Actionable ideas for the busy trader delivered daily right up front
- Friday uncertain.
- ES pivot 1391.08. Holding below is bearish.
- Next week bias uncertain technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
Last night I was pessimistic about Thursday unless the ES pivot held. It didn't and so down we went, with the Dow shedding 62 points in the process. Whither Friday? Read on...
The Dow: Yesterday's dragonfly doji was confirmed today with a long red candle that finally moved the indicators off their extreme overbought levels. Offhand, this chart looks ready for more downside. The only caveat is that the Dow has been finding some good support at 13,200 lately. If this line isn't respected Friday, look for lower still.
The VIX: The VIX gained 4% today on a decent green candle as I expected it might. With indicators still just coming off oversold, there's nothing here to suggest the VIX won't go higher Friday, which would be bad for stocks.
Market index futures: At 1:26 AM EDT we've got all three futures just turning positive with ES up 0.05%. The pattern lately has been for small move following big declines, and we've now had two down days in a row. The indicators are still transiting from overbought to oversold, so I wouldn't expect any big gains Friday, but the downside looks limited too..
ES daily pivot: Tonight the pivot drops from 1397.17 to 1391.08. With ES basically flat in the overnight so far, that puts us about twice as close to the new pivot as before. Still not a particularly bullish sign though.
Dollar index: I did get this one right as the dollar gained 0.12% today. The dollar has now managed only one green candle in the last 14, giving the impression of not really wanting to move higher. Meanwhile the euro is giving some good signals of moving higher Friday, which would move the dollar lower and be good for stocks.
Transportation: The trans did not go higher today as I thought they might, instead completely giving back yesterday's gains. The overbought indicators suggest more downside to come, but with the $TRAN unable to put together more than one down day in a row since April 9th, I'm cautious about this.
History: According to The Stock Traders Almanac, Friday is historically quite bearish - almost as bad as today was.
Month right wrong no callApril 7 9 2 May 2 1
And the winner is...
With both the Dow and ES sitting right on support levels, we need to see if they're going to respect them on Friday morning. A break below and we'll be looking at a lower close. Respecting Dow 13,200 and ES 1385 though could mean a higher close. I suspect the catalyst will be the jobs numbers. Since I have no way of telling what they may show, I'm going to have to take a pass tonight so no call for Friday. Maybe I'll give myself a day off. It's good to be retired :-) Happy trading!
ES Fantasy Trader
Today our long running short trade finally became profitable and I decided to cash out just before 9 PM. It took a while, but patience paid off in the end. It was admittedly only a 1.75 point gain, but considering how much heat we took on it, it was nice to get anything out of it at all.
Portfolio stats: the account now rises to $142,625 after 34 trades (27 wins, 7 losses) starting from $100,000 on 1/1 Tonight without a discernible edge, we're just going to stand aside.
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.
BOT 10 ES false JUN12 Futures 1385.00 USD GLOBEX MAY 3 20:52:26