Actionable ideas for the busy trader delivered daily right up front
- Friday lower - low confidence.
- ES pivot 1392.00. Holding below is bearish.
- Next week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader remains short at 1386.75.
Well so much for opting for historical precedent instead of paying attention to what the charts were saying. Turns out the charts were right in suggesting more upside and I was wrong. The Dow did finally manage to string together more than two winning days in a row, this time with a convincing 114 point pop that smashed the 13K resistance level and the 13,115 level. Now we need to wonder, can there be yet another day of upside in store or was this the blow-off top? Let's round up the usual suspects and search for clues.
The Dow: The Dow's three day run has a look and feel of going exponential. This sort of accelerating run-up always makes me nervous. And although we broke through the 13,115 resistance, there's another line at 13,260 and then the upper BB at 13,307. RSI has also turned lower now. However, there's no reversal warning on the stochastic yet. This chart looks like it still has a bit of moxie to make one more push higher, but not by much.
The VIX: The VIX fell another 3.45% today to close at 16.24, just above the top of last month's consolidation range. While there's no sign of a reversal yet here, the VIX has been acting pretty jumpy lately, so it's not out of the question. RSI did go oversold today and momentum turned positive. The futures are also near support and their lower BB.
Market index futures: Today's ES gain wasn't quite as pronounced as the Dow's and featured a 10 point sell-off after the close. This gives the overnight candle the look of a dark cloud cover. With all three futures down at 1:22 AM EDT and ES lower by a not insignificant 0.41%, this chart seems to be ready to move lower. A look at the hourly ES chart supports this idea, where the late afternoon dump broke the rising RTC for a bearish trigger.
ES daily pivot: Tonight the pivot climbs again from 1381.50 to 1392.00. That now places us below the pivot and ES is continuing lower - a negative sign for Friday.
Dollar index: Yesterday I spoke of the dollar's support at its 200 day MA. Today that support was tested and it held, with the dollar forming a bullish hammer. Its indicators have now bottomed at oversold so I'm thinking we're likely to see the dollar move higher on Friday - bad for stocks.
Transportation: Uh oh - after moving up in sync with the Dow for two days, today the $TRAN was decidedly down, losing 1.06% on a bearish engulfing pattern. Add in that four of my Fave Five indicators went lower today and it sure looks like this index is going lower Friday, and that's bad for stocks.
History: According to The Stock Traders Almanac, Friday is historically actually fairly bullish.
Month right wrong no callApril 7 7 2
And the winner is...
Hmmm - I'm not really seeing all that much negativity on the charts except for ES, which is looking like it wants to go lower. And with $TRAN and the dollar guiding lower and the euro moving higher, I'd have to say there's a good chance that Friday will close lower. It's been a difficult month to call for sure. Perhaps my call for a lower Thursday was just a day too early - I've done that more than a few times in the past.
ES Fantasy Trader
Portfolio stats: the account remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1 Tonight we are remaining short at 1386.75.
Reminder - you can now follow these entries and exits live on Twitter @nightowltrader. And let me note that I always buy on the ask and sell on the bid to make things more fair. This way there's no question that the trade would have executed for real. But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post. Also keep in mind that these trades run with no stops and no preset targets.