Friday uncertain

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

• Friday uncertain.
• ES pivot 2094.25.  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• Single stock trader: VZ not a buy.

Recap

The recent mean reversion sort of action we've been seeing after big gains the past few days asserted itself again on Thursday and trumped my call for a higher close.  I even mentioned it when I wrote "Ordinarily I'd say that after such a sudden large one-day move we'd be due for a pause".  Too bad I didn't stand by it.  Oh well - one more day to go and this crazy week is done.

The technicals

The Dow:  The Dow has alternated up and down for 11 of the last 12 now in an odd sort of stair-step rise that has consistently dragged the indicators higher.  On that alone there's not much to go by.  The only thing I see that's cause for concern is the stochastic which has now flattened out in preparation for a bearish crossover.  I'd be cautious here on Friday.

The VIX:  The VIX moved just 0.72% higher on a day the Dow fell triple digits in a sort of bullish divergence, unable to break back above its 200 day MA.  Nevertheless we are now oversold so it's reasonable to assume the next VIX trend will be higher.

Market index futures: Tonight, all three futures are higher at 12: AM EDT with ES up 0.11%  On Thursday ES put in a vague approximation of a dark cloud cover along with sending indicators overbought.  The stochastic is primed for a bearish crossover so despite a small run-up in the late evening hours, this chart has at least the suggestion of a reversal.

ES daily pivot: Tonight the ES daily pivot rises from 2089.58 to 2094.25.  That's enough to put ES back below the new pivot so this indicator now turns bearish.

Dollar index:  The dollar on Thursday recouped about 2/3 of its losses Wednesday in a move that sent the indicators off overbought.  That still leaves us in an official descending RTC though, the first downtrend I've seen here since last October.  What does this mean for the market?  Hard to say - the dollar has seemingly decoupled from the stock market lately.  It's also still not clear that the current trend means anything in a larger monthly context.

Euro:  The euro by contrast advanced nicely on Thursday to close at 1.0753 but is in the process of giving it all back in the overnight suggesting that the action of the last three days was nothing more than a multi-day fake-out.

Transportation:  The trans were completely unchanged Thursday after a long-legged doji that coupled with highly overbought indicators and a stochastic just inches away from a bearish crossover all suggest a move lower on Friday.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   6      4       5           3       0.692    183 
March      3      5       3           3       0.545    354

     And the winner is...

There are some indications of a move lower for Friday but they generally require confirmation.  But with this being a triple-witching day with no doubt all the usual accompanying gyrations, my usual policy is to stay away.  So I'm just calling Friday uncertain.  That's all she wrote.  See you again Sunday night!

Single Stock Trader


At least I was correct in staying away from VZ which moved a bit lower Thursday and is now hovering just above its 200 day MA.  With a spinning top, overbought indicators, and a stochastic that just formed a bearish crossover, I'd say there's more downside coming for VZ.