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- Monday higher - low confidence..
- ES pivot 1352.42. Holding below is bearish.
- Rest of week bias higher technically.
- Monthly outlook: bias down.
- ES Fantasy Trader remains long at 1365.00.
That's what I get for committing hubris. I was feeling pretty smug around noon last Friday for calling the market higher in the face of a big whoopise from JPM. After a big dump right out the gate, the Dow had recovered all of its losses and I was looking good. But how quickly one can go from hero to zero in this game. It was all downhill from there and the Dow ended the day down 34 points. So that one goes in the loss column. But we do not dwell on the past here, we only look to the future. So that's what the rest of this post is about.
The Dow: Ah, the Dow. As Mick Jagger once sang, "Heartbreaker, with your thirty four", the Dow broke my heart on Friday, giving up all its early gains and putting my account negative for the day. (OK, and I know it's 44, not 34, but the Dow lost 34). Uh, so anyway, we got this spinning top following a long decline and highly oversold indicators. RSI hit 4 on Friday and the stochastic has been lying on the floor for three days now. But we are still stubbornly stuck in a descending RTC so until I see that breakout, I can only assume we're in for more of the same.
The VIX: On Friday the VIX rose 5.63% on a tall dragonfly doji. But since we're not really in a trend either way, I'm not sure this signals a reversal. The VIX of the VIX seems to be climbing. Lately we've had three days of gap up and down days. The futures gave us a hanging man though and are sufficiently overbought as to suggest a move lower Monday, and therefore a lower VIX too.
Market index futures: At 1:26 AM EDT Sunday night (actually early Monday morning), all three futures are in the red. ES is down 0.22% putting us at the lower end of what is now becoming a fourth day of consolidation. Given how oversold we are here, the conventional wisdom is that the next move will be up. I just don't see a sign right now that that will happen on Monday.
ES daily pivot: Tonight the pivot steps down from 1355.67 to 1352.42. With some aimless trading in the overnight, we remain below this level and that's bad on the face of it. I need to see ES break above this on Monday morning to have a meaningful shot at a higher close.
Dollar index:The dollar continued its ascent on Friday, hitting its upper BB. And its indicators are as overbought as they get. RSI has been pegged on 100 for four days straight now. Technically, this chart favors a move lower, but what with the Chicoms meddling with the euro and who knows what other monkey business going on behind the scenes, anything's possible. In any case, a move lower looks likely in the next few days and that would be good for stocks.
Transportation: On Friday, the trans gave us a tall spinning top that along with highly oversold indicators suggest the next move is higher. So that would be good for stocks in general.
History: According to The Stock Traders Almanac, Monday is historically slightly bullish, but it is up 14 of the last 17.
Month right wrong no callApril 7 9 2
May 5 3 1
And the winner is...
Very strange. Tonight I'm not really seeing any signs that we're going higher on Monday. And yet, if I had just returned from an extended journey to Mars and looked at these charts, would I be shorting anything here? No I would not. Buy low, sell high, right? Well, things are looking lower than higher right now so I'm going to call for a higher close Monday simply because I see more upside potential than downside risk at these levels. But I don't feel really good about saying that. Watch the ES pivot closely Monday morning. If we can break above 1352.42, we have a good shot at a higher close. If not, then we're going lower. So says I.
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.