Actionable ideas for the busy trader delivered daily right up front
- Friday uncertain.
- ES pivot 1516.42. Holding below is bearish.
- Next week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Well Thursday ended up being a "noise" day. You can draw whatever conclusions you want from a Dow lower by 9.5 points and SPX up all of one point, and they don't amount to a hill 'o beans. I guess technically my conditional call for Thursday was wrong, because ES didn't regain its pivot until just after noon, though once it did we did finish higher on the day (right, by 0.07%). So, bottom line, the market remains in some strange sort of limbo, with neither side able to pull it their way. And with options expiration coming right up, it's not clear that the charts will have any answers either but we'll run them down anyway, just in case.
The technicals (daily)
The Dow: I'll admit I'm not sure what to make of today's action.We did trade outside the rising line defining the ascending triangle, so that could be viewed as bearish. But with this doji-type candle, it indicates that the bulls just seem to keep coming back despite the best effort of the bears to knock 'em lower. With the indicators all middling, the stochastic threaded out, and no RTC channel, there is really no guidance at all on this chart. However, if you move out to the weekly chart, it's looking fairly bearish, with last week's hanging man trading outside a rising RTC for a bearish setup and this week forming a spinning top so far.
The VIX: The VIX situation is just as confused. We took a big pop out the gate and then gave it all back by the end of the day to finish down 2.47% leaving the VIX just above its support line at 12.50 and still in a descending RTC. About the only take-away here is that you can't look for a big move lower in the market with the VIX at these levels.
Market index futures:Tonight all three futures are lower at 1:00 AM EST with ES down by 0.20%. Although ES put in a green candle on Thursday and remains inside it rising RTC, it has been having trouble making headway past 1518 the past three days and the overnight candle is forming up as a bearish engulfing pattern. Overall, this is the weakest looking chart of the bunch.
ES daily pivot: Tonight the pivot dips from 1517.42 to 1516.42. We broke under the old number at 10:45 PM but ES now seems to be interested in revisiting its pivot. When ES is rising and just half a point below the pivot, it merits watching. You know the drill - break-through, bullish, rejection, bearish.
Dollar index:The dollar remains in a declining RTC despite today's 0.46% advance, and with indicators still overbought, I have to think it has more downside on Friday. .
Euro: Last night I wrote "This makes me cautious about calling the euro higher Thursday" and that caution proved justified as the euro put in a big red marubozu on Thursday to return to its descending RTC, thus canceling the bullish setup. It's trying to perk up a bit in the overnight but who really knows. This chart is not looking very bullish to me.
Transportation:In an interesting divergence, the trans finished up 0.31% on Thursday to remain in their rising RTC. It did form a hanging man, but five of the last 11 candle shave been reversal signs and none of them has panned out. So until I see the trans exit the rising RTC, I'm not calling them lower.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
January 5 7 6 3 0.533 -101
February 2 2 2 3 0.714 140
And the winner is...
With options expiration coming up and such lackluster action lately, there's no point in making a call for Friday. I'll simply note that Friday is historically fairly weak. However, I'll also note that if ES breaks above its pivot, we could close higher, but anything beyond that is just pure speculation. So I'm just going to call Friday uncertain.
ES Fantasy Trader
Portfolio stats: the account remains at $98,750 after 5 trades (4 for 5 total, 1 1 longs, 3 for 4 short) starting from $100,000 on 1/1/13. Tonight we just continue to stand aside.