Actionable ideas for the busy trader delivered daily right up front
- Friday higher if ES pivot passed.
- ES pivot 1329.67. Holding under is bearish.
- Next week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader standing aside.
I love it when a plan comes together. Every chart I looked at last night behaved exactly as I expected today. And we finally got the decline that seemed to be brewing for a while with the Dow shedding 251 points in its second worst day of the year.
The Dow: Last night I said about the Dow, "something's going to break here soon.". And today it sure did, with a relentless day-long decline down nearly 2% to close at 12,574 at session lows. The bearish RTC trigger went off today, though a new downtrend is not yet in effect. Even with today's big drop, the indicators are still all just starting to come off overbought. Further downside would not be out of the question. The only problem is that today's close stopped right on a big support line, so continued losses on Friday is not a given.
The VIX: Just as the Dow tanked today, the VIX jumped, up almost 16.5% to close just over 20 again. This move took it just past the right edge of its descending RTC for a bullish setup. One more day higher would be the bullish trigger. And note that the stochastic made a bullish crossover today. And we still have a long way to go before reaching the upper BB.
Market index futures: While the Dow and VIX may be suggesting more downside on Friday, the futures, perhaps surprisingly (in view of this afternoon's bank downgrades) are actually all in the green at 1:29 AM EDT with ES up 0.23%. Today's long red candle was a bearish setup and trigger all rolled into one as ES crashed out of its rising RTC. But even that wasn't enough to send the indicators to oversold, implying that there's still some downside potential here.
ES daily pivot: Tonight the pivot takes a dive from 1348.33 to 1329.67. So that still leaves us under the pivot but a lot closer than before midnight. An eight point spread is within striking distance, though ES is showing no inclination to strike just yet.
Dollar index: Last night I wrote "I'd say the dollar's going higher Thursday". Right again, as the dollar jumped almost a full percent trading outside its descending RTC for a bullish trigger, implying more upside to come. Its indicators are also all just coming off oversold, leaving plenty of room to run higher.
Transportation: And finally, recall that last night I wrote "This chart too is looking ready to roll over.". And so it did, dropping almost 2% today. And that took us right out the rising RTC for a convincing bearish setup. One more down day here and we have a bearish trigger. Supporting this are indicators that have all peaked at overbought now.
Accuracy (daily calls):
Month right wrong no call conditional batting average points trade
April 7 9 2 .438
May 10 7 3 2 .632
June 5 4 5 1 .600 207 +$167
Reminder: "points" is the number of Dow points gained on days I was right, less points lost on days I was wrong about the direction of the close. "Trade" is the results from trading 100 shares of DIA from the open to the close on days I call the close higher, or DOG on days I call the close lower.
And the winner is...
The net bias tonight seems to favor the bears once again. All except the futures which are up a bit. But the typical market reaction following a big down day like today is either a small DCB or some form of small doji. So because I don't think we'll see a significant move either way on Friday, I'm pretty much sitting on the fence. But this may be a key pivot day. So let's do a conditional and say that if ES manages to break above 1329.67 Friday morning, we'll close higher, else lower.
ES Fantasy Trader
Well last night's trade was profitable for 5.25 points, even though I got out way too early and left a pile of cash on the table. But I'd always rather have that than watch a profit turn into a loss.
Portfolio stats: the account rises to $126,750 after 45 trades (34 wins, 11 losses) starting from $100,000 on 1/1 Tonight we stand aside absent any good bias one way or the other.
BOT 10 ES false SEP12 Futures 1338.75 USD GLOBEX 11:24:10SLD 10 ES false SEP12 Futures 1344.00 USD GLOBEX 01:02:53
CUA (Commonly Used Acronyms)
BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date
Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction. All trades listed here are presented only as examples of the author's personal trading style. Investing entails significant risk and trading entails even greater risks. Deal with it.