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- Friday lower.
- ES pivot 1902.00. Holding below is bearish.
- Next week bias uncertain technically.
- Monthly outlook: bias lower.
- YM Futures Trader: still long at 16,434.
I'm glad I took a day off on Thursday because we finally got a bit of clarity form the charts as the market finally managed to put in a non-trivial advance for only the second time this year. This made for some interesting chartage so let's get to it snd see what we can deduce about op-ex Friday.
The Dow: On Thursday the Dow retraced a bit more than half of Wednesday's losses. The green candle was something close to a bullish harami and though that's not the best of patterns, the indicators are now all clearly rising off their crazy oversold lows from last week. Even the stochastic is participating, making me cautiously optimistic here for Friday.
The VIX: The VIX has been all over the place this week which makes it an opportune time to take a look at the VVIX. On that chart we see that Thursday gave us a bearish harami with indicators just shy of overbought. It's not a slam dunk, but with strong resistance now at 116.7 it looks like there's more downside available there. What does that mean for the VIX? Well that gave us a classic red spinning top on Thursday that was unable to push any higher than Wednesday's highs. Indicators are now wandering around just short of overbought but with a bearish harami here as well, there's at least a suggestion the VIX could go lower on Friday.
Market index futures: Tonight, all three futures are lower at 12:35 AM EST with ES down 0.87%. After another disappointing day on Wednesday ES retraced most of those losses on Thursday to close right back up to 1914.50 on a tall fat green spinning top. Even with that big move the indicators are still oversold and all continuing higher off the bottom achieved last week. We also just barely exited the year-long descending RTC for the second time to produce a bullish setup. That all looks vaguely positive for Friday but we've been burned before here and in fact the new overnight is guiding mildly lower so I'm hesitant to call ES higher on the basis of this chart alone. And let's remember it's options expiration so anything is possible.
ES daily pivot: Tonight the ES daily pivot ticks up from 1902.00 to 1904.33. But an evening sag in ES now puts it back below its new pivot so this indicator flips right back to bearish again.
Dollar index: After a big dark cloud cover on Wednesday the dollar opened lower on Thursday but ended up finishing with a small 0.18% advance on a green spinning top. This is also a bullish piercing pattern and with the stochastic continuing its recent bullish crossover and indicators a long way from overbought there's a distinct possibility here the dollar might move higher on Friday.
Euro: The euro is now clearly in congestion mode because after a green hammer on Wednesday it gave most of those gains back on Thursday on a lopsided red spinning top to close back to 1.0878, a level that we seen for the last five days in a row. With only average volume and indicators that are just wandering around aimlessly between overbought and oversold, there is really no way to tell which way this chart is headed on Friday.
Transportation: The trans have been getting absolutely hammered all month so far and after their worst showing of the year on Wednesday they finally managed a decent 1.17% gain on Thursday on a nice green hammer with increased volume. Indicators are rising ever so slowly off of extreme oversold levels but remain oversold. So that all leaves us with possibly the best reversal sign we've een all month. But we've seen this movie before so it's definitely going to require confirmation. In the meantime I have a snaeking suspicion that the trans just might make it two in a row on Friday.
Month right wrong no call conditional batting Dow
January 4 3 2 0 0.571 439
And the winner is...
While Thursday's action offed some vaguely bullish signs, they all require confimration. And we're distinctly not getting that in the overnight futures. And given the market's continuing inability to put in more than one higher in a row, I'm afraid I'm just going to have to call Friday lower. I'll be happy to be proven wrong. That's all she wrote. See you again not Sunday but Monday night!
YM Futures Trader
After a nice recovery Thursday that helped cut our losses, we remain long at 16,434 in anticipation of further gains.