Actionable ideas for the busy trader delivered daily right up front
- Friday lower, low confidence.
- ES pivot 1454.67. Holding below is bearish..
- Next week bias uncertain technically.
- Monthly outlook: bias uncertain.
- ES Fantasy Trader standing aside.
Last night I called for a doji day today and I think we pretty much got that with a spinning top in which the Dow lost all of 21 points. It wasn't a true star but hey I'll take it. Now that we have a reversal warning, let's see if the charts support that for Friday.
The technicals (daily)
The Dow: The Dow basically did what I figured on Thursday, posting a small range day at the top of Wednesday's monster rally. And although we're still not overbought yet, the spinning top is at least a reversal warning. I'd not be going long at these levels.
The VIX: The VIX continued a bit lower on Thursday, down another 0.82% to form a spinning top of its own. It's indicators are nearing oversold but its stochastic is not yet forming a bullish crossover. We're also a long ways from the lower BB at 13.4. So there doesn't seem to be any real upward pressure on the VIX just yet.
Market index futures: Tonight all three futures are ever so slightly lower at 1:00 AM EST with ES dropping 0.03. Here we got another spinning top, this one parked on ES's upper BB.The indicators still aren't quite overbought but the general feel of the candlesticks is one of tiredness. ES is now looking like it wants to retrace Wednesday's gains. If that happens, look for the 50% Fib retracement at 1450 as a logical stopping point. We're already not too far from that. And just beyond that is that monster Monday-Wednesday gap that's just begging to be filled.
ES daily pivot: Tonight the pivot inches up from 1451.08 to 1454.67. However, combined with ES's meandering in the overnight, that now puts us below the new pivot, a bearish sign.
Dollar index: The dollar defied my expectations by not just moving higher but gapping up a big 0.71% to just reach its upper BB at 55.42. This also brought the indicators even more overbought. The current level is also a resistance line so I'm going to claim once again that the dollar is headed lower soon.
Euro: At least I was right about the euro moving lower on Thursday when it had its biggest fall since last July. This brought the indicators to oversold levels. The overnight trading is forming a morning star around 1.3048 so there are some signs the euro may be headed higher on Friday. That would mesh well with my expectation for a lower dollar.
Transportation: In a bit of divergence, the trans on Thursday rose another 0l63% but formed a bearish inverted hammer in doing so. While this requires confirmation, just looking at this chart makes one think that things are starting to look pretty toppy right about now.
Accuracy (daily calls):
And the winner is...
I'd characterize the charts tonight as mildly bearish. The momentum from earlier this week appears to have dissipated and the realization could bring out the profit-takers on Friday. I'm going to go out on a limb tonight and call Friday lower.
ES Fantasy Trader
Portfolio stats: the account remains at $100,000 as we wait for the right moment to enter our first trade of the year. While I do think we're going lower on Friday, I still don't have a good enough edge to warrant going short just yet, so we'll just stand aside again. There's no rush.