Actionable ideas for the busy trader delivered daily right up front
- Friday higher, low confidence.
- ES pivot 1503.58. Holding above is bullish.
- Next week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Well, it looks like it worked again. Last night's call was for a move higher if the ES pivot held up, else lower. Well at 10:10 AM we dove below the pivot and that was that. Dow down 42 points. End of story. QED. Now onward! We blitz the charts in an all-out assault to determine Friday's direction. Ooh rah!
The technicals (daily)
The Dow: After a small green hanging man yesterday, on Thursday the Dow gave us, yes, another hanging man, this one a big angry red one. But just like yesterday, we need confirmation and Wednesday's action doesn't cut it. So we're pretty much left where we've been for seven sessions now - range-bound. If you ignore the tails, the triangle formation still seems to be developing, but it's not really classical. But we also have a bearish RTC trigger, for what its worth. So we're pretty much remaining in limbo here without any clear direction either way. That's life.
The VIX: So turning to VIX-land, we see a gravestone doji. In fact the mother of all gravestone dojis. One that would make Morticia Addams proud. And contrary to what you might think. the GSD is actually a bullish reversal pattern. That said, we now have a new descending RTC going and falling indicators. On top of that, we stopped right on an S/R line so it's all pretty much a wash. I'll hazard a guess though that I don't think we're moving much higher here on Friday.
Market index futures: Tonight all three futures are higher at 1:06 AM EST with ES up by 0.08%. ES gave us a tall spinning top doji ton Wednesday as it continues to be stymied by resistance around 1510. However, the opens and closes of both of the last two days have been around the top of its latest consolidation range. By failing to revisit the 1495 area we were at last week, ES is showing some strength. It has also come down off overbought recently. So the selling pressure appears to be more like intermittent gusts now rather than a steady gale. But until it can break above 1510, I think we'll continue to remain range-bound. Accordingly, it's difficult to pick a direction on this chart. Too much noise, not enough signal.
ES daily pivot: Tonight the pivot dips from 1505.33 to 1503.58. After threading about the old number all evening, ES broke out just before 9 PM and the new lower pivot leaves us about four points above, a bullish sign.
Dollar index: I expected some rising action in the dollar on Thursday but I sure didn't think we'd see it blasting straight through its rising RTC with a big 0.61% gain that took it clear to its upper BB. .And with the indicators still not overbought, it looks like there could very well be some more upside available here on Friday. And it's interesting that even with this big move up, the Dow hasn't been all that negatively affected. Apparently, the party-goers are not yet ready to head for the exits.
Euro: And while the dollar had a big gain, the euro correspondingly had a big drop on Wednesday, establishing a new downtrend as its indicators continue their march towards oversold. It was unable to hold its five-minute pivot from last night and the new overnight candle continues moving lower, now down to 1.3402. This is something of a support line so we'll have to see if it holds on Friday morning. My guess is that after two relatively big down days, the euro may take a break or even a DCB.
Transportation: Interesting divergence here. The trans were up 0.24% on Wednesday while the Dow was down 0.30%. And oddly enough, the Dow was up Tuesday while the trans were down. And while the Dow appears to be just treading water, the trans continue to put in higher lows and testing resistance at 5884. This keeps them in a rising RTC with a continuation of the bullish stochastic crossover we saw four days ago. So while the hanging man is a reversal warning, the general gestalt here doesn't look all that bearish so I'm not convinced the trans will be moving lower on Friday.
Accuracy (daily calls):
onth right wrong no call conditional batting Dow-101
February 1 0 1 3 1.000 149
And the winner is...
With surprising strength in the trans, the futures all green and above their pivots in the overnight, a euro ready to rest after a long fall, copper finding support, bellwether IBM looking ready to move higher, the TLT in a continuing downtrend, and a VIX trending lower, it's looking like the correct technical call is for Friday higher. We do have a number of dojis around but they are warnings only and have not yet been confirmed. If we go lower Friday I'll be sorry I didn't wait for that instead of going out on a limb.. But I must add that I think we stand a chance of seeing some more downside early next week. That's all she wrote.
ES Fantasy Trader
Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 for 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13. Tonight with no clear direction we're going to stand aside once again.