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.

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.


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.