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- Friday uncertain.
- ES pivot 2007.83. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ still not a swing trade buy.
As I called it last night the market did indeed advance on Wednesday with the Dow gaining an impressive 217 points. With this interesting turn of events we now move ahead to Friday as we close out October's op-ex week.
The Dow: After a small late morning sag, it was just up up and away for the Dow which closed out Thursday at session highs for a 1.28% gain. The resulting candle is something like a cross between a bullish ladder pattern and a reversed bullish piercing pattern. That left the indicators confused as RSI went back overbought but the stochastic continues descending in a fresh bearish crossover - go figure. This left the Dow back at recent resistance right around Thursdays close so this is a tricky one to call, and I'm not going to touch it.
The VIX: Last night I was wrong about the VIX. It ended by confirming Wednesday's spinning top with a big 11% decline that punched right back down through its 200-day MA for the second time in three days. That took the indicators back into oversold territory but interestingly caused a bearish crossover from a low level in the stochastic. And that is often good for another day or two of lower prices. So at this point I would say the VIX may be headed lower again on Friday.
Market index futures: Tonight, all three futures are mixed at 12:45 AM EDT with ES down 0.05%. ES had a fantastic day on Thursday handily breaking through resistance around 2011 on a tall green marubozu. That sent the stochastic into a bullish crossover from a high level and as I've mentioned before this is often good for another day or two of higher prices. With resistance breached it's not out of the question that ES could advance some more on Friday Unfortunately, there's no follow-through in the overnight so it's also possible ES might want to take a breather on Friday.
ES daily pivot: Tonight the ES daily pivot rises again from 1989.42 to 2007.83. That still leaves ES well above its new pivot so this indicator continues bullish.
Dollar index: Last night I mentioned that the dollar looked a bit overextended after Wednesday's precipitous decline and speculated that it could move higher again on Thursday. Well that's exactly what happened with a half percent advance that finished with a green bullish harami pattern. The indicators are now starting to move off of highly oversold levels and the stochastic has just completed a bullish crossover. So this chart looks higher again on Friday.
Euro: Similarly, last night I called the euro lower for Thursday and that's also just what happened with the currency giving up all of Wednesday's big gains to finish almost exactly where it started at 1.1287. This is a bearish pattern and having visited its upper BB for an entire week in a row the indicators are now moving lower off of overbought with a completed bearish stochastic crossover to boot. Furthermore the overnight is moving lower in a non-trivial manner so my guess is that the euro closes Friday lower.
Transportation: Last night I mentioned the possibility of a move higher in the trans on Thursday and that's just what happened with a nice 1.44% advance on a green marubozu. That was enough to lift the all the indicators back higher towards overbought before ever reaching oversold. So with a confirmed spinning top from Wednesday it now looks possible that the trans could run higher again on Friday.
January 8 6 4 1 0.563 627
February 6 4 5 3 0.692 183
March 7 6 5 4 0.647 976
April 3 8 7 0 0.273 1
May 6 5 5 2 0.615 581
June 8 6 3 4 0.706 552
July 10 1 5 4 0.938 1212
August 10 2 3 2 0.857 2314
September 7 4 8 1 0.667 1404
October 4 4 1 0 0.500 455
And the winner is...
Tonight we have some bullish signs (a declining VIX) and some bearish signs (sagging futures). The indicators generally suggest more upside is possible but then we had a nice run on Thursday and with Friday upon us, traders may want to book some of those profits before the weekend. And to top it all off, it's options expiration again. Add it all up and there's only one safe course of action for me: Friday uncertain. That's all she wrote. See you again Sunday night!
Single Stock Trader
On Thursday VZ got swept up in the Dow's general euphoria with a $0.68 gain that finally propelled it past resistance around 44.39. It also formed a bullish stochastic crossover from a high level and those are often good for a day or two of higher prices. So with the other indicators now down off of overbought it's entirely possible VZ could still have room to run higher on Friday. But it's not a swing trade buy.