Friday, November 1, 2013

Friday higher if ES pivot passed

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher only if ES pivot passed, else lower..
  • ES pivot 1755.08.  Breaking above is bullish..
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside

Logic prevailed as Wednesday night's bearish technicals translated into a 73 point loss for the Dow on Thursday.  So on this Halloween, we ponder whether this trick will be followed by a treat on Friday or more of the same.

The technicals (daily)

The Dow: Intraday, the Dow kind of meandered on Thursday but the candle ended at session lows as an ugly red marubozu.  Despite two straight losing days, we're still (just) inside the rising RTC, so it's too early to pull the plug on this rally.  But Friday is do or die for the Dow.  And right now, it's looking grim.

The VIXThe VIX continues to be plagued by indecision.  After Wednesday's monster gravestone doji, we got a big red spinning top on Thursday that belied the meager 0.73% advance.  That also left us overbought so while the general motion lately is vaguely upwards, it's by no means clear we're going higher on Friday.

Market index futures: Tonight all three futures are higher at 12:24 AM EDT with ES up by a modest 0.06%.  As bad as Thursday's gap-down red candle looked, it wasn't enough to drive the indicators oversold.  But it did drop us out of the rising RTC so that's a bearish setup.  The new overnight candle is forming as a harami, which is bullish, but you can't really read too much into half-baked candles.  Overall though, this chart continues to look bearish.

ES daily pivot: Tonight the pivot drops again from 1761.83  to 1755.08.  We're still below the new pivot but with ES stabilizing in the overnight, it's only by a couple of points.  So this remains bearish for the time being, but we'll have to watch for any attempts to break above.

Dollar index: Last night I wrote "more upside looks likely" for the dollar and .that paid off nicely with a 0.53% gap-up pop on Thursday.  We're around some resistance right now and there is that gap that may want filling.  The indicators are also now quite overbought but there's still not a clear reversal warning here so I'm going to just punt this chart tonight.

Euro: And last night I also wrote, "this chart looks continued bearish" which proved to be an understatement as the euro suffered its biggest drop on Wednesday since the start of July, down to 1.3592.  While this was enough to drive th3e indicators oversold, we're still nowhere near the lower BB and the stochastic is still not ready to start forming a bullish crossover.    So we remain in a downtrend and the overnight confirms that, down another 0.24% so far leaving this chart looking continued bearish.

Transportation: Last night I wrote "this chart too is now looking bearish" and indeed we dropped another 0.48% here on Thursday.  With indicators still (just) overbought, and no nearby support in sight, this chart continues to look bearish.

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  8      3      3           3        0.800    485
October    7      5      8           2        0.643    674

     And the winner is...

Friday is the first of a new month and while those are generally bullish, that isn't historically true for November, although the first week of November as a whole is positive.  Now while the charts continue to look bearish. they actually don't look as bad as last night.  I'll note too that the NYSE A/D line actually moved higher on Wednesday from a low level and the Hi-Lo index remains at 100 - not the sort of behavior you'd expect if you were about to fall off a cliff.

So there's enough doubt here to preclude a simple call for Friday lower.  Instead we'll start the new month off with a conditional: if ES can break back above its pivot of 1755.08 by mid-morning Friday, we'll close higher, else lower.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17  total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside.again.

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