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- Friday uncertain..
- ES pivot 1605.17. Holding above is bullish.
- Next week bias higher technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
Once again the technicals prevailed and the Dow gained another 114 points so I'm pleased. Now as the week, the month, the quarter and the half all wind down, let's see if we can figure out Friday.
The technicals (daily)
The Dow: Thursday's nice green candle completed a textbook-perfect bullish three white soldiers pattern. Ooh rah! The indicators are still just coming off oversold, the bullish stochastic crossover is clearly established, we reclaimed 15K support, and we have a new rising RTC going. And with only mild resistance at 15,180, this chart appears to still have room to run.
The VIX: Last night I wrote "nothing here to suggest a move higher on Thursday", and the VIX indeed continued lower, down another 2.03% on a gap-down spinning top. We remain solidly in a descending RTC and the indicators are still not down to oversold. However, there are a couple of things now that were not here last night - the VIX encountered support around 16.50 intraday and respected it, and Thursday's candle was green for the first time in five days. Also, VVIX is now sitting just above its 2200 day MA so that should provide some support too. VXX though continues in down mode. So I'm thinking there's a decent chance the VIX could go still lower on Friday, but this run may be reaching an end and we could see a reversal in a few days.
Market index futures: Tonight all three futures are higher at 1:06 AM EDT with ES up by 0.28%. Like the Dow, ES now has a three white soldiers pattern going and the overnight action seems to be confirming it. With a new rising RTC going and indicators rising smartly off oversold, this chart continues to look bullish.
ES daily pivot: Tonight the pivot rises once again from 1589.92 to 1605.17. Even after this healthy gain, ES continues to remain above the new pivot as it drifts higher in the overnight, a bullish sign.
Dollar index: After two strong days, the dollar posted a slight loss of 0.09% .with a doji star on Thursday. RSI is now highly overbought (97). So while we remain in a rising RTC, there is now at least a suggestion of a move lower on Friday.
Euro: The euro once again defied my expectations by retracing half of Wednesday's losses on Thursday and the buying is continuing in the overnight, now up 0.14% and testing the 200 day MA at 1.3076 as I write. The euro has been good about breaking through the 200 MA to the upside lately and the overnight is leaving the descending RTC (finally) for a bullish setup. RSI also seems to have finally bottomed while remaining very oversold so I'm thinking there's a chance the euro could move higher on Friday.
Transportation: Bullish three white soldiers for the trans too as they outperformed the Dow on Thursday 0.83% to 0.77%. A new rising RTC is established, there's no resistance until 6354, the indicators remain low, just off oversold, so this chart continues to look good for 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 3 4 6 4 0.636 85
June 6 5 5 0 0.545 543
And the winner is...
Ah, a tough one tonight. Most of the chart action looks bullish but I'm a bit concerned about the state of the VIX. I'm even more concerned about the fact that Friday is historically an awful day according to the Stock Trader's Almanac - Dow down 6 of the last 7 and 15 of the last 21. Complicating matters is the fact that Friday marks the end of Q2 and raises expectations of window dressing. But window dressing doesn't always kick in so go figure. It's also a Friday ahead of a holiday week, so perhaps some traders will want to get out ahead of that. Then we've got Chicago PMI coming in Friday morning and the expectations are for WTE. But we're still in this schizoid "bad news is good news" mode, right?
So bottom line - although logic dictates a call for a higher close, I'm not liking the quarter (and half) all ending on a Friday and the possible volatility that can induce. So I'm going to have to content myself with a call of Friday uncertain as we say goodbye to the first half and await the start of July (which should be a good one).
ES Fantasy Trader
Last night's long trade worked out nicely for a 13.5 point gain. The entry was a bit late but the exit was perfect. These reversal plays with stochastic crossovers are always high probability and this one was a good example.
Portfolio stats: the account rises to $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13. Tonight we stand aside and live to trade another day.
SLD 10 false ES SEP13 Futures 1611.25 USD GLOBEX 10:48:01
BOT 10 false ES SEP13 Futures 1597.75 USD GLOBEX 00:26:56