Monday, June 4, 2012

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, medium confidence.
  • ES pivot 1285.00.  Holding under is bearish..
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader standing aside.

This weekend we have a split edition of the Night Owl.  See yesterday's post for the main chart analysis.  This post contains only the updates since then.  Monday night we'll resume the usual daily format.

The technicals

Market index futures: Tonight all three futures are, once again, significantly in the red.  ES is down 0.67% at 12:50 AM, although all of that drop happened in the opening hour Sunday evening.  Since then ES has found some support around 1265.  What's really bad though is that while Friday's trading stopped right on the 200 day MA at 1275.92, this evening pretty much just continued lower from there.

Since 2010, the SPX has broken below the 200 day MA from above six times.  Five of those times, there was continued movement lower in the following days.  And although ES is now at oversold levels, there's no sign of a reversal yet.  Its stochastic seems to be trying to set up a bullish crossover, but that's looking still a few days away.

But I would be remiss if I didn't add that on the hourly chart, ES has just exited its descending RTC and that's a bullish setup.  It might be that we've got a bottom around 1265.

ES daily pivot: Tonight the pivot takes a big drop from 1308.50 to 1285.00.  This has the effect of cutting the distance to the new pivot in half, even though ES has moved lower some more.  Of course, that still leaves us 20 points under, which is pretty awful.

     And the winner is...

I was waiting all weekend for some European byg wyg to make a grand announcement about how they'd seen the light over there and had a plan to solve their mess, but I guess I waited in vain.  The silence from that direction was matched only by the lack of leadership from Washington, where Emperor Nerobama seems to be more interested in getting re-elected than in saving the global financial system.  I guess somehow I had expected more.  Oh well - everybody back on the elevator.  Going down!  Next stop, the bargain basement.  Monday's going lower again.

ES Fantasy Trader

Portfolio stats: the account remains at $134,000 after 40 trades (31 wins, 9 losses) starting from $100,000 on 1/1.

Because I believe the recent short-term selling has been somewhat overdone, and because the Greeks aren't going to pack up their euro-tents and steal away on a weekday, and everything's looking so oversold, I am hesitant to go short tonight.  On the other hand, there's still no real indication of a turnaround yet so that pretty much leaves me just sitting on the sidelines.

Reminder - you can follow the entries and exits for these trades live on Twitter @NightOwlTrader.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

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