Looking bad for Monday, very bad

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

• Monday lower, high probability.  Bull-bear ratio is 1:4.
• ES pivot 1180.33.  Current price is far below that.
• Rest of week bias uncertain, rebound possible by Friday.
• Monthly outlook: bias down, regardless of Fed action in September
• ES Fantasy Trader opened new short position at 1138.50.

     Recap

Going down.

Hey, at least these guys have parachutes.  Not like this market is looking.  Last week we ended with the Dow putting in an ugly long red candle that just barely took us off oversold levels.  And the news that came out over the long weekend sure didn't offer much encouragement.

The Empty Suit from Washington delivered Yet Another Speech of Nothing, apparently designed once again to blame everyone except himself for the mess we're in.  Angela's got trouble in Deutschland.  The Post Office is going out of business.  Europe is down, Asia is down, start mixing the Jim Jones Kool-Aid.

With today being a holiday, we've got two ES sessions with no broader market open and this may give us a hint as to where we may be going Tuesday (not like there's any doubt about it tonight).  Let's run down the list of the Usual Suspects.

The technicals

The Dow: As I mentioned, a long red candle, oversold indicators going down, no real support in sight.  Score 1 for the bears.

The VIX: Actually ended Friday with a doji indicating indecision.  Weekly VIX chart put in a hammerish doji, though still at oversold levels.  Overall, I give this to the bears on the strength of the daily indicators.

VIX futures: Huge gap up on Friday.  Gaps eventually back fill but there's nothing to suggest that's happening tomorrow.  All this does it provide a base to go higher.  Higher VIX futures -> higher VIX -> lower stocks.  +1 bears.

ES daily

Market futures: ES, NQ, and YM all hugely lower tonight.  In fact, this deserves a chart because you don't often see a bearish identical three crows pattern. It has a very good success rate.Just look at those three big red candles, each one opening on the previous one's low. +1 bears

And with the indicators all still only halfway between overbought and oversold, ES still has plenty of room to run lower and it would not surprise me to see us retest the August lows at 1123 in the next day or two.  One more support level lies below that at 1110.  +1 bears.

ES daily pivot: is now 1180.33.  At 1:15 AM EDT we are at 1138.50, so there's basically no chance of getting anywhere near there tomorrow.  The one thing about this is that when prices get too far from the pivot, they tend to get pulled back.  We're pretty far right now.  +1 for the bulls.

Dollar index: Exponential run-up last week approaching overbought levels but not quite there yet.  Look for a lower dollar later this week.  No sign of a reversal just yet though.  +1 bears.

Oil: Dropping again in the overnight.  Daily chart looking overbought and peaked two days ago.  Oil going lower lately implies stocks going lower.  +1 bears.

Morningstar Market Fair Value Index: This index has fallen again, back to 0.85.  I think we need to see it hit 0.81 or .82 before stocks can go higher again. +1 bears.

History: The Dow has a slight positive bias the day after Labor Day according to The Stock Traders Almanac.  +1 for the bulls, though I don't think that's really going to help us this time.

   And the winner is...

Clearly the bears  The bull-bear ratio tonight is 2:8.  We're going lower on Tuesday.  The only thing we need to watch for is the possibility of a dead cat bounce or gap filling action later on in the day.  If there's more bad economic news though, you can pretty much count on just another red candle down to ES 1123.

ES Fantasy Trader

The ESFT went short once again at 8:30 this evening.  I'm sorry now I closed out my short from last Friday, and even more sorry I closed my real SDS position too.

SLD    10    ES    false    SEP11 Futures     1138.50    USD    GLOBEX    SEP 5 20:32:04