Actionable ideas for the busy trader delivered daily right up front
- Friday higher, low confidence.
- ES pivot 1541.92. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader remains short at 1538.25.
Much to my surprise, the Dow's rise continued unabated on Thursday, gaining another 33 points. With the Dow now up five in a row and three consecutive record closes, how long can this go on? I'm beginning to wonder myself. We now interview the charts for their opinions.
The technicals (daily)
The Dow: Thursday's 0.23% advance keeps the Dow squarely inside its rising RTC and all the indicators pegged at overbought. It's looking a lot like January all over again. And the last three days weren't even reversal candles. I must say I see nothing bearish on this chart at all.
The VIX: And as the Dow rose, the VIX fell, this time down 3.47%, giving up support at 13.50. The VIX has no support now until 12.45. And the lower BB is all the way down to 10.44. I see nothing on this chart to prevent it from moving lower on Friday.
Market index futures:Tonight all three futures are slightly higher at 12:50 AM EST with ES up by 0.05%. On Thursday ES completely canceled Wednesday's spindly doji and instead continued its relentless climb up the upper BB, now at 1547.35. The developing candle for Friday is looking like a hanging man, but the night is young and reversal signs from ES have been worth bupkiss lately, so we'll take that one with a grain of salt. I do note that RSI has begun moving lower, now down to 92.42. So there's at least a hint of interest in moving lower here, but not much more than that.
ES daily pivot: Tonight the pivot inches up from 1540.258 to 1541.92. Despite some wandering in the evening hours, ES remains above the new pivot, so that's a bullish sign. But it's only by a point and a half, so we'll need to watch for signs of a breakdown here.
Dollar index:I blew this one too last night. The dollar ignored the morning star and dropped 0.47% on Thursday to close almost on the edge of the rising RTC. With the last five days now looking like congestion more than anything else, we'll want to see if we move lower on Friday, which would signal a bearish RTC setup
Euro: Meanwhile, the euro took a big bounce on Thursday, leaping right out of its descending RTC for a bullish setup with a bullish engulfing pattern. The euro now looks poised to move higher on Friday.
Transportation:At least I got this one right when I wrote last night "there's a good chance of this chart going lower on Thursday." And so it did, down 0.48%. Not much perhaps, but still a divergence on a day when the Dow was up. It also closed outside the rising RTC for a bearish setup and gave us a completed bearish stochastic crossover. So I'd say odds are good for lower here again on Friday.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
January 5 7 6 3 0.533 -101
February 3 4 5 6 0.692 131
March 2 2 1 0 0.500 97
And the winner is...
I almost hate to say it, being as I'm short the ESFT and holding some SPXS for real, but the charts really don't look as bad tonight as they did last night. The ability of the market to rise on Thursday in the face of mild negative signs makes me think that there's still more upside available, given the improved technicals. Therefore, I'm calling Friday higher.
ES Fantasy Trader
Portfolio stats: the account remains $99,375 after 7 trades (6 for 7 total, 3 for 3 longs, 3 for 4 short) starting from $100,000 on 1/1/13. Tonight we remain short at 1538.25 and take the heat.