Friday uncertain

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

• Friday uncertain.
• ES pivot 1839.42.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• ES Fantasy Trader standing aside.

Recap

Last night I wrote "I'll just creep out to the very end of the limb and nervously call Thursday higher."  Well, looks like the limb snapped out from under me as the Dow dove an ugly 267 points to finish near session lows.  There was just something about last night I couldn't quite put my finger on.  Too bad too, because it seems like I always pick the really bad days to be wrong.  I'm still trying to sort this out.  Going over last night's charts in retrospect I still don't see any technical signs of this kind of dump.  But from the chatter on CNBC, it sounded like no one else had a clue either.  Oh well, such is the nature of the beast.  So we'll see how this changes the picture as we head to the end of the week.

The technicals

The Dow: On Thursday the Dow plunged all the way to its lower BB in a move that left the indicators oversold and the stochastic threaded out lying on the floor.  Wednesday's bullish RTC setup was canceled in a big way.  OBV kept rising though and money flow was actually higher.  I have to think that if nothing else we're due for a DCB here on Friday.

The VIX:  On Thursday the VIX resumed its love affair with its 200 day MA, shooting right back above it with a big 15% pop.  That lef the indicators overbought but the stochastic is now totally confused and threaded out.  We're also still short of the upper BB so it isn't clear that there still isn't at least a bit more room to run on Friday.

Market index futures: Tonight, all three futures are higher at 12:23 AM EDT, with ES up by 0.11%.  ES had a dreadful day on Thursday, plunging all the way to its lower BB with a dark cloud cover.  But even that didn't drive the indicators much lower than they were on Wednesday.  And the modest move higher in the overnight suggests the possibility of at least a DCB on Friday as traders figure out that Thursday' move was overdone.

ES daily pivot: Tonight the pivot dives from 1858.33 to 1839.42. We're still under the new pivot so this indicator remains bearish.

Dollar index: Last night's chart looked bearish to me though it wasn't the bottoming day I thought.  It was just down, another 0.13%.  The dollar stopped right on support just above its lower BB with oversold indicators.  So I'm going to be a bit more conservative and simply claim that I think the downside form here is limited.  It may or not be a bottoming day on Friday.

Euro: At least I got this much right.  Last night I wrote "it looks like there's more upside left on Thursday" and indeed the euro continued its climb ending at 1.3889, making it a four day winning streak.  Ad now being in a strong uptrend with no resistance til the upper BB at 1.3933, I see no reason why the euro won't hit that level Real Soon Now.  It is in fact continuing to inch higher in the overnight so far.

Transportation: The trans really got hammered on Thursday, giving up all of Wednesday's gains and then some, and canceling the bullish setup with a bearish engulfing pattern.  The indicators all turned downward though they're not yet oversold.  We're near support at 7412 now so Friday could be a bottoming day. 

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
February   5       2      2           1       0.750    107
March     12       3      6           0       0.800    431
April      4       1      2           0       0.800    196

   
     And the winner is...

With Mr. Market seemingly having picked up a bad case of the jitters, it's tough to make any iron-clad predictions.  I still have no good explanation for what happened on Thursday and that bothers me.  Therefore, I want to step back and let the market sort itself out.  So I'm just going to call Friday uncertain and see what happens.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account now rises to $105,625 after two trades in 2014.  We are now 2 for 2 total, 2 for 2 long, 0 for 0 short.  Tonight we stand aside.