Friday, April 4, 2014

Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain.
  • ES pivot 1882.00Holding above is bullish.
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last night I called Thursday uncertain writing that "A doji day is possible".  Well check it out folks: Dow down 0.45 points on a perfect doji star.  'Nuff said, lest I commit one of the traders' deadly sins - hubris.  Let's just say that Thursday's outcome was about as uncertain as they come.  But this now leaves us in a quandary - whither Friday?  We once again appeal to the charts for, if not outright salvation, then at least some meager sense of direction.

The technicals

The Dow: So the Dow is now in a nearly perfect rising RTC (Pearson's = 0.980).  Thursday's doji touched its upper BB for the third day in a row before retreating to the aforementioned doji.  RSI is now overbought, though not extremely so.  The stochastic continues to curve around for a bearish crossover, though not there yet.  Money flow continues higher though momentum has turned lower.  So where does that leaves us?  Shoot - uncertain again.  We have more reversal warnings now but they all require confirmation.  It would be foolhardy to call a top based on the evidence so far.

The VIXIn an interesting bit of divergence, the VIX on THursday rose 2.14%, as the Dow did nothing.  That was good for a bullish RTC setup as well as moving the stochastic very close to a bullish crossover.  The candle is also clearly bullish engulfing so all things considered, the VIX looks higher for Friday.

Market index futures: Tonight, all three futures are higher at 12:29 AM EDT, with ES up by 0.13%.  Wednesday gave us a doji just like the Dow and it remained inside a rising RTC.  SO far, the new candle is trading higher which is bullish.  But it's also trading outside the rising RTC which is a bearish setup.  But this RTC is so tight (Pearson's = 0.998) I'm inclined to cut it some slack, so we'll take this bearish setup with a grain of salt - for now.  Of more concern is the stochastic which is now just a smidge aways from making a bearish crossover.  And of course the RSI is now highly overbought.  So it's possible that this chart is now moving on rumors of Friday's jobs numbers coming out BTE.  We'll have to see.

ES daily pivot: Tonight the pivot barely ticks up from 1881.83 to 1882.00.  After breaking above the old pivot Thursday afternoon, we remain above the new one so this indicator remains bullish.

Dollar index:On Thursday teh dollar just laughed at the resistance that concerned me last night, blasting right through to ring the upper BB bell at 54.86.  The dollar has been very good about respecting its upper bB lately so given the overbought nature of the indicators I have to think that further upside is limited from here.

Euro: I missed the dollar but last night I wrote "the euro's three day winning streak may be over.".  And indeed it was, with the euro falling all the way back to 1.3742 after barely bouncing off its lower BB.  That completed a bearish crossover from a low level making me think the selling isn't over yet.

Transportation: Here's one of the more telling charts du jour.  I thought we'd go higher, but on Thursday the trans lost 0.16% on a classic spinning top sitting right on the upper BB.  With the stochastic moving into position for a bearish crossover, this chart is now ringing the bear alarm.  Roar!


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
February   5       2      2           1       0.750    107

March     12       3      6           0       0.800    431
April      2       0      1           0       1.000    115    
     And the winner is...

We've had a nice run this week but tonight we're seeing a virtual army of dojis on the charts giving a warning of a reversal.  The technical bias is now rather bearish, certainly much more so than last night.  However, I expect Friday to be news-driven by jobs numbers.  Since I have no way of telling that, I can only call Friday uncertain.  But I'd definitely not be going long at these levels.  That's all she wrote.  See you again next 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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