Monday, March 11, 2013

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence.
  • ES pivot 1547.75.  Holding above is bullish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains short at 1538.25.

And so the long bubble-up goes on unabated.  On Friday the Dow gained another 68 points to extend its winning streak to six in a row on the heels of some decent jobs numbers.  Can we make it a lucky seven?  We roll the charts and see what tumbles for Monday.

The technicals (daily)

The Dow: The three white soldiers I mentioned last week just keep right on marching.  In fact, they're been joined by three more.  We now have a whole platoon intent on taking the Dow to new heights.  In fact, nothing has changed on Sunday night from last Thursday night.  Same rising RTC, same broken overbought indicators, same lack of any bearish signs.  So I can only draw the same conclusion - this chart looks bullish.

The VIXIn contrast, there are a few bullish signs on the daily VIX which dropped another 3.59% on Friday.  This brought it to 12.59 just above its last year-long support level of 12.40.  But the candle was a classic gravestone doji.  And the stochastic is close to forming a bullish crossover from quite oversold levels.  So though we should wait for confirmation, there is at least a suggestion here of a higher VIX on Monday.

Market index futures:Tonight the futures are mixed at 1:05 AM EDT with ES dead flat, NQ down 0.02% and YM up by 0.08%.  So no guidance there.  And little else new here - the daily chart remains locked into its rising RTC and the indicators are all pegged at overbought (RSI is now 100).  And yet still no sign of a pullback.  But remember that ES spent most of January equally overbought without pulling back.  So I guess it ain't over til it's over.

ES daily pivot: Tonight the pivot inches up from 1541.92  to 1547.75.  Once again, we were above the old pivot and remain above the new one, though only by two points, so the pivot is definitely in play on Monday.  But as long as we remain above, it's a positive sign.

Dollar index: After a big drop Thursday, the dollar put in en equally big gain on Friday to remain inside a rising RTC now going back to February 1st.  The indicators have been overbought almost constantly since that time so they're now useless. The only pattern, if there is one, is that since that date, the dollar has paused tow of the last three times it made big one day gains.  But here too, in the absence of any real bearish signs, it is premature to call the dollar's recent run over.

Euro: And while the dollar rose, the euro sank on Friday, giving back almost all of its gains from last Thursday.  But that still kept it out of the descending RTC, so that's now a bullish trigger.  But one has to wonder if there's a bullet in the gun, because the euro is moving lower in the overnight, trading just under its pivot at 1.3031 and showing no interest in challenging it.  My best guess is that the euro will trade around that level on Monday.

Transportation: After a fake-out breakdown on Wednesday and Thursday, the trans regained all their lost ground on Friday with a 1.02% green marubozu that out performed the Dow.  It also marked the first time they were able to close above 5875, last week's resistance line.  However, Friday's close wasn't enough to regain the rising RTC, so that's a bearish trigger despite the green candle.  And the indicators have all peaked at overbought re begun moving lower.  It's not clear that the trans will be able to advance further from here, but their performance has been unstoppable so far this year and this is one bus I don't want to stand in front of.  So I'm going to wait until I see a move lower before declaring this uptrend over.

Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131

March      3      2      1           0        0.600    165

     And the winner is...

It's really getting almost nerve-wracking.  There's really only one shred of hope for the bears tonight in the form of the VIX and that one's not all that great.  So in the absence of anything more substantial, and with the Monday of March op-ex week being historically strong, logic dictates a call of Monday higher.

ES Fantasy Trader

Portfolio stats: the account remains $99,375 after 7 trades (6 for 7 total, 3 for 3 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we remain short at 1538.25 and take the heat.  I'm giving this one one more day to come in and then I'm giving up on it.  That'[s what I get for trying to play the counter-trend hero and not waiting for a regression trend exit.

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