Friday, December 2, 2016

Friday stock maket forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower.
  • ES pivot 2203.25.  Holding below is bearish...
  • Next week bias lower technically.
  • Monthly outlook: bias higher.
  • YM futures trader: no trade tonight.
Recap

We are now in a most peculiar period where the Dow has more or less been rising for a week while the SPX has mostly been falling for a week.  I'm now glad I called Thursday as uncertain because this is very unusual and I'm not quite sure what to make of it.  Normally the Dow and SPX are very highly correlated.  I haven't seen anything like this in the 12 years I've been doing this.  Thursday continued the pattern with the Dow up 0.36% and the SPX down by almost exactly as much - 0.35%.
VIX, daily

The technicals

The VIX:  On Thursday the VIX confirmed Wednesday's bullish engulfing pattern with a 5.55% gain on a fat green spinning top.  That sent the VIX overbought though the stochastic has yet to show any bearish inclinations.  With the 200 day MA falling lower and a near test of it on Thursday, I'm thinking we might see a retest on Friday.

Market index futures: Tonight, all three futures are lower at 12:42 AM EST with ES down 0.14%. 

ES daily pivot: Tonight the ES daily pivot falls again from 2203.25 to 2193.67.  That still leaves ES below its new pivot so this indicator continues bearish.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      8      6       6           1       0.600     222
April      6      4       8           2       0.667     416
May        9      3       4           4       0.813     756
June       8      5       7           1       0.643    1393

July       5      6       6           2       0.539    -304
August     1      3       8           0       0.250     120
September  4      5       6           0       0.444     -59
October   10      3       4           1       0.786     314
November   4      4       5           3       0.636     463
December   0      0       1           0       0.000       0

     And the winner is...

Huh - th3 SPX is now clearly in a downtrend while the Dow remains in an uptrend.  My daily market calls are for the Dow which I treat as a proxy for the broader market.  But this correlation has inexplicably suddenly broken down.  Right now the Dow seems to be the outlier since the VIX rose on a day the SPX was down - the expected outcome.  But in any case with all three futures running lower in the overnight and everything either overbought or just coming off overbought I think the Dow is due to pull back so I'm going to take a chance and call Friday lower.

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

YM Futures Trader

No trade tonight.

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