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- Friday higher.
- ES pivot 1860.16. Holding above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: no change.
The signs were certainly there last night that a reversal might be at hand but with the unprecedented bearish momentum so far this year I was unwilling to commit to that and wimped out by calling Thursday uncertain. As it turns out the Dow finally did manage to stop falling with a decent 116 point gain. Now the question becomes, is this just a bear market rally or a capitulation bottom. Let's look at the charts for some answers and see where Friday is headed.
The Dow: Last night I noted a major hammer in the Dow and that was indeed confirmed on Thursday though it was with a lumpy indeterminate candle. But the indicators are still rising and still just barely oversold so from the looks of it, this is encouraging for Friday.
The VIX: Last night I also noted that the VIX seemed to be forming an evening star and that was confirmed on Thursday with a 3.26% drop. The indicators remain in No-Man's Land, closer to overbought than oversold, so it's difficult to call this one for Friday. But FWIW, the candle pattern is bearish.
Market index futures: Tonight, all three futures are higher at 12:46 AM EST with ES up 0.85%. On Thursday ES put in a small green spinning top back up to 1861, its third reversal candle in as many days. However, we're getting some nice follow-through in the new overnight and with indicators all continuing to rise off of oversold I'd not be surprised to see more gains on Friday.
ES daily pivot: Tonight the ES daily pivot rises from 1845.91 to 1860.16. That still leaves ES above its new pivot so this indicator continues bullish tonight.
Dollar index: The dollar did basically nothing for the second day in a row as it continues to consolidate around the 66 handle on the $USDUPX. But we now have a fresh bearish stochastic crossover going and falling indicators that are still just overbought so it looks like the next move will be lower on Friday.
Euro: The euro on the other hand is clearly sagging, making it three down in a row on Thursday. And the new overnight continues lower so with indicators all off overbought and falling, it looks like more downside is not out of the question here on Friday.
Transportation: And finally on Thursday the trans confirmed Wednesday's doji for a nice morning star pattern and a nearly 1% pop. This also brought the indicators right to the edge of oversold on their way higher and exited a month-long descending RTC for a bullish setup. So that all makes this chart look positive for Friday.
Month right wrong no call conditional batting Dow
January 7 3 3 0 0.700 1107
And the winner is...
Tonight we're seeing a fair number of bullish signs in the charts. Can the market actually finally make it two up in a row? The market has been so badly beaten down all month I'm afraid to even suggest it but everything seems to be lining up that way so I'm just going to go out on a limb and call Friday higher. That's all she wrote. See you again Sunday night!
YM Futures Trader
We made back a bit on Thursday so no change here again.