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- Friday higher.
- ES pivot 1883.00. Holding above is bullish..
- Next week bias uncertain technically.
- Monthly outlook: bias higher.
- YM futures trader: still long at 16,434 .
Well the conditional call didn't really work out on Thursday. ES spent most of the day simply oscillating about its pivot so it was never really clear which way it would finish. It certainly wasn't clearly above its pivot by mid-morning. This technique works often, but not always. Turns out the Dow ended the day with a 125 point gain and I can never complain about that. And that now leaves just one more day as we round out the week and the dreadful month of January, so let's check it out.
The Dow: The Dow has now been reversed direction for five days in a row with a 0.79% gain on Thursday. Even with that, all the indicators continue to rise but have still not yet hit overbought. So with a green candle now on the books the logical assumption would be that Friday will be a down day, but with the Dow still only in the middle of its recent trading range I'm hesitant to do that .
The VIX: After a crazy long-legged doji star on Wednesday, instead the VIX decided to continue moving lower although it was on a funny gap-down green inverted hammer to close down 3%. That leaves all the indicators just shy of oversold and the stochastic primed for a bullish crossover although it has not done that yet. So we are left with a reversal warning of a move higher but one which requires confirmation.
Market index futures: Tonight, all three futures are sharply higher at 12:19 AM EST with ES up 0.70%. All of ES's gyrations on Thursday left it at the end of day with a perfect long legged doji star centered exactly in the middle of Wednesday's trading action. There is no better indicator of uncertainty than this. And that is reflected in the indicators, some of which are continuing higher, others of which have topped and are moving lower. In particular the stochastic has just barely squeaked out a bearish crossover. There was plenty of doubt left earlier tonight but that seems to be getting resolved to the upside in the new overnight after a surprise interest rate announcement from the Japanese.
ES daily pivot: Tonight the ES daily pivot is essentially unchanged, moving from 1883.17 to 1883.00. That leaves ES back above its new pivot so this indicator flips right back to bullish again.
Dollar index: The dollar fooled me on Thursday by ignoring Wednesday's inverted hammer and instead continuing lower, this time by 0.42% to continue a week-long descending RTC. Even at that the indicators have not yet hit oversold as the stochastic continues on in full-blown bearish crossover mode. There isn't even any decent support nearby for another day or two so I can't really call this chart higher tonight.
Euro: Last night I was looking at the euro's recent trading range and figuring that it had about run its course. However it turned out that the euro had plenty of gas left in the tank and on Thursday put in a tall green candle to close right back up to 1.0918, its best close since December 29th and just short of its upper BB at 1.0989. But even with a four day winning streak now the indicators are still a fair ways from overbought. So one might think that the euro would want to check out the aforementioned BB on Friday though with a non-trivial move lower in the overnight that remains to be seen.
Transportation: In a bit of a bearish divergence, on Thursday the trans lost 0.8% on a day where the Dow gained exactly that amount. This confirmed their dark cloud cover from Wednesday while narrowing the stochastic around for a bearish crossover although hasn't done it yet. Meanwhile the indicators are lying just short of overbought. So the overall appearance here is bearish though not extremely so.
Month right wrong no call conditional batting Dow
January 8 5 5 0 0.615 1036
And the winner is...
I was getting all set to call Friday uncertain in the face of a bunch of reversal signs that all required confirmtion. But the news out of Japan tonight has sent the futures sharply higher. In addition, the last day of January is historically pretty strong anyway. Now there is a bunch of economic news coming out on Friday, but unless it's really stinko, I'm going to hazard a guess that we close Friday higher. The possibility exists that we could be breaking out of a week-long trading range soon. That's all she wrote. See you again Sunday night!
YM Futures Trader
Nothing new again here.