Actionable ideas for the busy trader delivered daily right up front
- Friday higher only if ES breaks above pivot and stays there, else lower..
- ES pivot 1625.58 Breaking above is bullish.
- Next week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Well, it looks like my trusty ES pivot predictor finally failed me on Thursday. ES stayed above its pivot until well after noon, but the market finished lower anyway, so that's a miss. Still, the Dow was down less than 23, so it wasn't too bad. Now let's see where we might end the week.
The technicals (daily)
The Dow: Last night I talked about how there were no reversal signs on this chart. Tonight there are, in the form of Thursday's red spinning top and a stochastic that's just about the form a bearish crossover. Thursday was also the first day in five that we didn't close on or above the upper BB. We're still in a rising RTC though, so the uptrend remains intact. Burt there's now at least a chance of a move lower on Friday here.
The VIX: Last night I also wrote that "the VIX has a good shot at moving higher on Thursday", and it cooperated, gaining 3.71% on an asymmetrical spinning top. So with the highest close in four days taking us out of the recent trading range and a completed bullish stochastic crossover, I'd say the VIX could add on to its gains on Friday.
Market index futures: Tonight all three futures are slightly higher at 1:28 AM EDT with ES up by 0.05%. The drop in ES on Thursday served to complete a shallow bearish stochastic crossover and drove RSI to highly overbought (92.47). But it wasn't enough to drop us out of the rising RTC, so the trend remains intact. The overnight is hovering right on the edge, but it's still too early to call. However, ES does appear to have peeled off its upper BB finally, so the overall tenor of this chart has now turned bearish.
ES daily pivot: Tonight the pivot inches up from 1625.08 to 1625.58 in an unusual move considering the SPX closed lower on Thursday. But after breaking above the pivot right at Thursday's close, we just broke back under as I write this. Unless ES can get back above the new pivot, that will be a bearish sign for Friday.
Dollar index: The dollar was the big winner on Thursday, with a major 1.13% jump. This jolly green marubozu confirmed Wednesday's hammer in a big way and drove the indicators into overbought territory. But there's no resistance until 57 on the $USDUPX and the upper BB is at 57.15, so there's still a bit of room to run higher from 56.85 on Friday.
Euro: And of course the euro mirrored the dollar's gain by tanking on Thursday, falling all the way back to 1.3019 on a tall red marubozu. It's retracing a bit of that, up 0.22% in the overnight but we remain below the pivot and the indicators are not yet down to oversold. Still, the euro's tendency lately has been to do the DCB thing or at least pause after one big down day, so that's what I'm expecting Friday.
Transportation: Wednesday's hanging man was confirmed on Thursday with a 1.13% fall on a red marubozu. This move also took us out of the rising RTC for a bearish setup, turned RSI downward from overbought, and completed a bearish stochastic crossover. So all signs now point to continued lower on Friday.
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 1 1 1 4 0.833 26
And the winner is...
Although the overall mood of the charts seems to be more bearish tonight than last, I am concerned with the attempt ES is making to break back above its pivot indicating a lack of interest on the part of the bears to knock 'em any lower. Although it doesn't always work, as Thursday showed, it's a fairly consistent play, and I'm four for five with it this month so far. So we go back to the well one more time and make another conditional call: if ES can break above its pivot and stay there by mid-morning Friday, we'll close higher. If not, we close lower.
1:41 AM Update: ES has now in fact broken back above its pivot. This is an encouraging sign for Friday.
ES Fantasy Trader
Portfolio stats: the account remains at $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 because of the conditional call.