Monday maybe higher

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

• Monday higher - low confidence.
• ES pivot 1396.00.  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remains short at 1386.75.

Recap

One thing about the market - there is no better place in the world to learn humility.  Being wrong again on Friday reminds me of that lesson.  I'm not really sure what's driving this market higher, but I'm not about to fight the tape.  Still it's important to keep an open mind about what's coming next.  We'll see tonight if the charts can shed any light on the subject.

The technicals

The Dow: Friday's 24 point advance was marked by a bearish shooting star.  This sort of pattern does require confirmation though so it would be premature to call this chart lower on that basis.  We're also still just barely hanging on to the rising RTC and the indicators, though high, have yet to suggest a top.

The VIX:  On Friday the VIX put in a green candle for the first time in nine straight sessions, gaining half a percent.  On the other hand the weekly chart generated a big bearish engulfing pattern that also took it outside the rising RTC - a bearish setup.  Along with a weekly stochastic forming a bearish crossover, this would seem to suggest a lower VIX this week which would definitely be good for stocks.

Market index futures: OK, so Friday gave us a spinning top warning of a reversal.  But so far, we're not seeing that with all three futures up at 1:58 AM EDT and ES up by 0.14%.  Still, the indicators are getting fairly overbought by now and although we haven't seen an RTC break yet, the channel is quite narrow so it wouldn't take much to generate a bearish setup here.

ES daily pivot: Tonight the pivot rises from 1392.00 to 1396.00.  With ES pretty much just wandering around in the overnight so far, this now cuts the distance to the pivot in half.  While not cause for concern yet, we want to watch for any attempts to dive bomb that level.

Dollar index: The big development here is that on Friday the dollar broke under its 200 day MA following five straight days of declines and ten straight red candles in a row.  The dollar has some support coming up around 54.50 but we're not quite there yet.  A lower dollar would help stocks.

Transportation: This daily chart is now too choppy to figure out.  Even the weekly chart has been channeling in the 5200-5300 area for five weeks now.  Again, I think this reflects the recent political events in Europe more than anything.


History: According to The Stock Traders Almanac, Monday is historically slightly bearish.

Accuracy: 

Month right  wrong  no call

April   7      8      2
     And the winner is...

Well as I said at the start, you can't fight the tape and right now the tape is running higher.  While a lot of charts look like they're getting kind of extended, there are really not yet any really clear reversal signs.  So instead of trying to outsmart the market and second guess the top, I'm now just going to go with the flow and that means a higher close Monday.  (Watch - now the market will tank - no, just kidding).

ES Fantasy Trader

Portfolio stats:  the account remains at $141,750, after 33 trades (26 wins, 7 losses) starting from $100,000 on 1/1  Tonight we are gritting our teeth and remaining short at 1386.75.

Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.  And let me note that I always buy on the ask and sell on the bid to make things more fair.  This way there's no question that the trade would have executed for real.  But also don't forget that because ES often moves quickly, the price may have changed in the time it takes me to type in the Twitter post.  Also keep in mind that these trades run with no stops and no preset targets.