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- Monday uncertain, ES pivot is key.
- ES pivot 1274.42. Breaking over is bullish..
- Rest of week bias higher technically.
- Monthly outlook: bias up.
- ES Fantasy Trader standing aside.
One of the possibilities for last Friday that I mentioned was that "any gains will reverse later in the day on week ending profit taking." and that's essentially what happened with the Dow sinking out the gate, then recovering the rest of the morning only to give it all back later to close down a modest 56 points.
The technicals
The Dow: Friday's red candle serves as confirmation to Thursday's long doji. That said, it looks like we've got another symmetrical triangle forming on the daily chart which should resolve in the next day or two. And given an entry from below, the exit will most likely be to the upside.
The VIX: The VIX is now flirting with short term support just above 20 but still has a ways to go before hitting its lower BB at 18.93. And its indicators are not yet in oversold territory. In fact, the last three days suggest a bearish three black crows pattern. All of this suggests continued downside risk for the VIX, If not leading to higher stock prices, I'd expect this at least to put the brakes on any potential market downside.
Market index futures: Right now (2:25 AM EST) all three futures are in the red. ES is down 0.28%. However, it has actually been gaining since around 12:35 AM. After four days of complete indecision we may be getting a break lower tonight. Inverted hammer, hanging man and two dojis followed by some downside in the overnight all has a bearish feel to it. The failure of ES to break resistance at 1276 four days running also seems to suggest that we may need to back off and get a running start at it later on.
ES daily pivot: The new pivot has jumped to 1274.42 leaving us now about 3 points under. Given that ES is actually moving up right now, that puts the pivot in play. This will be the number to watch before the open. If ES attacks the pivot and fails to break through, that strengthens the bearish case.
Morningstar Market Fair Value Index: On Friday the index dropped to 0.88.
History: According to The Stock Traders Almanac, Monday is historically negative for the Dow.
And the winner is...
Another very very tough call tonight. As I've been writing, ES has continued to gain and is now just a point and a half below the pivot. Because of a lack of bearish guidance from the VIX and market charts demonstrating more indecision than signs of reversals, and with no new developments out of Europe over the weekend and no major economic news on the calendar for Monday I'm going to guess that Monday may just give us yet another day like we've been seeing the past four sessions.
If ES breaks above the pivot before trading opens, then we definitely could go higher, else lower. Watch 1274.42. For the time being anyway, the bias is actually to the upside but I'm not looking for any major moves either way. That's all, she wrote.
ES Fantasy Trader
Portfolio stats: the account remains $100,125 after 2 trades (1 win, 1 loss).
Tonight we're standing aside. Once again I see no real reason to put on a trade in either direction until we get out of this ongoing narrow range doji situation.
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