Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday higher, low confidence.
• ES pivot 1353.50.  Holding above is bullish.
• Rest of week bias higher technically.
• Monthly outlook: bias up.
• ES Fantasy Trader remaining long at 1376.25.

Recap

Well the Dow finally eked out its first meaningful gain in seven session on Friday.  I'd been waiting for this, though it's not clear whether this rally was technical or generated by Boehner's comments to the press.   Either way, it was good news for the markets.  So let's see now how this takes us into another holiday-shortened week as we get ready for Turkey Day.

The technicals (daily)

The Dow: After hitting an RSI of practically zero as I noted last week, the Dow finally closed up 46 points on Friday.  It doesn't seem like much but it was enough to form a bullish engulfing candle and bring the indicators (finally) off their extreme oversold levels.  And even more importantly, it brought the Dow out of its new descending RTC that I drew after last week's dojis, for a bullish setup.  So overall, this chart's not looking too bad tonight.

The VIX:  After an inverted hammer warning just above the 200 day MA on Thursday, the VIX gave it up on Friday dropping 8.78% to return near the bottom of its recent range.  With no obvious trends, this chart is unclear tonight.  However, the weekly chart is now looking rather bearish for the VIX.

Market index futures: Tonight all three futures are up at 1: 41 AM EST with ES higher by 0.22%.  On Friday ES gave us a powerful hammer that just managed to close outside its descending RTC for a bullish setup.  With good follow-through in the overnight and indicators that have now clearly bottomed at oversold, I'm liking the looks of this chart for Monday.

ES daily pivot: Tonight the pivot rises from 1351.83 to 1353.50.  We broke above the old number after Boehner's comments on Friday and remain above in the overnight tonight, so that's all a good sign.

Dollar index: On Friday the dollar gave us an inverted hammer sitting right on its 200 day MA/  Coupled with very highly overbought indicators, I'd say the dollar is ready to move lower this week.

Euro: And also on Friday the euro gave up its earlier gains, somewhat to my surprise, with a bearish engulfing candle.  However, in the Sunday overnight, it is climbing again and at 1.2768 is high enough to regain the rising RTC.  With indicators still rising, I'd say the euro's going higher on Monday.

Transportation: After a doji on Thursday, the trans gave us another reversal candle in the form of a classic hammer on Friday.  With both of these trading outside the long-running descending RTC, we now have a good bottoming sign.  I'd wager the trans are going higher this week.


Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

April      7      9      2                    .438
May       10      7      3           2        .632  
June       8      6      6           1        .600     632
July      11      2      6           1        .857     917
August     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19 
October    8      5      8           0        .615     208
November   4      3      4           0        .571      41

     And the winner is...

Tonight, the general tone of the charts is all positive.  And with Emperor Nerobama making positive noises from Bangkok, a visit to which he apparently thought was more important that our fiscal problems back home, I'm not seeing any real reason to be bearish tonight.  So I'm calling Monday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $197,375 after 70 trades (55 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we remain long at 1376.25.  I still have hopes for this trade.