Monday lower

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

• Monday lower, medium confidence.
• ES pivot 1372.42.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias down.
• ES Fantasy Trader goes short at 1363.75.

Recap

Last week ended lower as I expected, though by more than I expected.  Friday's 137 point dump put the kabosh on what was starting to look like a new uptrend after two solid green candles.  With another options expiration week coming up, things should be interesting.  Never a dull moment on the Street of Dreams, eh?

The technicals

The Dow: With the Dow up big and then down big and a full week behind us, I like to back out to the weekly chart.  And I have to say, it's looking more like a weakly chart, with two consecutive solid red candles.  Even worse, the candle from two weeks ago took us right to the lower edge of a weekly rising RTC all the way back to last December 5th.  That's a bearish setup.  And then last week's candle traded entirely outside the RTC.  That's the bearish trigger.  And the indicators continue their march downward from overbought levels.  Nothing but ugly here, folks.

The VIX:  Let's keep the weekly theme going here since the daily VIX chart is also somewhat confusing right now.  The weekly VIX closed with a big gap-up spinning top just short of 20.  But it's too soon to view this as a reversal warning.  Note that preceding candle looked almost identical and we moved up a lot from there.  And the weekly indicators continue to rise from oversold levels.  All of this suggests more upside to come from the VIX and that would be bad for stocks.

Market index futures: All three futures are trading lower tonight at 2:14 AM EDT, though not hugely with ES down 0.11%.  Friday's big red candle that essentially completely retraced Thursday's gains short-circuited the indicators, pulling the rug out from what was starting to look like an advance.  Although this kind of yo-yo motion might make you think that we could go right back up again on Monday, the fact that the VIX remains sub-20 tends to put a damper on that idea.  Overall, this chart's not looking so hot.

ES daily pivot: Tonight, the pivot fell from 1378.50 to 1372.42.  With ES pretty much wandering around little changed this evening, we were below before and are still below.  Not very encouraging.

Dollar index: The weekly dollar chart is less clear than the others, probably because of the recent renewed attention to Europe.  The greenback now finds itself near the upper end of a two month trading range with a hanging man and overbought indicators that would suggest the next move would be lower, contrary to what many of the other charts are telling us.  By itself, this would be good for stocks.

Transportation: And finally, the weekly $TRAN looks bad too.  Here we have two rising spinning tops followed by a hanging man.  The indicators are starting to top off at overbought levels, with the stochastic trying to form a  bearish crossover and OBV turning lower from a very high level.  Not good at all.

History: According to The Stock Traders Almanac, Monday is historically quite bullish.

Accuracy:

Month right  wrong

April   5      3

     And the winner is...

Tonight I'm just not feeling the love.  The charts are mostly in agreement about some more downside from here, so I'm going to call for a lower close Monday.

ES Fantasy Trader

Portfolio stats: With no trade over the weekend, the account remains at  $130,000, after 29 trades (22 wins, 7 losses) starting from $100,000 on 1/1  Tonight we go short at 1363.75 at 2:13 AM EDT.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.