Actionable ideas for the busy trader delivered daily right up front
- Friday higher if pivot passed, else lower.
- ES pivot 1351.83. Holding below is bearish.
- Next week bias higher technically.
- Monthly outlook: bias down.
- ES Fantasy Trader remaining long at 1376.25.
Today we finally got something different. Instead of a steady sell-off, we got a market kind of hunting for direction. And although it went down again, at least the losses were tempered. But we got faked out like this just three days ago. Is this a turn around or just a breather before the selling resumes? We weigh the evidence in the charts. (And Blogspot's spell checker is broken again, so I apologize in advance for any typos I might have missed).
The technicals (daily)
The Dow: The Dow lost just 29 points on a spinning top. At least that's a reversal sign but one that requires confirmation. Meanwhile, the indicators are more oversold than anything all year, including the end of that month-long slide in May. RSI is now 0.57 and the stochastic is lying flat on the floor. This is so overextended that I can't imagine not getting some sort of up move soon. I just don't know if it will be Friday.
The VIX: Meanwhile,t eh VIX posted a small gain of 0.39% but that was just enough to keep it above its 200 day MA and complete a bullish crossover. So it now has support and rising indicators. I'd say it's possible the VIX could move higher again on Friday.
Market index futures: Tonight all three futures are down at 1:26 AM EST with ES lower by 0.13%. Like the other charts, ES is now highly oversold with an RSI of just 6.59. But it remains inside a descending RTC and although it gave us a reversal candle in the form of a spinning top today, in this environment I need confirmation before calling ES higher.
ES daily pivot: Tonight the pivot drops again from 1361.42 to 1351.83. The situation is remarkbly to what we had last night at this time - below the old pivot, then still below the new number but by much less. Still, until we see ES actually break over the pivot, it doesn't matter how close it gets - it's still bearish.
Dollar index: The dollar stubbornly refuses to go down, poking back over the 200 day MA again today before closing exactly on it at 55.87 with a bearish hanging man. That's two reversal signs in two days - the dollar has to come down eventually. It just seems to be out of gas right here.
Euro: Last night I wrote simply "higher euro on Thursday" and that's just what happened today as the curvy E posted another solid gain for a bullish trigger. We can now officially declare the downtrend over. The currency is fairly directionless in the overnight so far but the trend is now up.
Transportation: After Wednesday's big dump, today the trans formed a gap-down spinning top good for another 0.24% loss. However, that was just enough to send it back out of the descending RTC for a bullish setup. We're also very close to support at 4892 now and the oindicators are now quite oversold with RSI dropping to 10.85. We're so oversold now that a reversal has to happen soon, but having gotten faked out two days ago I'm not going to believe it until I get some confirmation of today's doji.
Accuracy (daily calls):
October 8 5 8 0 .615 208
November 4 3 4 0 .571 41
And the winner is...
The charts all keep getting more and more oversold but we somehow continue moving lower. But this has to end sometime and Friday being option expiration might just do the trick. The Dow is up seven of the last nine on this day. Also the SPX Hi-Lo index fell back to8.33 today, a level from which rallies pretty much always follow. We're clearly overdue for a rally. I'd like to say it's coming on Friday but I just can't. So tonight I'm going to make a conditional call: if ES can manage to get above its pivot and stay there by mid morning, then we'll have Friday higher. If not, then lower again.
ES Fantasy Trader
Portfolio stats: the account remains at $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we remain long at 1376.25.