Actionable ideas for the busy trader delivered daily right up front
- Monday higher, medium confidence.
- ES pivot 1401.75. Breaking above is bullish.
- Rest of week bias higher, technically.
- Monthly outlook: bias up.
- ES Fantasy Trader goes long at 1407.50.
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Recap
Last Thursday we faced something of a conundrum with the Dow and dollar charts giving contradictory signals. I decided to go with the VIX and the futures which were guiding higher and so it was, with the Dow wrapping up the quarter with a decent 66 point gain. Today is April 1st, but there's no fooling the Night Owl as we figure out what might be in store for Monday.
The technicals
The Dow: Thursday's hammer was confirmed with a nice solid green candle Friday on increased volume. Window dressing? Perhaps, but this three day pattern which I call a morning hammer star, is rather bullish. The indicators too have now reversed course and are headed higher.
The VIX: Perhaps reflecting my confusion last Thursday, the VIX on Friday put in a green candle right at the bottom of Thursday's tall red candle. That makes now four straight days of closes right around 15.50. The VIX seems to get pulled down when it tries to go higher, and up when it tries to go lower. The futures, on the other hand, sure look like they're going lower, and that would be good for stocks.
Market index futures: At 1:10 AM EDT all three futures are positive, with ES up 0.27% after a gap-up open when trading opened Sunday evening. After last Thursday's doji, we got a solid green candle on Friday confirming the doji as reversal. This evening's gap-up open shows good follow-through. OBV is moving up but not yet at overbought levels and the stochastic just formed a bullish crossover. I'd say this chart is in pretty good shape.
ES daily pivot: Tonight the pivot rises from 1396.17 to 1401.75. While ES has been drifting ever so slightly lower since around 7 PM Sunday, we are still five points above the new pivot.
Dollar index: Last Thursday the dollar chart was confusing to me. Friday provided us with some clarity, with a big gap down that touched the lower BB and eventually closed down 0.28% but on a green candle. The weekly chart though, with a now completed candle, continues to guide lower with all indicators continuing to come off overbought levels and a now complete bearish stochastic crossover. This can only be good for stocks.
Morningstar Market Fair Value Index: I don't know what's up with MS and their index, but now they're showing the number as 0.96, unchanged in six straight sessions, whereas last week they were showing numbers up to 0.98. I'm about ready to drop this as a daily indicator if I can't get consistent believable numbers out of them.
History: According to The Stock Traders Almanac, Monday is historically quite bullish.
And the winner is...
Tonight I'm seeing more positive signs than negative, so I have to give it to the bulls. That said, the Dow is still pretty much range-bound in the 13,100-13,250 area and we're closer to the top of that than the bottom. I'm not sure we're going to have the juice on Monday to break out above this, so while I'm going for a higher close Monday, I'm also thinking the upside is limited.
Performance:
Here are my performance stats so far for 2012. "ESFT" is the ES Fantasy Trader. The first two columns are for my trading account. The next is for the ESFT. The last is the Dow, my reference benchmark that I try to match or beat.
Date Trading Month Tr. YTD ESFT YTD Dow YTD
1/31/12 7.41% 7.41% -0.50% 3.41%
2/29/12 3.67% 11.35% 7.88% 6.02%
3/31/12 1.76% 13.31% 29.88% 8.16%ES Fantasy Trader
Thursday night's long was good for merely a single point, but a win is a win, right?
Portfolio stats: We finish the month and the first quarter with $129,875, after 26 trades (20 wins, 6 losses) starting from $100,000 on 1/1. Tonight we go long right at Thursday's pivot, 1407.50 at 12:48 AM.
SLD 10 ES false JUN12 Futures 1402.50 USD GLOBEX MAR 30 11:20:39
BOT 10 ES false JUN12 Futures 1401.50 USD GLOBEX MAR 30 01:15:58 
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