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- Friday higher, low confidence.
- ES pivot 1410.17. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias uncertain.
- ES Fantasy Trader standing aside.
It was sure looking good for my call lower early on Thursday morning but then the market reversed and wobbled it way higher for the rest of the day to finish up 40 points. It was an interesting move that we'll discuss in the Dow section below as we try to do better on Friday.
The technicals (daily)
The Dow: Everyone knows you can't fight the Fed and you can't fight the tape either. I've been thinking this market was going lower for days now. Only it's not. And today's close was important not just for being up but also for finally cracking the 13,050 resistance zone that had been stopping the Dow for a week now. We also executed a bullish stochastic crossover from a high level today. I've noticed that whenever that happens, we seem to be good for a few more days of upside even thought he indicators are all still overbought. And today's move kept us back inside the rising RTC.
The VIX: At least I was right in not calling the VIX lower today, as it gained 0.73% in an unusual move up on a day when the market was also up. Today's doji ended right on the right hand edge of the rising RTC for a bearish setup. It also caused a bearish stochastic crossover. And while it rose today, the VIX remained entirely within yesterday's candle. So I think now is the time to call the VIX lower for Friday.
Market index futures: Tonight all three futures are up at 1:13 AM EST with ES higher by 0.07%. This is a chart that just doesn't seem to want to fold and after back-to-back green candles, we're still getting more upside in the overnight. So despite overbought indicators, I can't bring myself to call this chart lower. Resistance remains in the 1418-1420 neighborhood but that still leaves a bit of room to run on Friday.
ES daily pivot: Tonight the pivot rises from 1406.58 to 1410.17. We were above before, and remain above the new pivot so that's bullish.
Dollar index: I did get this one right too, writing "My guess is that we could see a move higher here soon." The dollar delivered today with a 0.61% pop for a bullish RTC trigger and a completed bullish stochastic crossover with indicators just rising out of oversold. So all systems are go for more upside here on Friday. It's interesting though that the dollar, like the VIX, rose on a day when the market was up too.
Euro: And I got this much right last night too when I said "expect some more downside here on Thursday". We got plenty, with the euro taking its biggest one day loss since November 2nd. And there's more follow-through in the overnight, including a sudden 0.0015 cent loss in just 20 minutes as I write this. Anyway, the recent two week uptrend is now clearly over and I think there's more downside to come on Friday.
Transportation: Like the VIX, the trans gave us a doji today dropping just 0.09% but remaining above the 200 day MA at 5110 after a successful intraday test of it. And we also just formed a bullish stochastic crossover. And finally, we traded entirely outside the descending RTC so that's a bullish trigger. I'm fairly confident that the trans are going higher from here.
Accuracy (daily calls):
October 8 5 8 0 .615 208
November 7 5 5 0 .583 135
December 2 1 1 0 .667 34
And the winner is...
The charts are in a funny state lately. Take copper. It's put in three consecutive days of red candles but it continues to move higher as each day gaps up over the previous one. This is the sort of thing that vexes me no end. And the TLT's looking toppy too. I call this the rubber ducky market. You try to push it underwater but it just keeps popping back up. So with the Dow now having established support at the 200 DMA and broken resistance at 13,050, I think it's now going to take a poke at its upper BB at 13,173. Therefore I'm going to go out on a limb again and call Friday higher.
ES Fantasy Trader
Ugh, OK, that's it, I've had enough. I finally just had to throw in the towel on what was becoming a too-long running trade for an ugly 18.5 point loss. Like I said, you can't fight the tape.
Portfolio stats: the account now falls back to $188,750 after 73 trades (57 wins, 16 losses) starting from $100,000 on 1/1/12. Tonight we stand aside to regroup.
BOT 10 false ES DEC12 Futures 1414.50 USD GLOBEX 00:43:09