Friday, August 8, 2014

Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower, low confidence.
  • ES pivot 1910.25.  Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias neutral.
  • ES Fantasy Trader standing aside.

Well unlike The Who, I just got fooled again.  With a downtrend running now 10 straight sessions, we've seen six reversal candles in that time.  And not a single one of them has produced a reversal.  On Thursday it was more Putinoia or whatever - it hardly matters at this point.  What goes down must come up - the only question now is when.  So we go to the chart sin search of an answer for Friday.

The technicals

The Dow:  Thursday's 75 point loss finishing just off session lows non-confirmed Wednesday's narrow spinning top.  But there was something interesting here.  The Dow tested the 200 day MA and probed 10 points below before retreating higher,  I take this inability to push under the MA as a sign of weakness for the bears.  The 200 is sort of the Gothic Line of MA's.  The indicators continue to remain uselessly oversold and Wednesday's candle remains in the descending RTC so the only bullish sign right now is the 200 MA support.  We now need to see if the Dow can hold 16,343 on Friday.

The VIX:  The VIX has gone completely schizo, alternating between higher and lower for an entire week now, with a 1.77% gain the latest reversal on Thursday.  On that basis, I'd call it lower on Friday which is as good as anything because there is no trend here at all..

Market index futures: Tonight all three futures are lower at 12:12 AM EDT with ES down a non-trivial 0.52%.  ES remains stubbornly stuck in an unremitting downtrend, the indicators are all uselessly bottomed out at oversold and without any reversal candle, this chart looks just plain ugly.

ES daily pivot: Tonight the ES daily pivot drops again from 1913.75 to 1910.25.  We remain below the new pivot so this indicator remains bearish.

Dollar index:  On Thursday the dollar formed a long-legged doji right in the middle of Wednesday's big decline.  But lacking confirmation, this means nothing and given the recent herky-jerky action of this chart, I'm not calling it.  I'll just note that we;re now sitting right on the edge of the rising RTC so a move lower looks more likely from here.

Euro: And of course the same thing with the euro which laughed at Wednesday's hammer and dropped to 1.3360 on Thursday.  That's the lowest close since last November and it solidifies the 200 week MA breakdown.  Though the indicators are highly oversold, there's no sign of a reversal here.  A rejection of the daily pivot in the overnight confirms that.

Transportation:  The trans remain mired in a now twelve session downtrend.  With a Pearson's of 0.979, this one is steep and straight.  Thursday's decline was stopped only by support at 7980.  The indicators remain ridiculously oversold.  Momentum for example is at its lowest level since August 2011 and the current slide is perhaps not coincidentally, the worst since that same month.  It's not clear what keeps this sell-off moving, but with no reversal signs in sight, all one can do is expect more downside on Friday.


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       7      6           0       0.462    -67
June       8      10      3           2       0.500    132
July       6       4      4           3       0.692    639
August     1       3      0           1       0.400   -209

     And the winner is...

Hmm - while there are a few reversal signs on the charts, the futures are looking decidedly negative tonight.  And I'm tired of catching the falling knife so with no confirmations apparently forthcoming, I guess there;s no point in fighting this tape,m so it's just Friday lower.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

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