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- Friday higher, low confidence.
- ES pivot 1719.17. Holding below is bearish.
- Next week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1695.50.
The market was unable on Thursday to push further into record territory, instead spending most of the day just slowly dribbling lower and taking my prediction along with it. Not much excitement compared to Wednesday, that's for sure. So let's move on to yet another Friday as the treacherous month of September rolls on.
The technicals (daily)
The Dow: The Dow's lackluster 40 point down candle on Wednesday doesn't do much for me. It's not really a dark cloud cover or any sort of doji, and it's still well inside the rising RTC. Just two things here: the indicators have started to come alive again, moving off extreme overbought, and we now have a new resistance line at 15,693. So while it looks like we might be in for a pause, it looked that way on the 12th too, and that didn't work out. The current environment is quite similar.
The VIX: I figured the VIX could go lower on Thursday but I was surprised at a 3.16% gap down. And of course it's unusual for the VIX to fall at the same time as the markets. So we now have an inverted hammer but we've yet to touch the lower BB, which is now falling away, currently 12.81. And there's also an unusual bearish stochastic crossover from a low level. Those are often good for a day or two. So my guess is that the VIX might just go lower again on Friday.
Market index futures: Tonight all three futures are lower at 1:23 AM EDT with ES down by 0.12%. With a doji on Thursday, the overnight peeling away from the upper BB and guiding lower, and the indicators beginning to move off extreme overbought, this chart is now looking bearish.
ES daily pivot: Tonight the pivot jumps again from 17111.42 to 1719.17. But that move let ES cross under the new pivot at midnight, so this one is now bearish.
Dollar index: Small DCB here on Thursday, good for 0.14%. The trend remains lower but we could be seeing a reversal next week..
Euro: The euro continued higher on Thursday, climbing the upper BB. The overnight candle is up another 0.03% and that leaves it just outside the rising RTC for a bearish setup. This suggests a possible move lower on Friday for the euro.
Transportation: Interesting divergence here as we gained 0.31% to the Dow's 0.26% loss on Thursday. This is particularly impressive coming on the heels of Wednesday's big move. So this one continues to look 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 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 5 3 2 1 0.667 239
And the winner is...
Tonight the charts are looking pretty uniformly bearish. However, Friday is a quadruple witching day, and the Dow is up eight in a row and nine of the last 10 according to The Stock Trader's Almanac. That is pretty good odds. So faced with this sort of contradiction, the only reasonable call is for Friday uncertain. See you again Sunday night!
ES Fantasy Trader
Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15 total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13. Tonight we remain short at 1695.50.
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you need to factor in the news..charts are really crazy.They set you up..these computers they use now,all the long/short info and trade the way they can make the most.Been watching your trading for months..you would have made a ton..if you traded to the other side of what your charts are telling you
ReplyDeleteSure - well the optimal strategy this year would have been to buy on January 1st and then just hold. The idea behind the ESFT is to make short-term swing trades. Since it's just paper trading, I take more risk than I would with my real money and clearly counter-trend trades have been quite risky all year so far. At least we're making some of that back today though.
DeleteI try to never use the word "could've" (along with "would've" and "should've") becasue they're not all that helpful. I just try to do the best I can every day.
As far as the charts go, I call the next day's close every day based on the charts and I post the results every night in my "Accuracy" section. I believe the results there indicate that technical analysis does work.
That's not to say the market isn't being manipulated. I'm sure it is. Just look at how gold shot up just *before* Wednesday's Fed announcement. But even shadowy figures still cast shadows and there is information to be gleaned from them.
Thanks for reading and happy trading!