Actionable ideas for the busy trader delivered daily right up front
- Monday higher - medium confidence
- ES pivot 1297.00. Holding above is bullish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader remains long at 1365.00.
Well Friday just gave us more of the same old same old, with the Dow sinking yet again, down another 73 points. Not even the Facebook hoopla could save this sorry session. Speaking of which, I'd like to tell you a little market joke. Here it is:
So what's the joke? Well this is Facebook's opening day, told in 5 minute candles. Let's walk through it:
|FB is where?|
11:45 AM - FB drops right back to 38. 10 seconds later my phone rings. It's my broker. The same one who told me a month ago that he had no FB shares for me. Now he's got some. You don't say. I decline.
11:50 AM - Boing! FB bounces off the IPO price back to 41.95 (but no higher) and then starts wandering lower.
2:50 PM - The early worms decide to give everyone else the bird and cash out. Back down to 38 we go.
3:35 PM - FB finds more support than a pair of carbon steel suspenders. It trades for 10 straight candles down to exactly 38.00, but not a penny lower.
4 PM - FB closes at 38.15. The IPO boys made 15 cents. Everyone else lost money. Big whoop.
Then there's the odd little ping pong match that occurred in the after hours where it bounced between 38, on the dot and 42, yes, on the dot before closing at 38.42. What the heck was that all about?
And people wonder why the "average investor" distrusts the markets. This chart isn't a joke, it's just shameful. So let us now turn attention instead to some charts that are more meaningful and less manipulated.
The Dow:My closing comment on this last week was "no turn-around in sight". And indeed the Dow continued its relentless march towards its 200 day MA, now just 170 points below us. And we're still stuck in the descending RTC. Given its current slope (and there are still no signs of a turn on this chart) we'll hit the MA on Tuesday. That will be the day of reckoning. You heard it here first: 12,198.73 is the Dow's Alamo. If we break that support, heaven help us.
The VIX: Just as the Dow is marching down to its 200 day MA, the VIX is marching up to its own, at 25.77, just 0.67 up from Friday's close. That is easily in striking distance for Monday. If we break above that level it will be bad, very bad. But if we bounce off, look for an end to the market downtrend. Monday will tell this tale. Should be interesting. I will have my VIX chart front & center on Monday.
Market index futures: There are two bright spots tonight. The first is that all three futures are up by significant levels at 1:46 AM EDT, with ES gaining 0.48% (NQ is up 0.6%). But with ES just marching down toward its own 200 day MA (at 1268.66, now just 28 points away) and remaining firmly inside a long descending RTC, why would the futures all be up like this? Perhaps traders like the vague hand waving emanating from Camp David this weekend or are anticipating some sort of big announcement from our Empty Suit of a president on Monday. Maybe. But I've seen this movie before and every time I try to kick this football like Charlie Brown, Lucy yanks it away in the morning. We'll see.
ES daily pivot: Ah, the pivot. Tonight it takes yet another drop this time from 1310.83 down to 1297.00. But with the rally in ES so far overnight and this drop, we are now testing the pivot as I write. And as I return to this section, ES has now crossed the pivot. That is a positive development.
|Daily dollar ($USDUPX)|
Transportation: But I've saved the worst for last. Last Thursday, the trans took a big dump stopped only by their own 200 day MA. But on Friday they just continued down from there, dropping another 1.3% despite glaringly oversold indicators. This, folks, is bad news indeed. The last time we broke under the 200 MA from above was August 1, 2011 at 5160 when the Dow was at 12,132 (oddly enough, real close to where we are now). Seven days later, the Dow closed at 10,720, a 1412 point loss. That's some scary stuff, eh kids?
History: According to The Stock Traders Almanac, Monday is historically slightly bullish.
Month right wrong no call conditional
April 7 9 2
May 6 5 2 1
And the winner is...
As far as Monday is concerned, all is not as gloomy as it was for most of last week. The problem is that we're getting some severe mixed messages. The $TRAN chart is very bad, but there's a sign of hope in the VIX, and the dollar and ES both look quite positive. So what's it gonna be? I'm going way way waaaaay out on the limb here and at the risk of being the Owl who cried Wolf, I'm calling Monday higher. Partly because of the G-8 politics and partly because this streak is just getting much too old to go on much longer. I just have this feeling about it tonight.
But I will add the usual caveat - if ES has broken back under the pivot by the open, all bets are off.
ES Fantasy Trader
Portfolio stats: the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1 Tonight we're once again still holding on to this long at 1365.00. At this point we're in too deep to get out now. But perhaps that's the problem. Maybe I should just throw this trade into the volcano to appease the angry market gods.