Friday, November 14, 2014

Friday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday higher only is ES stays above its pivot, else lower..
  • ES pivot 2034.83.  Breaking above is bullish, below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well we're not quite 100% tonight but I'm feeling good enough to put together my usual collection of random rants that pass for market forecasting.  So on Thursday we got yet another doji on yet another small range day.  There was some talking head on CNBC Wednesday talking about consolidation.  I was thinking more like topping but after Thursday I'm starting to think maybe he's right.  Let's let the charts decide.

The technicals

The Dow: The Dow now has three dojis in a row: a star, a hanging man and Thursdya' spinning top.  Notably, we're two days outside the rising RTC now and that's a canonical bearish trigger.  With RSI at 99.01, who ya gonna believe - some talking head on CNBC, or me?  I'm still thinking this looks toppy.

The VIX: And notably, the VIX on Thursday gained nearly 6% on a bullish piercing pattern that tested the 200 day MA.  Despite Wednesday's decline, the week-long trend is vaguely higher and given the oversold conditions, this isnt' what I'd call consolidation.  It looks more like the VIX will want to revisit the MA on Friday.

Market index futures: Tonight, all three futures are slightly higher at 12: EST with ES up 0.04%.  On Thursday ES put in a perfect star.  Consolidation or top?  Well we traded outside the rising RTC for a bearish setup and indicators remain oversold.  There's little clue it he overnight as to Friday's direction.    Perhaps we're in for more sideways motion.

ES daily pivot: Tonight the ES daily pivot ticks up from 2033.33 to 2034.83.  That now leaves ES essentially right on top of the new pivot.  So that puts the pivot in play.  A break above is bullish and below is bearish.

Dollar index: If there's any consolidation to be found, it's in the dollar which on Thursday went nowhere.  We've now seen 59.04 ($USDUPX) for size straight days now.  However, the dollar has now exited a month-long rising RTC for a bearish trigger so with declining indicators I'd say there's more downside to coming on Friday.

Euro:  And as the dollar slowly slides, the euro continues to drive slowly higher.  We've barely moved over the past week but it was enough to bring the indicators off oversold.  Still the only reasonably forecast here is for more sideways action until we get a breakout - and I don't see that coming on Friday.

Transportation:  The trans is always a good indicator and on Thursday we got 0.20%'s worth of bearish divergence form the Dow. with a small red hanging man that closed right on the rising RTC for a bearish setup.  Indicators remain highly overbought here too so the next move seem to be logically lower from here.


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  6       6      5           2       0.571    376
October    6       6      3           1       0.538    271
November   4       2      2           0       0.667     91

     And the winner is...

While we're seeing some bearish signs cropping up in the charts, I'm not yet seeing confirmation form the futures.  In fact with ES sitting right on its pivot, this is an ideal time for a conditional call.  If ES move above its pivot and remains there by mid-morning Friday, we'll close higher.  Otherwise, if ES breaks under and stays there, we close lower.  That's all she wrote.  See you again Sunday night!

ES Fantasy Trader

Portfolio stats:  the account remains at $121,625 after nine trades in 2014, starting with $100,000.  We are now 7 for 9 total, 5 for 5 long, 2 for 3 short, and one push.  Tonight we stand aside.

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