Friday, July 5, 2013

Friday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher, low confidence.
  • ES pivot 1618.92.  Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside..

Well that sure didn't take long.  Tuesday night I pointed out that the former leader of Egypt got booted exactly one day after he refused to leave and that the current leader had just made the same promise.  And this time it was deja vu all over again.  One day after Der Morsi swore he'd die before being kicked out, out the door he went.  OK, so much for Ringling Bros. Egypt & Bailey, let's move on to the serious stuff, like where Friday, that oddball session sandwiched between fireworks and the weekend might be headed.

The technicals (daily)

The Dow: The Dow is back in consolidation mode with the past week centered about the 15K level.  The last candle we have, from Wednesday's rump session was bullish engulfing, so taken at face value this is positive, although the stochastic is inching its way toward a bearish crossover.

The VIXPerhaps the most interesting chart tonight is the VIX which put in a big red marubozu on Tuesday belying it's relatively small 1.46% drop.  That broke support at 16.2 and left us hanging perilously above a big gap between there and 16.0.  And that's where I think the VIX is headed next, despite its oversold condition on the indicators.  And I'll note that VVIX has broken under its 200 day MA and has room to run lower itself before hitting either support or its lower BB.

Market index futures: Tonight all three futures are significantly higher at 1:19 AM EDT with ES up by an impressive 0.99%, courtesy of the ECB and their talk on interest rates.  Thursday's big green marubozu put a clear end to a week of indecision for ES and broke above resistance around 1612.  And although RSI is now pretty overbought, the stochastic is nowhere near forming a bearish crossover, so this chart looks positive for Friday.

ES daily pivot: Tonight the pivot rises from 1605.33  to 1618.92. After skyrocketing in trade on the Fourth, we remain well above the new pivot so that's clearly a bullish sign.

Dollar index: In shortened trade on Wednesday the dollar dropped 0.38% with a stubby spinning top putting the bearish RTC exit back on the table.  And with indicators now having clearly peaked at overbought and turning lower it looks like the dollar is ready to follow suit on Friday..

Euro: Meanwhile, the euro, which did trade on both Wednesday and Thursday continued to be stymied by resistance at 1.3028.  And it's now down big-time in overnight trading, off 0.86% so far.  With a sell-off of that magnitude already in place, I don't know how much more downside is left for the regular session Friday, although the daily trend remains down.

Transportation: The trans as a leading indicator are boding poorly for the market, down 0.31% on Tuesday and confirming the latest rising RTC exit.  With overbought indicators and the stochastic inches away from a bearish crossover, this one looks more likely to go lower than higher on Friday.

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       0      1      0           1        0.500    -43 

     And the winner is...

Trading is likely to be choppy on Friday sandwiched as it is between a holiday and the weekend.  The futures are pointing to a big gain but we've got a bunch of employment numbers coming out.  My guess is that even if those are bad (which means good), that won't be enough to override the ECB news.  So with most of the charts looking positive, I'm just going to go ahead and call Friday higher.

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 stand aside again.  It's one of those nights where the big move happened before I got around to it so we'll just have to let this bus go by.

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