Friday, March 15, 2013

Friday uncertain though technically bullish

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain, though technically bullish.
  • ES pivot 1554.08.  Holding above is bullish
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside

The market made quick work of two days of dojis as the Dow climbed once again on Thursday, this time adding on another 84 points to make it ten in a row now and yet another all-time record high close.  And so the party roars on.  So are any guests edging nervously towards the doors yet?  Doesn't look like it but let's check the charts for exit signs anyway - one never knows.

The technicals (daily)

The Dow: Thursday's 0.58% gain canceled the reversal warnings of two days of dojis here.  This is precisely why I refused to call a top the past two nights.  You don't catch the falling knife, and you also don't go for the, what's the opposite of a falling knife, a rising skyrocket?  All this green marubozu accomplished was to make this chart look bullish again and keep us right in the middle of a now 13 day long rising RTC.  One good thing about this - the longer RTC's go on, the easier it becomes to spot the exit - and we're nowhere near there yet.

The VIXLast night I wasn't ready to call the VIX lower again on Thursday, but that's where it went anyway, down another 4.48% in a move that averted an exit from the descending RTC.  Given this, and with no bullish pattern in sight and all support now gone, it would not surprise me at all if the VIX didn't visit its lower BB at 10.07 Real Soon Now.

Market index futures:Tonight all three futures are higher at 1:00 AM EDT with ES up by 0.06%.  The strong performance of ES on Thursday helped avert a rising RTC bearish exit.  In fact, tonight's candle is about the same as last night's at this hour - sitting right on the edge of the RTC.  But still no sign of a breakdown yet.

ES daily pivot: Tonight the pivot inches up from 1547.83 to 1554.08.  Once again, above before, above after, looking bullish.  Nothing new here.

Dollar index: On Thursday the dollar took a  substantial 0.34% close outside its rising RTC for a bearish setup.  As its indicators continue to slowly slide lower, it looks like we could see continued lower here on Friday.

Euro: The Big Sleep award of the week goes to the euro, which is still mired in a tight band centered about 1.3000 going back ten sessions now.  With the overnight inching higher after Thursday's early losses, it looks like just more sideways action here on Friday.

Transportation: And finally, the trans continue to outperform the Dow as they climb their upper BB.  Dow Theorists take note.  And the pause we got last week only dipped the indicators a little, thus putting some more gas iback into the tank.  So this chart is once again looking bullish.

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      4      3      2           0        0.571    212

     And the winner is...

Thursday held true to its historical role of outperforming, but Friday is triple-witching and much more problematic.  While the charts have all turned fairly bullish once again, I hesitate to call Friday higher because of all the expirations going on on Friday.  There's also a number of economic news items coming out that could move the market.  So while the market looks higher technically, in the real world I just have to call Friday uncertain.  I'd still not be putting on any shorts here just yet.  Best to stick with the long pants until the model struts the catwalk.

ES Fantasy Trader

Portfolio stats: the account remains at $92,625 after 8 trades (6 for 8 total, 3 for 3 longs, 3 for 5 short) starting from $100,000 on 1/1/13.  Tonight we stand aside in the absence of any apparent good overnight trend, as well as the inherent risks around triple-witching.

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