        .571     -19

October    2      2      0           0        .500     -16

     And the winner is...

Once again, tonight I'm seeing essentially all bullish signs.  The difference is that we now seem to be getting nearer to the possibility of a top, but we're not there yet.  That said, with a slew of payroll and unemployment numbers coming out tomorrow, this entire discussion is moot.  Numbers BTE, we go higher, worse than expected, we go lower, end of story.  So the all things being equal bias is higher, but with no way of knowing the news ahead of time, I'm going to have to call Friday uncertain with a positive bias.

ES Fantasy Trader

Portfolio stats: the account still remains at $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12. To some extent, my ESFT trades are mirroring my real account.  I reached my nominal goal there, of a 30% annual return, two weeks ago.  t seems like there's been a reason not to trade every single night lately and tonight there's another one.  I'm not going to stand in front of the event risk posed by Friday's economic news, so once again we simply stand aside.

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.

No comments:

Post a Comment

Due to some people who just won't honor my request not to post spam on my blog, I have had to re-enable comment moderation. Comments may take up to 24 hour to appear, depending on when they're made. Sorry about that.