Friday, January 31, 2014

Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain.
  • ES pivot 1780.92.  Holding below is bearish.
  • Next week bias higher.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

It was difficult and a bit scary to call Thursday higher after Wednesday big plunge in the Dow but no guts, no glory as they say, and we were rewarded with a nice 110 point rebound.  Now with just one day left in the week and the month, let's see if we can go out with a winner with the help of the charts.

The technicals (daily)

The Dow: The Dow retraced a bit more than half of Wednesday's losses to close at 15,848, a level that has served as both support and resistance in three of the last four days.  It also leaves us right on the edge of the descending RTC, just short of a bullish setup.  And RSI and the stochastic are forming a shallow bottom that looks more bullish than bearish.  I have to think there's more upside due here.

The VIXThe VIX meanwhile did move lower, but only by .0.35% on a funny gap-down green candle.  Like the Dow, it is attracted to a particular level, in this case 17.24.  However, here there's no RTC so we're left with indicators that remain overbought suggesting that the next move is lower.

Market index futures: Tonight the futures are decidedly mixed at 12:52 AM EST with ES barely lower by 0.04%, YM off 0.10% but NQ up a solid 0.31%. ES is having trouble finding a direction with the last four days in a row alternating red and green.  Support around 1772 continues to hold but there doesn't seem to be much gas in the tank to propel a move higher, so we kind of sputter along.  I'm not feeling the love here tonight.

ES daily pivot: Tonight the pivot ticks up from 1778.83  to 1780.92.  After crossing below the old number just before midnight, ES reversed and is now knocking on the door of the new pivot, showing interest in mounting an attack on it.  This sort of pattern is inherently unstable so this indicator is indeterminate tonight.

Dollar index: Finally the dollar snapped out of its doldrums with a big 0.76% gap up on Thursday.  That leaves a lot of blank space wanting retracing, but the dollar has not been good about doing that right away and with the upper BB coming into view, RSI now only just off oversold and a bullish stochastic now clearly completed, more upside is not out of the question for Friday..

Euro: Last night I wrote "the only call here is for even more continued downside" and continue it did with the euro tumbling all the way back to 1.3550, stopping right on a support line.  The overnight is flat and the indicators are now in No Man's Land between overbought and oversold so the only question now is whether the support will hold on Friday.  My best guess is that we could get a bottoming day here.

Transportation: The stick sandwich pattern I mentioned last night here paid off on Thursday with a 1.55% gain for the trans that broke the resistance at 7274.  With indicators still only just off oversold, this chart now looks at least mildly bullish.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      5           0       0.333

     And the winner is...

Historically the last day of January is positive, but this hasn't been a typical January and I'm not getting a good reading either positive or negative from the charts tonight so I'm afraid I'm just going to play it safe and call Friday uncertain.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $103,000 after the first trade of 2014.  We are now 1 for 1 total, 1 for 1 long, 0 for 0 short.  Tonight we stand aside.

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