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- Monday higher medium confidence.
- ES pivot 1547.00. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Last Friday proved to be the perfect mirror image of Thursday as the Dow regained all the ground it had lost the day before. So is this sideways action a sign of a top or are we just consolidating before another leg higher? Well to be honest, the ECB and IMF just made my job a lot easier tonight, but there's a few interesting things in the charts I wanted to go over anyway, so let's do the run-down.
The technicals (daily)
The Dow: Notable here is a freshly completed bullish stochastic crossover. A week of sideways action seems to have pumped some gas back into the Dow's tank to enable some more upside.
The VIX: And mirroring the Dow, on Friday the VIX gave us a bearish stochastic crossover. With a 3% fall on Friday and putting in lower highs for three of the last four, I'm looking for lower on Monday.
And now, thanks to the ECB, here's the breakout and it's to the upside, just the way it's supposed to work. The last candle on the right there is Monday's as it looks at 1 AM Monday morning. Note also the bullish stochastic crossover now completed (second to last subchart). Overall, this chart is now looking pretty positive.
ES daily pivot: Tonight the pivot rises from 1542.08 to 1547.00. ES broke above its pivot at 7 AM Friday and never looked back, thus validating my conditional call for a higher close if we stayed above the pivot by mid-morning. And even with tonight's gain in the pivot, we remain comfortably above, so that's a bullish sign.
Dollar index: The dollar gapped down on Friday in a move that formed a bearish stochastic crossover. With the other indicators falling too and no RTC to guide us, this is as good a reason as any to look for a lower dollar on Monday..
Euro: The euro of course took a big spike when the Cyprus news came out Sunday evening. It is interesting to note that once things settled down, it has pretty much maintained those gains, currently up a generous 0.42%. Having now bounced off the 200 day MA and with a just completed bullish stochastic crossover here too more upside looks likely on Monday.
Transportation: On Friday the trans put a convincing end to their week-long slump, gaining just over a percent as the indicators continue to move closer to oversold. Nevertheless, this chart technically remains the weakest of the bunch.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
January 5 7 6 3 0.533 -101
February 3 4 5 6 0.692 131
March 5 4 4 2 0.636 270
And the winner is...
Well looks like we can thank the Russian mafia tonight for their generous support in bailing out Cyprus' rotten banks by donating their hard-earned drug money to cause. Spasebo, comrades! And that's providing enough pin action in the futures and currencies at this late hour that I think it will carry through, and therefore I'm calling Monday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13. Tonight we stand aside because for the second time in a week, we had a big move early in the evening and once again I think we missed this boat. Right here's not the time to get in - five hours ago was. Oh well. I can't spend all my time watching the charts.