Friday, March 22, 2013

Friday higher if ES breaks above pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher if ES break out above pivot, else lower.
  • ES pivot 1542.08.  Breaking above is bullish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night I called for the ES pivot to rule the day and it did.  ES tested the pivot twice before dawn and then dove under convincingly at 9:10 AM.  By 11 AM it was all over.  There was one brief vain attempt to break out again at 11:35 but it came to naught.  The markets all moved down after that and the Dow finished the day with a 90 point loss.  So now let's see where Friday may take us.

The technicals (daily)

The Dow: Thursday's red candle was almost a bearish engulfing pattern.  It demonstrated the Dow's continued inability to break out above 14,515.  It also drove the indicators lower, but we're still only halfway from overbought to oversold.  Right now, this chart's looking rather punky.

The VIXAfter looking pretty tired itself on Wednesday, the VIX made a remarkable recovery Thursday to close 10.42% higher.  But oddly enough, this green candle also prompted a bearish stochastic crossover.  The stochastic has been oscillating nicely since mid-January and these crossovers are usually a good indication of a top.  So I'm still looking for a move lower here.

ES daily
Market index futures: Tonight all three futures are higher at 1:00 AM EDT with ES up by 0.10%.  Technically, ES gave us a bearish engulfing pattern on Thursday.  But there's something bigger going on here.  This is now looking to me like a megaphone pattern.  You don't see these very often.  It's not perfect, but see if you don't think the basic idea is there - look at the alternating green-red-green-red, each larger than the one before.  (Click the chart to enlarge).  And since this one was entered from above, that's where we'd expect the exit to be eventually.

That little stub at the end there is the new candle developing in the overnight - and it's green.  The indicators have certainly come down far enough to support a move higher soon.  And note how close the new candle is to the edge of the descending RTC.  We just need to close above 1542 on Friday for a bullish setup.  1542, oddly enough, is also the new ES pivot.

ES daily pivot: Tonight the pivot drops from 1547.08  to 1542.08.  After spending most of the day below the pivot, ES now seems interested in testing it, being now just 1.25 points below.  Any break above would be bullish.  A rejection would be continued bearish.

Dollar index: I got this one wrong - the dollar did not move higher on Thursday, instead posting a small 0.05% loss..  This chart is now too disjointed to figure out - I pass.

Euro: The euro seems to be forming a symmetrical triangle just above its 200 day MA.  Being as it was entered from above, I'd look for an eventual break lower, though not necessarily Friday.  The euro has in fact been drifting higher all evening.  I'm not looking for much action here on Friday - unless all hell breaks out in Cyprus that is.

Transportation: Last night I wrote I wrote that Thursday would be "make or break day" for the trans.  Well it was break. I said that "the indicators, still overbought and declining, seem to favor more downside".  And we got it in spades Thursday as the trans tanked 1.62%. That's a bearish RTC trigger.  And with indicators continuing to fall steadily from overbought to oversold, it looks like more downside is possible.

Accuracy (daily calls): 

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      4      4           1        0.600    270

     And the winner is...

We're at an interesting juncture here.    There seems to be a lot of (not unjustified) short-term negativity over all the new brouhaha out of Europe.  But that's already driven many charts lower.  I'm also looking at that curious megaphone business in ES right now.  Tonight is almost like an inverse of Wednesday night so I'm going to make the same conditional call, only from the other side.  If ES can break out above its pivot of 1542.08 by mid-morning on Friday (and by that I mean 10 to 11 AM-ish Eastern) then we'll close higher.  Otherwise, look for another leg lower.  Of course if the market gets spooked by some new lunacy from Cyprus on Friday, then all bets are off.

ES Fantasy Trader

 Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13.  Tonight we stand aside because of the conditional call..


  1. This market has been SOOOO frustrating and I am sick and tired of hearing jeers from the Buy and Holders...

    Anyway, good luck with your analysis and trades Michele!

    1. That is quite true. It's been deceptively difficult with a lot of fake-outs lately. That's why I'm sort of hedging my bets with these conditional calls. And now with Europe starting to perk again, who the heck knows where we're going next.

      Anyway, thanks for reading!

  2. Thought I'd email you to say I appreciate your blog :), but then realized comments are open here! Thank you, I always find value and look forward to your posts. Have a great weekend.

    1. Hi Vikas and thanks for the kind words. It's always nice to hear from my readers.


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