Actionable ideas for the busy trader delivered daily right up front
- Friday higher if ES stays above pivot, else lower.
- ES pivot 1588.42. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
Once again, ES broke over its daily pivot right at the open and that was that - we finished Thursday higher with the Dow gaining another 131 points thanks in good measure to the ECB. Hey, we'll take 'em any way we gets 'em. And with that, we march on to yet another Friday, chartwise that is.
The technicals (daily)
The Dow: On Thursday the Dow very nearly erased all of Wednesday's losses. Resistance at 14,840 remains an issue though RSI has now come off overbought. The stochastic is all threaded out and there's no RTC going, so I've got no guidance on this chart for Friday.
The VIX: And the VIX fell right back into the center last week's consolidation range. The indicators have come off oversold but appear to be stuck halfway to overbought. And there's not RTC here either, so I'm drawing a blank on this chart tonight.
Market index futures: Tonight the futures are little changed at 1: 00 AM EDT with both ES and YM absolutely dead flat but NQ up 0.06%. Like the Dow, ES retraced nearly all of Wednesday's losses on Thursday. But we traded outside the rising RTC for a second day so that's a bearish trigger. Still, ES doesn't seem to be in a hurry to move any lower just yet. In fact, money flow is actually continuing to rise.
ES daily pivot: Tonight the pivot inches up from 1582.92 to 1588.42. .Even this gain was not enough to put ES below the new pivot, so this sign remains bullish.
Dollar index: Last night I wrote "I wouldn't be surprised to see the dollar bounce off the 200 MA on Thursday.". Well on Thursday it took an ECB-fueled rocket ride with a 0.93% gap up to pop right out of its descending RTC for a bullish setup. This move also formed a bullish stochastic crossover and caused RSI to bottom at oversold. This all points to continued higher, though we may take a brief pause on Friday after such a big move on Thursday.
Euro: Last night I had a whole list of factors that made me think "the euro is headed lower on Thursday". And sure enough, the euro took a big dump on Thursday, falling clear out of its rising RTC for a bearish setup, completing a bearish stochastic crossover and driving the indicators off overbought. This all points to more downside, though as with the dollar case, we could see a pause or even a small gain on Friday. The overnight is in fact currently up 0.12%.
Transportation: Unlike the Dow, the trans only managed to retrace half of their previous losses on Thursday. A second day of trading outside the rising RTC is a bearish trigger and that is supported by declining indicators. This seems to favor the downside for Friday, though not very convincingly.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
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 0 0 0 2 1.000 0
And the winner is...
Thursday was definitely news-driven, though some of the technicals worked anyway particularly in the currencies. Friday promises more of the same, with a slew employment numbers coming out. The general buzz seems to be that these may actually be BTE. That alone could push the market higher again, though a miss would be sure to drive it lower. Given the paucity of guidance in the charts tonight (possibly a reflection of this uncertainty), I'm going to make a third conditional call in a row: if ES remains above its pivot of 1588.42 by mid-morning Friday, we'll close Friday higher. If on the other hand, ES dives under the pivot it the wee hours and is unable to regain it by mid-morning, we're closing lower. That's all she wrote.
ES Fantasy Trader
Portfolio stats: the account now rises to $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13. Tonight we stand aside again in view of the conditional call.