Friday, September 12, 2014

Friday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher, low confidence.
  • ES pivot 1993.83.  Holding above is bullish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Arrgh - I said Wednesday would go lower, so it went higher.  Then I said Thursday would go higher, so it went lower!   Admittedly the big drop was early on and the Dow spent the rest of the day climbing back out of that hole.  If only the bell rang at 4:30 instead of 4 we might have made it.  And the SPX did end in the green, but my forecast is for the Dow.  Such are the perils of forecasting days with small changes.  Let's move on to Friday and see if we can end the week with a win.

The technicals

The Dow: On Thursday the Dow handed us a tall skinny hammer, and a better one than we saw on Wednesday.  It is interesting to note that in nine of the last ten days we've seen candles where the shadows were longer, sometimes much longer than the real bodies clearly demonstrating some powerful indecision. I've made a new descending RTC back to 9/5 and we're still in that.  Also, while the indicators continue to fall, they're not yet oversold.  So this chart still doesn't look very bullish to me.

The VIX: Now this is interesting.  We got some divergence here as the VIX fell 0.62% on a day that the Dow was down too..It's not a major one but the candle is strongly bearish engulfing, and an early retest of the 200 day MA failed, and we closed out of the rising RTC for a bearish trigger.  And we're on the verge of a bearish stochastic crossover.  To me, this all looks like more downside for the VIX on Friday.

Market index futures: Tonight all three futures are slightly higher at 12:30 AM EDT with ES up 0.04%. On Thursday ES broke out of a short descending RTC with a green tomahawk for a bullish setup, confirmed with a bullish stochastic crossover.  The other indicators are also rising and the overnight is trading modestly higher, so I'd have to say this chart looks at least a bit bullish for Friday.

ES daily pivot: Tonight the ES daily pivot ticks up from 1990.92 to 1993.83.  We remain above the new pivot so this indicator continues bullish.

Dollar index:  On Thursday the dollar put in a decent hammer but coming below Wednesday's spinning top as it did, the net effect as absolutely unchanged. The only thing is that it closed outside the rising RTC and that's a bearish trigger.  Could it be that the dollar's uptrend is over?

Euro: Last night I mentioned 1.2902 as support for the euro and that's just about where it traded around on Thursday, closing slightly higher at1.2924 on a long-legged spinning top.  Interestingly, it looks like the euro is now forming a symmetrical triangle as we've been putting in lower highs and higher lows for four days now.  That would suggest that the next break will be lower - again.

Transportation: Last night I wrote "the trans look ready to move higher on Thursday" and so they did.  In another bit of divergence the trans jumped 0.40% on a day the Dow was down with a tall green marubozu that confirmed Wednesday's hammer in a big way. That left the indicators in disarray with RSI and the stochastic moving lower, but money flow, OBV, and momentum turning higher.  Overall, this chart seems to look bullish to me tonight.


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     8       7      2           2       0.588     81

September  1       4      1           0       0.200    -34

     And the winner is...

The glimmers of optimism that appeared on the charts last night are starting to crystallize a bit tonight.  In particular, the VIX, the futures, and the trans look positive.  Also, the SPX Hi-Lo index appears to have bottomed and that's always a positive sign.  Therefore, I will once again call Friday higher.  I guess I have to be right eventually.  That's all she wrote.  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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