Monday higher technically but EU news decides

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

• Monday higher, low confidence.  Bull-bear ratio is 7:2
• ES pivot 1248.08.  Falling through would be bearish.
• Rest of week bias higher.
• Monthly outlook: bias up on technicals.
• ES Fantasy Trader holding long.

Recap

Well I blew it again.  I thought we were going higher on Friday.  Instead the Dow handed us a 61 point decline.  In my defense I will point out that I made my call conditional on no bad news from Europe, and there was.  Honesty, I'm getting quite sick of these Greeks with their riots and referenda.  Just pack it in and get it over with already.  Sheesh.

Anyway, being as I've now been wrong two days in a row, I'm a bit cautious tonight as I check the charts.  Still, you do what must be done so once more into the breach dear friends...

The technicals

The Dow: Friday's 61 point loss to close at 11,983 came on a low volume hanging man that pretty much got hung up on the daily pivot of 11,982 as well as the 200 day MA at 11,975.  It's a tricky chart because the stochastic has completed a strong bullish crossover.  With two good support points, I think that trumps the bearish looking candle, so I'm going to give this chart +1 bulls.

The VIX: After a tall inverted hammer Thursday the VIX made a bearish engulfing pattern Friday, ending down just over 1%.  And its stochastic just finished a bearish crossover.  The VIX is really looking like it wants to go lower, so +1 bulls.

VIX futures: Same story here as the VIX itself.  Lower futures would also be good for the market, so another +1 bulls.

Daily ES

Market index futures: All three are in the red right now at 1:15 AM EST but not by much.  It looks to me like ES is making a symmetrical triangle - what do you think?  Since these usually resolve in the same direction from which the triangle started, this would imply a pop higher in a day or two.  It really looks to be nearly complete.  Not also the bullish stochastic and OBV now at levels from which we've bottomed recently and I give this chart +1 bulls.

ES daily pivot: Tonight, is 1248.08.  Even though it's up from Friday, we remain above it and in fact just survived a test at 12:35 AM.  As long as we remain above this number, it's bullish so I'm awarding +1 bulls on that basis.

Dollar index: 54.40 or fight - In the last two sessions the Dollar has made two inverted hammers and has been unable to make any headway past 54.40.  And its stochastic is making a definite bearish crossover, which is always a good indicator.  A lower dollar being good for stocks, this is +1 bulls.

Oil: Oil too has been near the top of its recent trading range and unable to go much higher.  Unless some bad news comes out it looks more likely it will go lower Monday, so that's +1 bears.

Copper: Copper is a bit confused here, with a hanging man on Friday offset by a clear bullish crossover on the stochastic.  I think that trumps the candle so I'm calling copper higher Monday and that's good for stocks so +1 bulls.

Morningstar Market Fair Value Index: No update on Sunday so no points.

History: Although the first day of  the month is typically bullish for stocks and November is one of the best months, according to The Stock Traders Almanac,the Dow has been down the last 4 out of 5 years on this day, so +1 bears.

     And the winner is...

The bulls with a bull-bear ratio of 7:2.  I almost hesitate calling Monday higher after having been wrong two days in a row now, but I recognize that it's happened to me in the past that I'm often not so much wrong as just a day early.  And even though we've got a clear bull bias going here, the overall picture doesn't look particularly convincing to me.

So as I did on Friday, I have to hedge my call with the disclaimer that everything hinges on what new/rumors/ political intrigue comes out of Europe tomorrow.  All it will take is some negative opinion from some minor functionary no one ever heard of in some country most people can't even find on the map to drive our market down.  As I said last week, there's no charts for that.  We live in funny times.

2 AM Update: News is coming out that the Swiss National Bank may act again to cap the franc, thus driving down the Euro.  This is the sort of bad news I was just talking about and it already sent ES for a tumble under the pivot.  I'm now officially standing aside - Monday is just too hard to call.

ES Fantasy Trader

Tonight we are still holding the long position entered last Thursday.  It went south on us on Friday by a bit but I'm betting we'll make some money Monday.  Portfolio stats: the account remains at  $172,500 after 33 trades (24 wins, 9 losses) since inception on 8/18 with $100K.