Actionable ideas for the busy trader delivered daily right up front
- Friday higher, low confidence..
- ES pivot 1691.921691.92. Holding above is bullish.
- Next week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader going long at 1695.00.
Well Washington tried to dump some cold water on Thursday's rally but the Dow managed to finished 55 points higher anyway. This has some interesting implications for the technicals, so read on.
The technicals (daily)
The Dow: The Dow's 55 point move up on Thursday wasn't that dramatic but it was enough to exit the descending RTC for a bullish setup. Because the channel is so steep, we'd have to close below 15,122 on Friday to not get a bullish trigger, something that seems unlikely. Also, the stochastic is now clearly moving into position for a bullish crossover, either Friday or Monday by the looks of it. So this chart is now looking bottomy.
The VIX: What the heck's going on here? Once again, the VIX traded in a positive correlation with the market on Thursday, gaining 0.36%, exactly the same as the Dow. However, the candle was positioned largely below Wednesday's and the stochastic is just about to form a bearish crossover. And of course, once again, the 200 day MA acted as a roof on the VIX so it's looking like there's more downside to come.
Market index futures: Tonight the futures are mixed at 1:11 AM EDT with ES down by 0.01% but NQ up 0.08% and YM up 0.09%. On Thursday ES retraced all of Wednesday's losses and that was enough to exit its descending RTC for a bullish setup. The indicators are now officially oversold and the stochastic is within a hair of a bullish crossover. So for the first time in five days, this chart is looking positive.
ES daily pivot: Tonight the pivot rises from 1688.42 to 1691.92. Like last night we are very close to the new pivot, only tonight we're above it so this indicator is now bullish, but just barely. It won't take much to slip below the pivot so I'll be watching this closely on Friday.
Dollar index: The dollar remained in a nervous little trading range for the sixth day in a row on Thursday. We got a bullish RTC exit and the indicators continue to rise off oversold but the dollar continues to have trouble getting anything going. So my best guess is for just more sideways action here on Friday.
Euro: On Thursday the euro gave up most of Wednesday's gains in a move that dropped it back into its descending RTC, thus canceling the bullish setup. The overnight is just wandering but the bias now seems to be negative again.
Transportation: Unlike the Dow, the trans' gain on Thursday wasn't enough to exit its descending RTC, but it did provide a bullish harami candle. So we have at least a reversal warning, but the bull case isn't as strong here as it is for the Dow.
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 3 4 6 4 0.636 85
June 6 5 6 0 0.545 543
July 10 2 4 4 0.875 486
August 11 3 6 2 0.813 687
September 7 3 3 3 0.769 356
And the winner is...
After some faint stirrings of a reversal last night, I'm now getting some more solid indications that the market is ready to move higher. The NYSE A/D line has swung positive again and the SPX Hi-Lo index has also moved higher. And last but not least, Dr. Copper exited his own descending RTC and so looks ready to move higher too. So all signs seem to point to the logical conclusion that we will close Friday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $110,000 after 16 trades (12 for 16 total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13. Tonight we go long at 1695.00, having found what looks like a trend change.