Actionable ideas for the busy trader delivered daily right up front
- Monday higher, medium confidence.
- ES pivot 1375.75. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias down.
- ES Fantasy Trader going long at 1378.25.
Last Friday got off to a nice start and things were looking fairly good - that is until Emperor Nerobama had to open up his mouth. His speech managed to erase all the gains and send the Dow back into the red, though it finally managed to eke out a meager four points by day's end. There's a sure-fire day-trading strategy for you - watch for when Obama's going to give his next speech and then short the heck out of ES, right around the time he says "Good afternoon". But right now it's night time and that means chart time, so let's go.
The technicals (daily)
The Dow: Friday finally gave us a reversal candle in the form of a clear doji star. With the stochastic looking ready to start a bullish crossover, this chart's starting to look like last week's wave of post-election selling may be over.
The VIX: And while the VIX gained 0.65% on Friday, it did it with a tall hanging man. And that's the second one in a row, which strengthens the case for a reversal The VIX has some resistance in the 18.70 area so I'm thinking the next move is likely lower.
Market index futures: Tonight all three futures are up at 1: 24AM EDT with ES higher by 0.16%. The interesting thing on this chart is that Friday gave us a classic doji star. But not just that, ES took an intraday peek below the 200 day MA and apparently did not like what it saw. This sent the indicators at last into oversold territory and the overnight action just gave us a bullish crossover from the stochastic. I'm liking this chart more than I have in several days now.
ES daily pivot: Tonight the pivot drops from 1381.75 to 1375.75. The good news here is that ES has been trending higher since around 8 PM, so we broke above the new pivot at midnight. So far, that seems to be holding, so that's a positive sign.
Dollar index: On Friday, the dollar posted a second hanging man as its attempts to move higher were blocked by the 200 day MA at 55.88 on the $USDUPX. And the indicators are back to very overbought. I still think the dollar is due to move lower and Monday would be as good a time as any.
Euro: Still no end to the euro's continuing decline, remaining in a descending RTC from October 17th.We're up a bit in the overnight, but that hasn't been paying off lately so until we manage to exit this RTC, I say the euro's continuing lower, though some action tonight out of Greece on their budget could provide a bounce here on Monday.
Transportation: And finally, the trans on Friday posted their third consecutive losing day, although the losses have been getting smaller as we go, dropping 0.71% this time. This helped the indicators all move closer to oversold but they're still not there yet. Next stop, if I had to guess, would be the lower BB at 4978, then maybe a bounce off it.
Accuracy (daily calls):
October 8 5 8 0 .615 208
November 3 1 3 0 .750 197
And the winner is...
November op-ex week tends to be fairly bullish historically, and gets better as the week goes on. And the charts tonight are finally pointing to a possible rally. Also, Dr. Copper has reached a strong support line and the TLT's looking toppy. Add it all up and I'm betting Monday's higher.
ES Fantasy Trader
Portfolio stats: the account remains at $194,250 after 69 trades (54 wins, 15 losses) starting from $100,000 on 1/1/12. Tonight we're going long at 1378.25. I'm liking the setup with ES not really having taken off yet but with what looks like a decent edge (finally) developing for Monday.