Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Friday uncertain.
  
• ES pivot 1754.00.  Holding below is bearish..
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

We had a bit of excitement here at Night Owl Central last night revolving around a corrupted Windows directory.  Suffice it to say that if you're missing a few files out of the 28 bazillion in there, if they're the right files then you're dead in the water.  Recovery eventually involved pulling the boot drive, attaching it to another PC, and copying the entire Windows backup from the file server back onto the drive.  That took hours.  What a pain.  But nothing can stop the Night Owl for long and we're back, baby!  So we didn't miss much - we're a bit lower than we were two days ago.  But let's see how the intervening candle changed the picture for Friday.

The technicals (daily)

The Dow: The Dow on Thursday gave back all of Wednesday's gains and then some to form a classic bearish engulfing pattern after just touching its upper BB.  That, plus a new bearish stochastic crossover and declining indicators all looks bearish for Friday.

The VIX:  After moving lower on Wednesday, the VIX had a big 9.79% pop on Thursday to bring it right back to recent resistance and break it decisively out of its descending RTC for a bullish setup.  We also got a bullish stochastic crossover so it looks like more upside is possible.  A test of the 200 day MA at 14.40 is not out of the question for Friday.

Market index futures: Tonight all three futures are higher at 1:09 AM EST with ES up by 0.13%.  A big loss on Thursday dropped us out of a wide rising RTC for a bearish setup and sent the indicators lower almost to oversold.  After a big move like this it's not uncommon to see a DCB and that's what the overnight is looking like right now.  Note too the presence of support at 1742.

ES daily pivot: Tonight the pivot drops from 1763.75  to 1754.00.  That still leaves us below the new pivot by a fair amount, so that's bearish.

Dollar index: After equivocating some on Wednesday the dollar put in a funny gap up on a tall red candle that opened on the upper BB and moved lower from there.  With indicators still overbought, more downside is possible..

Euro: On Thursday the euro put in a tall hammer that pierced the lower BB but that isn't getting confirmed i the overnight, now down another 0.28%.  Though indicators remain oversold, this doesn't bode well for the euro.  But obviously either this or my dollar call is wrong.  Both charts look bearish to me, but one of them will be higher on Friday.  I'm a bit more confident in the dollar.

Transportation: The trans got slammed Thursday with a deep red marubozu that broke support at 6977 on accelerating losses.  Indicators are now near but not at oversold.  With no reversal candle and no further support til 6737, this chart looks 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
November   2      2      0           0        0.500    122

     And the winner is...

Right now the charts are still looking technically bearish.  However, there's a slew of economic news coming out on Friday along with some yakking from Fed heads, including Uncle Ben.  Any of these has the potential to derail the technicals, so it's best to just let this one play out.  Therefore, the call is for Friday uncertain.  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.