Monday maybe higher

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

• Monday higher, low confidence.
• ES pivot 1389.92.  Holding above is bullish.
• Rest of week bias uncertain, technically.
• Monthly outlook: bias up.
• ES Fantasy Trader goes long at 1395.25 at 1:03 AM..

Recap

Thursday night I was expecting a doji on Friday - little change, with direction hard to determine.  It was more of a star than a doji but we did get a small move, with the Dow gaining just 35 points to close at 13,081.  What does that mean for the coming week?  Read on...

The technicals

The Dow: One thing I mentioned last wee was that Friday might be a bottoming day and that's just what the chart ended up looking like.  We got a nice green hammer on the day that held support at 13K.  The Dow is now firmly oversold and its stochastic is right at the level from which a bullish crossover appears ready to form.  I'm now liking the look of this chart.

The VIX:  On Friday, the VIX took its biggest tumble in 13 sessions, dropping 4.82% back below the 15 level.  And in so doing it just formed a bearish stochastic crossover.  This implies a lower VIX Monday which would suggest higher stocks.  The futures seem to support this idea, being stuck in a now seven day descending RTC that is showing no sign of reversing.

Market index futures: At 1:15 AM EDT we've got all three futures in the green.  NQ is up a nice 0.22% while ES and YM are lagging a bit, up just 0.05% each.  After three days of losses last week, ES on Friday put in a green hammer, just like the Dow.  The fact that we're now trading around the upper end of that hammer is early confirmation that the downtrend may be over.  This is supported by rising OBV and money flow, and a stochastic that looks to be readying a bullish crossover in the next few days.

ES daily pivot: Tonight the pivot ticks down from 1390.75 to 1389.92.  With ES pretty flat in the overnight after a pop on the open this evening, we're still about five points over the pivot - not a huge number but still encouraging for Monday morning.

Dollar index: On Friday the dollar put in a stubby gap-down star - not really a reversal indicator.  Supposedly the $DXY is continuing lower tonight.  I no longer have access to $DXY since my data provider whom I will not name but their initials are eSignal decided to start charging for it.  So I have to use the Deutsche Bank dollar index $USDUPX.  It's still free but it only updates during regular hours.  So be it - hey eSignal, you already get enough money from me every year.  Well anyway, even though the dollar gapped down and its indicators are all oversold now, there's still more downside room to go, which would be good for stocks.

Morningstar Market Fair Value Index: On Friday, the index remained at 0.96, but it continues to step down from the high of 0.98 reached early last week. This remains at least something of a concern and will bear watching


History: According to The Stock Traders Almanac, Monday is historically slightly bullish, the only really at all bullish day of the week.  The whole last week of March is generally a downer.

     And the winner is...

I'm seeing enough positive signs in the charts tonight to be cautiously optimistic about tomorrow, so I'm going to call for a higher close Monday.  The rest of the week though remains to be seen.  However, I do note that J-Trader is long right now and the great Rob Hanna is seeing a pretty convincing historical bullish edge to the current setup.  That's all she wrote.

ES Fantasy Trader

Since we did not trade Thursday night, the account remains $124,625, after 24 trades (18 wins, 6 losses) starting from $100,000 on 1/1.  Tonight we're going to try a long from 1395.25.