Friday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Friday higher, low confidence.
  
• ES pivot 1832.08.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Thursday ended up being pretty uneventful with a Dow down all of 18 points while the SPX was up all of 0.64.  So as the market continues to look for direction, let's see if the charts have any guidance for Friday.

The technicals (daily)

The Dow - is  it in front or in back?

The Dow: The Dow is now in one of these Necker cube illusions.  Looked at one way and it's in a shallow descending trend.  Looked at another way and it's just in some sideways consolidation.  Either way, the famous First Five Days of January indicator was a flop.  But all is not lost - a down five days isn't as good a predictor of a bad year as an up five days is of a good year.

But with a long-legged red spinning top on Thursday and the indicators just nervously wandering about between overbought and oversold,  this chart is remarkably opaque.  I just have to take a pass on this one.

The VIX:  The VIX barely eked out a 0.16% gain on Thursday with a tall inverted hammer that just failed to escape its descending RTC,  Indicators continue to fall and VVIX is looking lower, so I'd say the VIX is headed down on Friday.

Market index futures: Tonight all three futures are higher at 1:04 AM EST with ES up by 0.15%.  ES has now given us two dojis in a row with Thursday's having a larger range than Wednesday's forming a mini-megaphone.  RTC-wise Thursday was the payoff for Wednesday's bullish trigger.  Indicators are now rising off oversold and with the overnight moving higher, this chart is looking good for Friday.

ES daily pivot: Tonight the pivot inches up from 1830.92  to 1832.08.  After breaking above the old number Thursday afternoon, ES has just continued to rise, leaving us sufficiently above the new pivot to call this indicator bullish.

Dollar index: The dollar completed a bearish evening star pattern on Thursday, falling off its upper BB with a small loss.  With indicators now quite overbought, the next logical move is lower..

Euro: And the euro is mirroring the dollar nicely with a tall spinning top on Thursday a la bullish piercing pattern.  The overnight is gapping up enough to cause RSI to bottom at oversold, so the euro looks higher for Friday.  That squares with my dollar lower call (I look at each chart independently).

Transportation: Some big bullish divergence in the trans on Thursday as they outperformed the Dow with a nearly 1% gain to the Dow's 0.11% loss.  This move also gave us a bullish RTC setup and a completed bullish stochastic crossover.  There's some resistance at 7400 but the upper BB isn't til 7469.  So with a decent three day winning streak going, this chart looks bullish on its own as well as being positive, Dow Theory-wise.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

  1  12/31      40         48        -      -   1402   0/1

  2  1/7        47         30        +      +   1466   1/2

  3  1/14       52         15        +      +   1472   2/3

  4  1/22       50         21        +      +   1486   3/4

  5  1/28       44         26        +      +   1503   4/5

  6  2/5        40         36        +      +   1513   5/6

  7  2/11       43         25        +      +   1518   6/7

  8  2/19       21         43        -      -   1520   6/8

  9  2/25       30         52        -      -   1516   6/9

 10  3/4        29         39        -      -   1518   6/10

 11  3/11       41         26        +      +   1551   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643   13/24  11/21

 25  6/17       32         40        +      -   1627   14/25  11/22

 26  6/24       13         46        -      -   1592   14/26  11/23

 27  7/1        25         42        -      -   1606   14/27  11/24

 28  7/8        42         29        +      +   1632   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692   16/30  13/27

 31  7/29       39         17        +      +   1692   16/31  13/28

 32  8/5        46         27        +      +   1710   16/32  13/29

 33  8/12       32         41        -      -   1691   17/33  14/30

 34  8/19       23         54        -      -   1656   17/34  14/31

 35  8/26       23         50        -      -   1664   17/35  14/32

 36  9/3        21         54        -      -   1633   17/36  14/33

 37  9/9        35         30        +      +   1655   18/37  15/34

 38  9/16       40         28        +      +   1688   19/38  16/35

 39 9/23        52         36        +      +   1710   20/39  17/36

 40 9/30        39         43        +      -   1692   21/40  17/37

 41 10/7        30         33        +      -   1691   22/41  17/38

 42 10/14       48         22        +      +   1703   23/42  18/39

 43 10/21       57         30        +      +   1745   24/43  19/40

 44 10/28       59         19        +      +   1760   25/44  20/41

 45 11/4        42         25        +      +   1762   26/45  21/42

 46 11/11       39         39        +      x   1771   27/46  21/42

 47 11/18       52         30        +      +   1798   27/47  21/43

 48 11/25       58         29        +      +   1805   28/48  22/44

 49 12/2        56         26        +      +   1806   29/49  23/45

 50 12/9        55         30        +      +   1805   30/50  24/46

 51 12/16       30         43        +      -   1775

 52 12/23       38         29        +      +   1818 

  2014

 01 12/30       50         23        +      +   1841

 02  1/6        40         44        +      -   1831 

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that both I and the majority of the poll voted bullish four weeks ago, so we were both right.  Therefore the Night Owl continues the last few calls of 2013 with an accuracy of 30 for 50, or 60%.   And the poll as a whole rises to just above break-even at 24 for 46 or 52%.   In two weeks we'll be able to fill in the remaining blanks for 2013 and come up with the final numbers for the year.

This week we have our first divergence of the year.  I voted continued bullish while the majority voted bearish on a fairly substantial gain in bearish sentiment from last week.  I'm afraid I'm still not seeing it.  I could be wrong.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      3      2           0       0.250     -126

     And the winner is...

With the VIX, the futures, and the trans looking positive tonight, I'm just going to go ahead and call Friday higher.  Of course bad jobs numbers on Friday could torpedo that call, but the expectation seems to be for BTE (how do they know this?)  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.