Actionable ideas for the busy trader delivered daily right up front
- Friday uncertain, topping day possible.
- ES pivot 1464.00. Holding above is bullish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
|Does the J stand for "joke"?|
Will someone please tell me Emperor Nerobama's not hiring a guy who signs his name as a doodle to be the Secretary of Treasury. Actually, that can't really be his signature. Even doctors write better than that. My German Shepherd writes better than that. I think he was simply trying to get his pen to start putting down ink and by the time he finally realized it was in fact going, it was too late and then he couldn't find the WhiteOut. Yeah, that must be it. What the heck.
With an 81 point gain on Thursday, the Dow finally broke out of a five day trading range. But very little has changed in that time, indicator-wise. Which kind of leaves us in a pickle because the longer this goes on, the harder it becomes to tell if this move is for real or just another fakeout. Maybe a review of the charts will help shine some light on this conundrum. Or maybe we're just drawing curli-ques.
The technicals (daily)
The Dow: After starting the week off with a fakeout breakdown, the Dow has rebounded and now broken above the upper end of its recent range with a close at 13,471. In addition, both money flow and OBV have put in a bottom and turned upward. However, the upper BB lies just overhead at 13,532 and we remain quite overbought. So given that we've finally broken out of the range, I'm thinking there's fairly clear sailing now at least until the upper BB but we may get a pullback after hitting that.
The VIX: The VIX has fallen and it can't get up. It's trying awfully hard, but keeps moving lower, this time by 2.32% even though it put in two consecutive green candles. The indicators are all lower than I've seen them since October 2011 and the VIX has been cut nearly in half in just eight sessions. With today's inverted hammer, you've just got to think a reversal is coming, but then again so's Christmas. I'll believe it when I see it.
Market index futures:Tonight all three futures are basically flat at 1:04 AM EST with ES dead even and both NQ and YM down all of 0.01%. After posting an impressive 0.89% gain on Wednesday, ES has actually been drifting lower since around 6 PM giving the new candle a developing dark cloud cover appearance. RSI has also peaked at overbought and is now headed lower. I don't know if this is the start of a larger reversal, but we may be in for a pause or a move lower here on Friday.
ES daily pivot: Tonight the pivot bounces from 1455.50 to 1464.00. We were above before and remain so now but the distance has narrowed to just three points. While this is de facto bullish, the pivot is now in play and we'll want to watch for attempts to break below it.
Dollar index:After a bunch of directionless trading, the dollar absolutely cratered today, with the $USDUPX dropping a whopping 1.07%, it's biggest one-day decline since August 3, 2012, probably after traders got a look at Jacob Lew's signature. This move is driving the indicators off overbought and it looks like further downside is possible Friday.
Euro: And similarly, the euro put in a huge green candle today to bring it to 1.3259, right at the resistance that stopped it last month. Despite this, the indicators are not yet overbought and we're inching higher still in the overnight. But we'll have to wait and see if the euro can break above this strong resistance line or if it's going to try to retrace Thursday's big jump. It's too risky to predict from here.
Transportation:I commented last night that this chart no longer looked very bearish and today we got another advance, this time for 0.51%. We're now at levels not seen since July 2011 and are now quite overbought. And like the Dow, the upper BB is nearby at 5608. So with two green candles no signaling any reversal, I'd say we're going to have a look at the upper BB and then maybe reverse.
Accuracy (daily calls):
And the winner is...
With charts still looking fairly bullish but also near various resistance lines, I think Friday may be a topping day, possibly a doji. I'm definitely not expecting another big move higher. And it's too soon to tell if today's move was a breakout or a fakeout. Accordingly, I'm going to just call Friday uncertain. The ES pivot should be illuminating. IF we break below it by mid-morning, that increases the odds for a lower close.
ES Fantasy Trader
Portfolio stats: tonight the account remains at $103,750 after one trade (1 for 1 total, zero for zero longs, 1 for 1 short). Tonight we stand aside again in the face of a lack of good guidance.