Friday, January 27, 2017

Friday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower.
  • ES pivot 2294.33.  Holding below is bearish..
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • YM futures trader: no trade tonight.

Last night I was a bit worried about calling Thursday higher because often record-breaking rise are followed by greater or lesser pullbacks.  And in fact on Thursday both the Nasdaq and SPX took minor losses.  But my call is for the Dow and that managed to gain another 32 points so that counts as correct.  Still, with all three major averages ow overbought it's hard to keep from thinking that maybe the recent rally into record territory has taken its toll and that we're now ready for a pullback or at least a breather.  Let's see what the charts have to say about this as we look ahead to Friday and  round out the last full week of January.

VIX, daily
The technicals

The VIX:  Last night I observed that "I'm looking for a move higher in the next few days" in the VIX.  And on Thursday it fell again but this time only a scant 1.69% and on a classic gravestone doji at that.  With the VIX now in the 10's, five down in a row now, nearly oversold and with two reversal candles in a row, it can't be long before we see a move higher, possibly as soon as Friday.  Just look at the chart and tell me if you don't agree.

Market index futures: Tonight, all three futures are slightly lower at 12:20 AM EST with ES down 0.07%. 

ES daily pivot: Tonight the ES daily pivot rises again from 2288.00 to 2294.33.  That's enough to put ES back below its new pivot so this indicator now turns bearish.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    7      2       7           1       0.800    358

     And the winner is...

There are record highs just about everywhere you look right now but I get the feeling that the enthusiasm is starting to wane just a bit.  The VIX is giving off signs it's getting ready for a move higher, the Dow and the trans are both now overbought and up against their upper BB's, the TLT is oversold with a green hammer, and copper has already topped.  The futures are also sagging a bit in the overnight, something we haven't seen for several days now.  Ad ES seems to be confirming a classic doji star from Thursday.

Now none of this is guaranteed bearish but it's sure looking less optimistic than the last two nights.  So I'm going to go out on a limb and call Friday lower.

That's all she wrote.  See you again Sunday night.

YM Futures Trader

No trade tonight.


  1. I hope you’re right and we’re approaching a correction or pull-back, so we can get down to business, because buying high is not my preferred strategy.
    Although I'm not a big fan of statistics - in fact I believe as Henry Clay that “statistics are no substitute for judgment” - but as we’re approaching a perfect trifecta, here again are some interesting prophecies from Jeff Hirsch (editor of the Trading Almanac) thanks to my 20/20 hindsight:
    Dec 12, 2016 - Strength generally follows strength, even during options expiration week.
    Jan 4, 2017 - History also suggests that the S&P 500 will continue to rally through President Trump’s first 100 days in office as six of the last nine (66.7%) newly elected Presidents were greeted with S&P 500 gains.
    Jan 5, 2017 - If the major indices can shake of today’s minor setback and break out to new all-time highs, January 2017 will likely follow the much more bullish Post-Election Year January pattern.

    1. Excellent points. All of that is entirely possible and I'm a big fan of The Stock Trader's Almanac. I probably should have been more specific. When I said "pullback", I meant "one-day pullback". Calling the market closing direction for the next day is hard enough - I have no clue where we're going to be 100 days from now.

      But I'll note that so far two of the STA's indicators are looking positive: the First Five Days of January (which were up, and the month of January as a whole (assuming we don't crater next Monday and Tuesday).

      In my personal trading, I'm now fully invested, something fairly rare for me. And I've yet to sell anything.


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