Friday higher

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

• Friday higher.
• ES pivot 1948.42  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ still not a swing trade buy.

Recap

I'm very glad I noticed a sudden upturn in the futures in the wee hours of Wednesday night and changed my Thursday call from bearish to merely uncertain. The overall market managed to finish with modest gains - always a good thing. It was also a welcome relief from the series of wild swings intraday we've been seeing recently. So let's move on to Friday as we complete this holiday-shortened week . 

The technicals

The Dow:  As it turns out the Dow gained a respectable 77 points on Thursday on a lopsided spinning top. That also unwound the stochastic for a narrow bullish crossover from a high level which is an encouraging sign. This isn't the most bullish pattern in the world but I'd give better than even odds of advancing further on Friday.

The VIX:  On Thursday the VIX lost 7% on a classic dark cloud cover. That sent RSI moving lower and the stochastic just squeaked out a bearish crossover from a low level. The latter is often good for a day or two of continued lower. Therefore I'd say there's more downside in store here on Friday.

ES daily

Market index futures: Tonight, all three futures are higher at 12:59 AM EDT with ES up 0.35%. After a rocky start yesterday evening ES telegraphed a move higher around 1:30 AM and indeed managed to close with a long-legged green spinning top on Thursday. But here's something interesting , take a look at this chart. It sure looks to me like ES is developing a symmetrical triangle and if that's the case then that's really bad news for the markets because these patterns generally exit in the same direction from which they were entered. So given the fact that this one was entered in a big crash last month the next leg would likely be lower. And from the looks of it the pattern is nearly complete. If this follows through I will be looking for another leg down next week.  But Friday at the moment is looking higher.

ES daily pivot: Tonight the ES daily pivot falls again from 1956.75 to 1948.42.   And that, plus the drift higher overnight is enough to put ES back above its new pivot so this indicator is back to bullish.

Dollar index:  Last night I wrote that it looked like they was still more downside available for the dollar on Thursday and was that was a very good call indeed as the dollar slid a massive 0.60% to punch right through its 200-day MA at 64.08 on a tall red marubozu. With two black crows in place, falling indicators, and the 200 MA gone this chart looks distinctly bearish for Friday.

Euro:  Similarly I called the euro higher for Thursday and that's also just what happened as it rose smartly to close at 1.1285 stopping right on its own 200 day MA. However that typically offers some pretty strong resistance and indeed in the overnight we now see the euro moving back lower again. That has had the effect of sending RSI starting to move lower too. But the stochastic continues to rise and has yet to begin curving around for a bearish crossover so what we have here is a warning of a possible move lower on Friday but something that requires confirmation.

Transportation:  On Thursday the trans handily outperformed the Dow with a 0.93% advance compared to the Dow's 0.47%. That also broke resistance around 8015 and keeps us in a rising RTC. Indicators also continue to rise but have not yet hit overbought. So the overall impression of this chart for Friday now looks bullish - quite a reversal from last night.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   6      4       5           3       0.692    183
March      7      6       5           4       0.647    976
April      3      8       7           0       0.273      1
May        6      5       5           2       0.615    581
June       8      6       3           4       0.706    552
July      10      1       5           4       0.938   1212
August    10      2       3           2       0.857   2314
September  4      1       2           0       0.800   1187

     And the winner is...

In the space of one day, the technicals have gone from bearish to bullish - such are the vagaries of life with the VIX in the mid-20's.  So assuming there's no untoward announcements from any Byg Wygs overnight, I'd say we round out the week with Friday higher.  That's all she wrote.  Next week should be  really interesting.  See you again Sunday night!

Single Stock Trader

On Thursday the Verizon was one of the Dow's weaker players gaining just $0.07 on a narrow lopsided spinning top. But that came right at the lower end of Wednesday's tall red bearish engulfing pattern. The net result is that the indicators are now all over the place with RSI and OBV rising but momentum falling and money flow flat. In any case none of that makes for my preferred setup therefore this is once again not a swing buy.