Friday, May 30, 2014

Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower, low confidence.
  • ES pivot 1914.42.  Breaking below is bearish.
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well I guess the trend is your friend after all.  Last night I was thinking hte market looked toppy but I couldn't call it lower in the absence of any outright bearish signs.  And that proved to be a good decision since the Dow was up 0.39% on Thursday and the SPX even more.  But I must say, this market is making me more nervous right now than I've felt in a long time.  I'll be glad to see May done with, and Friday's the end of the week and the month so let's do those charts and head for the beach.

The technicals

The Dow: That resistance at 16,678 just melted away on Thursday as the Dow managed to punch through with a 66 point gain.  But that still leaves it short of the record from a few weeks ago and the upper BB at 16,745.  And oddly, RSI just dropped off overbought, though the stochastic continues slowly narrowing in on a bearish crossover.  So despite Thursday's gains (on shockingly low volume I might add) I still think there's more downside risk than upside potential here.

The VIX: Meanwhile the VIX remains stuck in the basement and can't find the stairs, down another percent on Thursday, but with a doji star.  The trade was outside the descending RTC so that's a bullish trigger and the indicators are hovering just off oversold.  It looks like the VIX wants to go higher but simply can't find its mojo.  But with the VIX now at 11 and a half, there really seems to be a lot more room to run higher than lower, cf. everyone lately buying VIX calls.

Market index futures: Tonight all three futures are lower at 12:39 AM EDT with ES down 0.14%.  I really thought Thursday was going to be the turn for ES.  Silly me.  The move to 1918 kept us right in  a steeply rising RTC as we climb the upper BB for an amazing four in a row now.  Tonight though the chickens may finally be coming home to the rooster as ES seems to be stalling out with a move lower that has now taken it out of the aforementioned rising RTC for a bearish setup.  The stochastic has also finally squeaked out a bearish crossover.  IN sum, this chart now looks ready to roll over.

ES daily pivot: Tonight the ES daily pivot rises again from 1909.17 to 1914.42.  With ES drifting lower in the overnight, that still leaves us above the new pivot but just barely.  It won't take much to test the pivot and a break below would be bearish for Friday.

Dollar index:  Last night I looked at the dollar and claimed that "a reversal is coming Real Soon Now".  Well real soon proved to be Thursday with the dollar down 0.10%, though on a funny green marubozu.  Still that was enough to eke out a bearish stochastic crossover and with RSI now quite overbought, I'm going to go right back and claim there's more downside to come on Friday.

Euro: After blasting through its 200 day MA (down) on Wednesday, the euro found a modicum of support at 1.3595 on Thursday to end with a small gain.  Indicators remain quite oversold but we also remain in a two week declining RTC so until I see a reversal candle, it's look out below, euro.

Transportation: And finally the trans kept right on rocking in their railroad-straight rising RTC with another 0.43% gain on Thursday as they climb the upper BB, four days in a row now.  The stochastic is  threaded out but it's at levels from which down moves typically come Very Soon.  So despite a six day winning streak (or perhaps because of it), I just can't get on board this runaway train.


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      9       3      5           0       0.750    482
May        6       6      6           0       0.500    -49

     And the winner is...

The last day of May is historically fairly weak.  I'm also seeing the reversal signs strengthening in the charts.  It's still not a given, but I'm going to take a chance and go out on a limb and call Friday lower.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $121,500 after four trades in 2014, starting with $100,000.  We are now 4 for 4 total, 2 for 2 long, 2 for 2 short.  Tonight we stand aside.  But so far my SH at 24.07 isn't looking like such a great buy though I still have hopes for it.

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