Monday, April 1, 2013

Monday higher if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher if ES pivot holds, else lower.
  • ES pivot 1559.00 .  Breaking below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Well doesn't it just figure - I said the market would go higher on Wednesday, so it went lower.  Then I said it would go lower on Thursday, so naturally it went higher.  Bottom line, the up/down/up/down pattern continues, now nine in a row of alternating higher and lower closes.  So let's figure out if this is going to hold on Monday.

The technicals (daily)

The Dow: The Dow admittedly caught me by surprise Thursday with a 52 point gain for another record close.   We are now well out of the 14,522 resistance area and now to 14,560 too.  Thursday's candle was bullish engulfing and it also negated Wednesday's hanging man.  Also, the indicators are rising again but not yet overbought.  And the upper BB is now at 14,682.  Looks like more room to run here.

The VIXThe VIX continues to be range bound, trading down 3.42% on Thursday to close at 12.70, right at the bottom of the range.  This alone would suggest a move higher on Monday even though the indicators continue to fall and are not yet oversold.

Market index futures:Tonight all three futures are lower at 1:55 AM EDT with ES down by 0.16%.  On Thursday ES traded above the upper megaphone line I talked about last week and remains in a rising RTC.  We're also now near the upper BB at 1567.  The overnight slippage is looking a bit bearish and the stochastic is looking like it wants to form a bearish crossover.  But with so much continuing upward momentum, I hesitate to call this chart lower on Monday.

ES daily pivot: Tonight the pivot rises from 1554.33  to 1559.00 even.   We were above all day Thursday and remain above the new pivot, though only by a point, so that puts the pivot in play.  A break below would be bearish.

Dollar index: Last Wednesday night I wrote of the dollar's big pop, "This kind of move generally pulls back in short order".  And the $ did not disappoint, falling back 0.28% on Thursday with a spinning top.  That leaves Monday uncertain, particularly with the greenback's recent herky-jerky movement..

Euro: The euro equivocated a bit on Thursday with a small gain but overall remains in a descending RTC.  It does seem to be trying to rally in the Sunday overnight but we'll need to see it break through its pivot at 1.2812 to seal the deal.  Not clear if that's going to happen on Monday.

Transportation: On Thursday the trans outperformed, handily beating the Dow with a 1% pop that cleared the descending RTC for a bullish trigger on increased volume.  With rising indicators nowhere near overbought and an upper BB at 6320, looks like more upside in store on Monday.

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      5      7      5           2        0.500    1

     And the winner is...

We have something of a mixed picture tonight.  The Dow and the trans are looking pretty bullish while the futures and the VIX are looking a tad bearish.  However Monday is the first day of a new month and those are generally bullish.  The first week of April is in fact historically quite strong.  So given all that I'm going to make a conditional call: if ES manages to stay above its pivot by mid-morning, we'll close higher on Monday.  If ES breaks below the pivot in a convincing manner (not just a quick dip that pops back up), then we go lower.

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 given the conditional call.

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