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- Friday uncertain.
- ES pivot 1647.25. Holding below is bearish.
- Next week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Well we finally did close lower on Thursday but it wasn't nearly as bad as I had been thinking it would be last night. After a big dump out the gate, the buyers reappeared and retraced all those losses as the day wore on, with a late-afternoon mini-dip finally putting us marginally back into the red. So two interesting candles in a row. What does this bode for Friday? Let's figure it out.
The technicals (daily)
The Dow: The Dow showed surprising resilience in bouncing back from its morning lows on Thursday. The net result was a tall spindly long-legged doji that in itself considerably diminishes the ongoing case for the bears. We did, however, close outside the long-running rising RTC, just barely, so that's a bearish setup. The indicators are also looking bearish now, having finally come off their extreme overbought positions. But Friday will tell the tale and we do need to see that confirmation of both the doji and the RTC before making any further assumptions on market direction.
The VIX: Last night I wrote "I'm guessing now that the VIX has no more than one up day left". ANd the VIX delivered just that, starting the day with a huge gap up, skipping its upper BB entirely and continuing right to its 200 day MA - and then bouncing right back off again like the sledgehammer gong at the country fair. The end result was an odd red marubozu suspended in space between the 200 MA and the upper BB entirely above Wednesday's action. It also drove the VIX overbought and moved the stochastic into position for a bearish crossover. It also formed a definite exponential run-up over the past four days and we know how those always end - lower. So all the signs are in place for a lower VIX on Friday.
Market index futures: Tonight all three futures are lower at 1:14 AM EDT with ES down by 0.17%. Wednesday provided us with a classic hammer but also a bearish RTC exit, officially ending the uptrend. In fact, I'm starting a new descending RTC right here. With the continued negative follow-through in the overnight and indicators continuing to fall towards oversold, this chart continues to look bearish for Friday.
ES daily pivot: Tonight the pivot dives from 1662.58 to 1647.25. Interesting action tonight. The sharply lower pivot allowed ES to move above it at midnight. Then ES took a quick dump below the new number but then just as quickly pushed back up again. As I write, ES appears to be threading about the pivot, not quite sure which direction to go. So until it decides, there's no predictive power here.
Dollar index: I was looking for a higher dollar on Thursday but it was not to be, with Thursday's real body trading entirely below Wednesday's for a big 0.78% loss on a fat little red spinning top. With this sort of choppy indeterminate action, there's no point in trying to make a call, so I won't.
Euro: The euro meanwhile is acting a little better behaved, regaining all of Wednesday's losses and then some on Thursday to close at 1.2933. That's a bit better than the plain sideways I'd been looking for, and with the overnight hanging around the upper end of that candle, plus rising indicators, further gains on Friday are possible.
Transportation: Once again we find the trans diverging from the Dow, ending Thursday up 0.21% to the Dow's 0.08% loss. The candle is also a classic hammer on increased volume. The indicators are now halfway back to oversold but momentum has actually turned higher already. So this chart looks set to move higher on Friday.
Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll. We continue to track the poll to see how well it performs.
Wk.# Week % Bullish % Bearish NightOwl Poll SPX Accuracy Poll
1 12/31 40 48 - - 1402 0/1
2 1/7 47 30 + + 1466 1/2
3 1/14 52 15 + + 1472 2/3
4 1/22 50 21 + + 1486 3/4
5 1/28 44 26 + + 1503 4/5
6 2/5 40 36 + + 1513 5/6
7 2/11 43 25 + + 1518 6/7
8 2/19 21 43 - - 1520 6/8
9 2/25 30 52 - - 1516 6/9
10 3/4 29 39 - - 1518 6/10
11 3/11 41 26 + + 1551 7/11
12 3/18 41 37 + + 1561 8/12
13 3/25 31 38 + - 1557 8/13
14 4/1 38 38 + x 1569 9/14
15 4/8 32 50 - - 1553 9/15
16 4/15 33 50 + - 1589 10/16 9/16
17 4/22 19 63 - - 1555 10/17 9/17
18 4/29 33 58 - - 1582
19 5/6 50 31 + + 1614
20 5/13 37 37 + x 1634
21 5/20 50 25 + + 1667
Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out. The "NightOwl" column is how I voted. The "Poll" column is how the majority of participants voted. Since the poll is for 30 days out, after the first four weeks we're able to see how well we did. This week we see that both the majority and I voted bearish four weeks ago, so we were both wrong. Therefore we continue the year with an accuracy of 10 for 17, or 57%. The poll as a whole meanwhile drops to 9 for 17 or 53%.
This week we see that after sitting on the fence last week, the majority decided to join me and vote bullish once again by a considerable margin. Only two other times this year has bullish sentiment been greater. I voted bullish once again because I'm still not seeing any meaningful trend changes on either the SPX weekly or monthly charts.
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 5 7 5 2 0.500 121
April 7 5 5 3 0.667 328
May 2 4 6 4 0.600 -17
And the winner is...
Here's the thing. We have the Dow looking not too bad, the VIX looking good (as in ready to move lower, implying good for stocks), ES looking weak, the trans looking strong and the currencies doing their own thing. And also Friday is the last trading day before Memorial Day. As usual, lots of people will be leaving early for the long weekend, so we can look for some twists and turns on light volume. So this one is just plain too tough to call, ergo Friday uncertain.
Happy Memorial Day to all. Reminder - I'm taking some time off next week though I do expect to post at least Monday night for Tuesday's session.
ES Fantasy Trader
Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13. Tonight we stand aside again with another "uncertain" call.