The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Friday uncertain.
- ES pivot 1994.58. Holding below is bearish.
- Next week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Recap
Repeating a pattern we've seen regularly lately, the Dow took a big dump right out the gate and the spent the rest of the day clawing its way back to even. Though on Thursday it didn't quite make it, ending down 42 points for the lower close I predicted. With just one day left in the week and the month, we now ponder where Friday may go, besides off to the beach in preparation for the long Labor Day weekend.
The technicals
The Dow: Thursday's candle did more technical damage than the meager 0.25% loss would suggest. First, it was a hefty hanging man. Second, it never managed to even reach Wednesday's highs. Third, indicators remain highly overbought but have now started coming back down.. And fourth, the stochastic looks like it's trying to untangle itself with a bearish crossover. That all adds up to lower in my book.
The VIX: Last night I wrote "I think there's more room to run higher here". But I also wrote that the VVIX didn't seem to support that. Turns out, I was right both ways. The VIX did gain 2.29% on Thursday but did it with a gap-up red inverted hammer. Indicators have now come off oversold and we have here a suggestion of a stalled advance, but one which requires confirmation on Friday.
Market index futures: Tonight all three futures are higher at 12:20 AM EDT with ES up 0.06%. On Thursday ES exhibited the signs of out-of-gas-itis I mentioned last night, failing to take out Wednesday's highs on a tall doji. Indicators remain quite overbought though the overnight seems to be showing new signs of life and confirming the doji.
ES daily pivot: Tonight the ES daily pivot drops from 1997.00 to 1994.58. Having moved back above the old number this evening, we remain above the new pivot so this indicator turns bullish.
Dollar index: I thought the dollar would go lower on Thursday but instead it put in a long-legged doji around the center of Wednesday's candle for a 0.08% gain. But it also gave us a completed bearish stochastic crossover and with indicators still overbought, I'll go ahead and claim once again that the dollar goes lower on Friday.
Euro: Meanwhile the euro has clearly found support in the 1.3185 region, trading just above that level on Thursday for a classic spinning top. Trading outside the descending RTC makes it a bullish trigger and the still oversold indicators support that. The new overnight is trying to break above its pivot but doesn't seem to have much oomph behind it. So this one is just too tough to call for Friday.
Transportation: Last night I wrote "I think there's more downside here on Thursday" and it was good thinking because the Trans dropped 0.27% to settle just under their recent trading range with a red hammer. Indicators are now clearly moving from overbought to oversold so the general gestalt here remains negative.
The overall impression tonight is fairly negative. However, the futures are guiding higher. The problem now is that I expect Friday to be an even lower volume day than Thursday as traders pack up and head out on vacation. That increases the probability that random gyrations will be magnified and distort the charts. Therefore I'm just going to call Friday uncertain and start enjoying my own weekend. Happy Labor Day to all and see you again next Monday night. That's all she wrote.
ES Fantasy Trader
Portfolio stats: the account remains $114,250 after eight trades in 2014, starting with $100,000. We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push. Tonight we stand aside.