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- Friday higher, low confidence.
- ES pivot 1680.75. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1643.00.
And so the crab market marches on - sideways. Dow up a hair, SPX reversing what looked like the start of a downturn... arrgh! Just where does Mr. Market think he's going? Let's scour the charts for any signs of a road map.
The technicals (daily)
The Dow: On Thursday the Dow defied my predictions of a loss by gaining 13 points. The Dow has now been putting in reversal candles for the past five sessions in a row - and all to naught. Thursday's was a tall tall hanging man, complete with overbought indicators. And what does this all mean? I'll tell you what it means. It means bupkiss. Nil, nada, nothing, zilch, zero. As long as the Dow continues to find support around 15,535 and encounter resistance at 15,585, we're just stuck in a channel. And I see no sign of anything different on Friday.
The VIX: After a promising start on Wednesday, the VIX fell back on Thursday, losing 1.59% on a dark cloud cover. There is a related warning on VVIX in the form of a spinning top, so any further advance in the VIX on Friday is certainly now in question.
Market index futures: Tonight all three futures are higher at 12:44 AM EDT with ES up by 0.24%. After a big star doji on Thursday, it's beginning to look like the recent three day decline was yet another fake out breakdown. And the overnight move higher certainly seems to be confirming that. Add in a bullish RTC exit and a stochastic moving into position for a bullish crossover from a high level, and it all points to a higher close on Friday.
ES daily pivot: Tonight the pivot drops from 1685.42 to 1680.75. After dancing about the old pivot all evening, ES broke decidedly above at 9:05 PM, and the drop in the new pivot puts us even higher above it, so that's all quite a bullish sign.
Dollar index: On Thursday the dollar gave up all of Wednesday's gains and then some, losing 0.42%.as it continues to careen wildly across the chart. It tested its 200 day MA before ending right back when it closed on Tuesday. With that support established and a bullish RTC exit, there might be some upside here on Friday, but honestly this chart is just too disjointed to get a good bearing on.
Euro: Last night I mentioned the daily pivot as key. The euro did indeed cross it early Thursday morning and so the euro closed higher, to 1.3246. The overnight is showing a big gap up, although that may be a misprint due to one bad bar from eSignal - not sure. What is sure is that the euro is now up another 0.25%, impressive for this hour of the night. Either way, that keeps us in a rising RTC. And with the upper BB not til 1.3341 and no nearby resistance, I'd say odds favor a higher euro on Friday.
Transportation: Last night I wrote "we likely have at least some more downside here on Thursday and then we'll have to see about Friday". Well we indeed got a move lower - and then a retracement to finish down just 0.05% on a big doji star with increased volume. While the indicators are still not quite down to oversold, I'm now more confident that we'll see a move higher here 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 3 4 6 4 0.636 85
June 6 5 6 0 0.545 543
July 9 2 2 3 0.857 483
And the winner is...
What a difference a day makes. All the bearish signs I saw last night have vanished into thin air. Indeed, the charts are pretty bullish tonight. And given that the prevailing longer term trend remains up, I will call Friday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $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 remain short at 1643.00. I'm at the stage of not even wanting to look at this trade anymore.