Actionable ideas for the busy trader delivered daily right up front
- Friday slightly lower, medium confidence.
- ES pivot 1318.08. Holding above is bullish..
- Next week bias lower technically.
- Monthly outlook: bias up.
- ES Fantasy Trader remains short.
Well it was more of a star than a doji, but I think I had the right idea when last night I called for today to run slightly lower and that's just what the Dow gave us with a 22 point loss.
And I apologize for screwing up the blog. Due to a slip of the mouse, I somehow managed to delete yeterday's post (Wednesdy night's call for Thursday). Which is a shame, because I was right abour today.
The Dow: Today's not-quite-a doji candle is another reversal warning. But as I mentioned yesterday, we've seen many of these for over a month now and none of them has generated a reversal. More telling is the fact that we traded entirely outside the rising RTC for a second day now. That is a much better indicator that the uptrend may be at an end. In either case, I now see more risk than reward in the Dow daily chart.
The VIX: The VIX has now spent six straight sessions touching it lower BB - highly unusual. But today it put in its first green candle since January 17th, forming an almost-hammer. With a bullish stochastic crossover, the VIX is now giving some good signs that it may be ready to move higher again tomorrow.
Market index futures: Tonight at 1:30 AM all three futures are again in the red with ES down a quarter percent. The star ES put in today was a reversal warning and took us right to the edge of the rising RTC from .January 5th. The overnight trade is now happening entirely outside the RTC. This is a bearish setup.
ES daily pivot: Tonight the pivot rose from 1316.00 to 1318.08. We made a failed attempt to break over the pivot at the close and have been drifting lower ever since. The movement of the pivot higher places us even further below it now. This is all bearish.
Dollar index: Today the dollar dropped 0.26% on a gap-down green candle that took it right to its lower BB. This is at least a suggestion that we may see a higher dollar on Friday and that would be bad for stocks.
Morningstar Market Fair Value Index: Yesterday the index actually moved up a notch to 0.94, a positive sign for stocks.
History: According to The Stock Traders Almanac, Friday has a slight historically bullish.edge.
And the winner is...
I have to say, I'm starting to get nervous. January is now nearly over and I've only had one losing day so far. In fact, this has been my best month ever. I'm up 7.75% YTD. And it's starting to remind me of last year when I also started out strong. In 2011 I was up 8.32% by February 10th. I then lost 2.5% over the following week. Clearly, gains of 8% per month are not realistically sustainable. That would be a a 96% annualized gain. Ain't gonna happen. Accordingly, I have started to scale back some of my positions. In the past week, I've sold my positions in GLW (two days before it dove), LOW, and F to raise some cash.
Let's not forget that last year January started off with a great run too, until the day before the last day of the month when the Dow dropped 189 points. I don't know if history will repeat itself, but I'm beginning to feel we're overdue for at least some sort of pullback. Right now, I see Friday going lower.
ES Fantasy Trader
Tonight we're still hanging onto our short from four nights ago. I think this trade is about to come in. Portfolio stats: the account remains $99,250 after 5 trades (3 wins, 2 losses)