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- Friday higher, low confidence.
- ES pivot 1648.00 .. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
Well that was odd, with the Nasdaq "flash freeze" dominating the news all afternoon and urgent pop-up windows from Interactive Brokers beeping at me every five minutes about everything that was down. Whatever it was, it serves me right for second guessing my bullish bias from Wednesday. Turns out I wasn't wrong, just a day early as all three major averages closed higher on Thursday with the much-maligned Nasdaq turning in the best performance. I'm not going to engage in any conspiracy theories here because all we care about is what's coming next. So we march on to Friday. Ooh-rah!
The technicals (daily)
The Dow: On Thursday, the Dow did indeed open lower as I had been expecting. But then it spent the rest of the day, wiggling higher - as I had not been expecting. That's what I get for not sticking to my first prediction based on the SPX Hi-Lo index that we were due for a rally. And Thursday's candle was a bullish harami that saw the first rise in RSI in days. This alone looks like a good bet for higher on Friday.
The VIX: Last night I wrote "if the technicals can reassert themselves, the VIX is looking lower for Thursday". Well they did and it did, with a big 6.15% gap down to complete the bearish evening star. In the process, the VIX touched its 200 day MA intraday but with some good downward pressure now in the form of a bearish pattern and bearish stochastic crossover with indicators that remain quite overbought, I'm looking for more downside on Friday.
Market index futures: All three futures are higher at 1:17 AM EDT with ES up by 0.17%. Thursday saw ES put in a big bullish engulfing candle that ran outside the descending RTC for a bullish setup and a good indication that the downtrend is over. Indicators remain oversold and the bullish stochastic crossover is complete. With continued upside it he overnight, this chart looks ready for higher again on Friday.
One interesting point - it looks like we now have a developing megaphone pattern in ES. Since this one was entered from above odds are 75% that it will exit higher.
ES daily pivot: Tonight the pivot rises from 1641.75 to 1648.00 even. We remain well above the new pivot so this indicator is bullish
Dollar index: On Thursday the dollar gapped up for a 0.38% gain on a red handing man. However, with a completed bullish stochastic crossover and indicators rising, it looks like the dollar could go higher again on Friday..
Euro: Last night I wrote "I'd say the euro's going lower on Thursday", and it's good I said that because it did - with a gap-down long-legged doji that landed right on the rising RTC edge for a bearish setup. We also got a completed bearish stochastic crossover and the overnight is following lower, now off another 0.10%, so this all favors continued lower on Friday.
Transportation: After Wednesday's bullish RTC trigger, we got the payoff on Thursday with a big 1.98% jump for the trans. This marubozu clearly ends the descending RTC and the consolidation that led us out of it. There's no resistance til 6511 so there's still room to run 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 10 2 4 4 0.875 486
August 9 1 5 1 0.909 565
And the winner is...
The general tenor of the charts is bullish tonight, so logic dictates that I call Friday higher. Have a great weekend and see you again Sunday night.
ES Fantasy Trader
Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15 total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13. Tonight we continue to stand aside - while I do think we're going higher from here, I'd prefer to see a more clear turn-around.