Actionable ideas for the busy trader delivered daily right up front
- Monday higher, medium confidence. Bull-bear ratio is 7:0.
- ES pivot 1211.25. Current price is well above that.
- Rest of week bias uncertain, more gains possible.
- Monthly outlook: bias up, on technicals
- ES Fantasy Trader standing aside.
Once upon a time, long long ago I was trying very hard to master a particular figure skating jump and it just wasn't working. I kept trying and trying, and falling and falling. Finally my coach said "If what you're doing isn't working, try something different". So I did, and literally on my very next attempt, I landed the jump. Right now, this is kind of how I'm feeling about this market. I keep looking at the technicals and thinking this market is going lower. And for two out of the last three days I've been flat out wrong.
So tonight I'm going to try something different. I'm still going to make a call, but it's going to be based exclusively on weekly charts, not daily. I'm getting the impression that something has changed recently in the market and it's time to try something different. So let's see if we can stop falling down and land this forecast for Monday.
The technicals
The Dow: Put in its best week since June last week with a strong solid green candle after a successful test of its 200 week MA a week earlier. Last week's close also pierced resistance at 11,525 albeit on lower volume than the week before. And last week also brought us out of a descending weekly regression trend channel from the beginning of July. With weekly indicators now clearly having bottomed and on the way back up again, the weekly chart goes to the bulls.
The VIX: Put in a tall red candle, the second in two weeks. The VIX has clearly put in a weekly top here. Candle-wise, there's nothing here to suggest higher this week, but the VIX is near support in the form of its 200 week MA at 27.6. In any case, with a weekly close finally under 30 for the first time since July and indicators that are declining but not yet oversold, this chart looks like +1 bulls.
VIX futures: The futures, which had been on a near vertical tear since July, peaked two weeks ago on a tall inverted hammer and finished last week with a tall red candle. With declining indicators and no support in sight, there's nothing here to suggest the futures won't go lower still, so +1 bulls.
Market index futures: All three are in the green by about half a percent at 1:40 AM EDT. ES put in a big hammer two weeks ago and a tall solid green candle last week that cleared resistance at 1214. There is now no further resistance until 1251. Its indicators while rising are still not at overbought levels. I see no reversal signs here, so +1 bulls.
ES daily pivot: Now 1211.25. We've actually closed above the pivot for the last five weeks running and remain above tonight, so that's +1 bulls.
Dollar index: After two full weeks of indecisive dojis, the dollar took a dive last week on a tall solid red candle. With its indicators still just coming off overbought and having fallen out of its weekly rising regression trend channel, the dollar still has room to run lower, so +1 bulls.
Oil: After a hammer and a solid green candle, oil is now near both a peak resistance shelf and its 200 week MA, though it still has a bit of room to rise further before it gets to either one, so for tomorrow at least, +1 bulls.
Morningstar Market Fair Value Index: N/A on a Sunday night, no points.
History: According to The Stock Traders Almanac, the Monday before October expiration is historically positive, so +1 bulls.
And the winner is...
The bulls, with a shut out for a weekly-basis bull-bear ratio of 7:0. So without even looking at the daily charts which have not been particularly productive recently, I'm going to call Monday higher.
ES Fantasy Trader
Tonight I finally threw in the towel on my short from last week once again proving why your first loss is your best loss. I simply got tired of waiting and being wrong. This loss was an ugly, embarrassing 42.25 points.
Portfolio stats: the account is now $130,500 after 24 trades (17 wins, 7 losses) since inception on 8/18 with $100K.
BOT 10 ES false DEC11 Futures 1227.00 USD GLOBEX 01:16:23
SLD 10 ES false DEC11 Futures 1184.75 USD GLOBEX OCT 11 20:16:46
No trade tonight while I see how my weekly forecast works out.
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