Friday stock market forecast

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

• Friday higher.
• ES pivot 1988.75.  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: no trade.

Recap

Last night I decided I couldn't figure out which way Mr. Market was headed on Thursday and therefore called the close as "uncertain".  Turns out Mr. Market couldn't figure it out either with the Dow ending lower by all of five points as he struggled to make sense of the latest shenanigans from the ECB as well as the ongoing tug-o-war in oil.  So let's move right on to the end of the first week of March and see if we get any more clarity for Friday.

The technicals

Dow daily

The Dow:  By the close Thursday it was almost like the Dow was frozen in time and space as it put in a textbook perfect wide-ranging (compared to recent activity) doji star.  It's worth a picture (click the chart to enlarge).  This indicates a lot of uncertainty but the context is pretty negative, with a second day outside the rising RTC (lower diagonal red line) for a bearish trigger, a failed attempt to take on the 200 day MA (thick orange line), indicators that remain overbought and a falling stochastic.

The VIX: Like the Dow, the VIX put in a tall doji star, off just 1.58% after failing to break through its own 200 day MA.  Indicators are rising though only about halfway towards overbought.  Of note is that we now have two down days here, such as they are and the VIX really seems to be showing little appetite at the moment for a run higher.

Market index futures: Tonight, all three futures are higher at 12:25 AM EST with ES up 0.69%.  Like the other charts, ES on Wednesday put in a long-legged doji that tried and failed to break out over its 200 day MA.  That left all the indicators falling off of overbought and a completed bearish stochastic crossover moving lower.  It looks generally bearish but the new overnight is rising strongly.and in fact looks like ES is gearing up for an attack on its 200 day MA again.

ES daily pivot: Tonight the ES daily pivot falls from 1987.00 to 1988.75.  The strong overnight action in ES leaves it well above its new pivot so this indicator continues bullish.

Dollar index:   The dollar took a monster cliff dive on Thursday, down a whopping 1.13%, its biggest daily drop since, uh, I don't know, the late Middle Ages.  I scrolled back a good ways and couldn't find anything this big.  All courtesy of the ECB of course,  So anyway, that instantly drove the dollar to extreme oversold and very nearly touched its lower BB.  It also crashed right through its 200 day MA like a Tall Boy bomb into the U-boat pens at L'Orient.  With YTD support close at hand I'd hazard a guess that further downside is limited from here though.

Euro, daily

Euro:  And the euro of course was the exact opposite fo the dollar - a monster green candle that sliced up through its 200 day MA to jump back to 1.12005, its best close since February 12th.  That leaves the indicators all extremely overbought but without a bearish candle, I can't quite clal this one lower yet even though the new overnight is sagging a bit.  Just look at the chart.

Transportation:  Same story here as all the other cahrts Wednesday - a big doji star.  So after a gain Tuesday and with falling indicators, this looks more bearish than anything else.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      3      2       2           1       0.667    -227



     And the winner is...

I don't know - it's all rather frustrating.  Despite some dramtic moves on Thursday, we ended up right where we began.  The dojis warn of a possible reversal, but after three days of up/down/up, which way?. Right now the best clue we have is coming from the futures which are all up strongly as I write.  So that's what I'm going with and I'm calling Friday higher.  That's all she wrote.  See you again Sunday night!

YM Futures Trader

No trade tonight..