Friday, July 12, 2013

Friday higher if pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher only if ES stays above pivot, else lower..
  • ES pivot 1666.42.  Holding above is bullish...
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains short at 1643.00.

Well calling Thursday was pretty much a no-brainer, as the Dow jumped 169 points after being juiced by the one-two combo of Uncle Ben and the BOJ (hey that would make a good band name).  So life goes on and we move on to Friday.

The technicals (daily)

The Dow: With the Dow enjoying its best day since June 7th, the rally rolls on.  Thursday's gain put us right back into the rising RTC as we closed just under the upper BB.  The indicators are all hopelessly pegged on overbought and therefore have lost their predictive value.  So there's still really nothing bearish about this chart.

The VIXInterestingly, although the Dow gained 1.11% on Thursday, the VIX only lost 1.41% - and did it on a green candle.  This traded entirely outside the descending RTC so that's now a bullish trigger.  And the support level I mentioned last night, 13.62, held up nicely, with the VIX opening at 13.57 and moving higher from there.  So although the lower BB continues to fall away rapidly, I'm thinking there's now a chance the VIX could go higher on Friday.

Market index futures: Tonight all three futures are slightly lower at 1:37 AM EDT with ES down by 0.06%.  A strong five day run in ES has brought it to its upper BB and kept it in its rising RTC, easily breaking resistance at 1633.  However, 1670 now appears to be a stumbling block and ES is looking a bit in need of a well-deserved rest.

ES daily pivot: Tonight the pivot jumps from 1649.50  to 1666.42.  Despite this big gain, ES remains above the new pivot, but just barely.  Still, as long as we do not break under, it remains a positive sign.

Dollar index: The dollar just fell out of bed on Thursday with a monster gap down for a 1.57% loss that put a convincing end to the current uptrend.  But even that was only enough to drive the indicators about halfway from overbought to oversold.  So while we now have this yawning gap that invites filling, there is no real support until 56.12.  That leaves this chart rather uncertain.  Maybe the euro will provide some clues.

Euro: After its monster pop in the overnight last night, the euro finished the day hanging onto enough gains to remain above the 200 day MA and form a  giant inverted hammer.  The overnight is now trading lower, down 0.17% and it looks like a test of the 200 MA is imminent.  With the heady heights of 1.3200 rejected, the euro could move lower on Friday.

Transportation: After taking a break on Wednesday, the trans motored higher again on Thursday, up a big 1.22% to remain in their rising RTC and closing just shy of their upper BB.  There are no bearish signs on this chart.

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      7      5           2        0.500    121
April      7      5      5           3        0.667    328
May        3      4      6           4        0.636     85

June       6      5      6           0        0.545    543

July       5      1      0           1        0.867    447

     And the winner is...

Although the charts appear to be slowing down a bit tonight, at least compared to the rip-snorting advances we've seen the past few days, I'm still not really seeing much serious pressure from the bears.  So it's kind of a toss-up.  I'm inclined to make this a conditional call, particularly in view of the PPI and Michigan sentiment numbers coming out on Friday.  So let's say this: if ES can manage to stay above its pivot by mid-morning then we close Friday higher.  But if ES gives up the pivot by then, then we close lower.

ES Fantasy Trader

Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13.  Tonight we go remain at 1643.00 and take some more heat.

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