Friday, October 28, 2016

Friday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain.
  • ES pivot 2129.92  Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias lower.
  • YM futures trader: short at 17,670.

As I expected, the market did move lower on Thursday, if only fractionally as this hum-drum sideways action just keeps on going.  In fact, going all the way back to September 9th, the Dow has crossed today's closing value of 18,170 every day but six.  I'm tempted to go on vacation until this blasted election is over.  Oh well, one quick look at Friday's charts and then at least it's the weekend.

The technicals

VIX, daily
The VIX:  Thursday provided us with a textbook-perfect exmaple of how the regression trend technique works.  On Monday, the VIX just exited its descending RTC (note close above the blue descending line).  That's a bullish setup.  That means to be on the lookout for a trend reveral.  On Tuesday we traded above that - that's the bullish trigger - we're going higher.  And then on Wednesday we got the payoff, a nearly 8% gain to make it three in a row.  And note that I made those annotations before the following moves happened.

But that brings a new concern - the too much too fast phenonmenon.  I went back two years in the daily VIX chart and didn't find any instances where three big up days were followed by a fourth.  And we're also closing in quickly on the 200 day MA (orange dashed line) at 15.94.  That's often good resistance.  So while we're still only just off oversold here, it's not impossible that the VIX might do some retracing soon, though perhaps not as soon as Friday.

Market index futures: Tonight, all three futures are higher at 12:22 AM EDT with ES up 0.12%. 

ES daily pivot: Tonight the ES daily pivot falls again from 2132.92 to 2129.92.  Tht still leaves ES below its new pivot so this indicator continues bearish


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

     And the winner is...

I've been kinda pushing my luck lately trying to make market predictions in such a low-range environment.  But I will note that on Thursday we got some bullish divergence in the trans which rose 0.60% on a day the Dow fell 0.16%.  On the other hand, we also got a classic dark cloud cover out of the Dow and all the indicators are wandering about halfway between overbought and oversold.

The VIX has had quite a three day run but there's really no reversal candles there yet.  And while the futures are higher in the new overnight, they're not particularly exciting and have actually been sagging as the evening wears on.  So given that points seem to be pretty hard to scrape lately, I'm just going to call Friday uncertain and leave it at that.

But I will make a few other predictions.

The Night Owl's Crystal Ball Says...
  • No rate hike in November
  • Probably a rate hike in December
  • That Nasty Woman wins the election, but not by a landslide
  • The market reacts negatively the next day
 Remember, you saw it here first.

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

YM Futures Trader

No trade tonight.