Actionable ideas for the busy trader delivered daily right up front
- Monday higher, high confidence.
- ES pivot 1321.25. Holding above is bullish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader standing aside.
Last Friday was quite interesting for me because some fool with a backhoe dug up the local fiber cable and knocked out Internet service in our entire neighborhood. Service wasn't restored until about 5 PM, so I basically had the day off. I used the time to rethink the idea of installing a dual WAN router and subscribing to a wireless ISP like Clearwire. That would prevent these sorts of problems.
Anyway, by watching CNBC I was able to see my call for a lower close go down the drain as the market relentlessly trended up the entire day for an impressive 93 point gain to close out its best week this year so far (and my best week also). But with some new wrinkles over the weekend from Spain and China, where are we likely to go this coming week? We turn to the charts for the answer.
The Dow: Thursday's shooting star reversal warning was shot down by Friday's strong green candle. With indicators still not yet at overbought levels, the only thing in our way now is a small resistance shelf at 12,580, give or take. After that, there's another line at 12,700 and then the psychological 13K again. Right now, there's nothing on this chart to suggest anything but continued higher on Monday - and that was before the weekend news.
The VIX: And on Friday the VIX formed a classic dark cloud cover, one of the most powerful bearish reversal patterns around. With its indicators still not oversold yet, there's no reason to believe the VIX can't go lower still on Monday.
|Nobody expects the Spanish Inquisition!|
ES daily pivot: Tonight the pivot ticks up from 1319.42 to 1321.25. We moved above the old number on Friday and of course now we're way above the pivot, always a good sign (initially at least - getting too extended from the pivot eventually starts to bring a reversionary pull into play).
Dollar index: The dollar on Friday completed sort of a morning doji star, except for the fact that Friday's candle was red instead of green. But its stochastic just barely squeaked out a bullish stochastic crossover and the candle itself landed right on the edge of the descending RTC for a bullish setup. This seems to suggest a move higher by the dollar on Monday. But - and this a a big but, the euro gapped up big time in Sunday night trading on the news from Spain, so I wouldn't be surprised to see the dollar move lower on Monday. Canonically, that should be good for stocks.
Transportation: Dow theorists take note - the trans gave us a 1.06% gain on Friday, better once again than any of the major averages. And this move negated Thursday's gravestone doji so here too we have a chart that looks like it still has more upside potential.
Accuracy (daily calls):
Month right wrong no call conditional batting average points trade
April 7 9 2 .438
May 10 7 3 2 .632
June 4 1 1 0 .800 +220 +$211
And the winner is...
Well tonight is pretty clear I'd say. While the charts already looked mildly bullish at the end of last week, right now the futures are pointing to a higher close Monday. I'll be a buyer of DIA at the open.
ES Fantasy Trader
Earlier this evening we covered last Thursday night's trade at 1343.50 for an ugly 29.75 point loss, a victim of the (unexpected) news from Spain and last Friday's network outage that kept me from closing the position when I wanted to in the face of steadily rising prices. Tonight we are regrettably standing aside. I'm pretty sure most of tomorrow's gains have already occurred. This one was simply not tradeable.
Portfolio stats: the account falls back to $129,250 after 43 trades (33 wins, 10 losses) starting from $100,000 on 1/1
BOT 10 ES false JUN12 Futures 1343.50 USD GLOBEX 19:53:26
SLD 10 ES false JUN12 Futures 1313.75 USD GLOBEX JUN 7 20:21:18
CUA (Commonly Used Acronyms)
BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date
Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction. All trades listed here are presented only as examples of the author's personal trading style. Investing entails significant risk and trading entails even greater risks. Deal with it.