Actionable ideas for the busy trader delivered daily right up front
- Monday higher, low confidence.
- ES pivot 1659.00. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader going long at 1663.50.
The Night Owl is flying down to her southern next next week so I expect that I will be skipping publication of the blog for a few days while I get all my files transferred and computers updated down there. Anyway, it's Memorial Day week then so it won't be a bad time to take a bit of vacation.
Once again I was surprised on Friday by how robust the recent advance has been. I was too skeptical to back this horse and as a result got left in the dust of a 121 point gain and another record close for the Dow. Now with the uncertainty of op-ex week behind us, let's get down to business for Monday and see what's cooking on the grill.
The technicals (daily)
The Dow: Friday's move brought the Dow right back to the left edge of its rising RTC, keeping the trend very much alive. The indicators remain useless and the upper BB is now at 15,404, and the weekly chart looks even stronger so I'd say there's still room to run here on Monday.
The VIX: After spending a week unsuccessfully trying to climb above 13.5 and getting smacked back every time, the VIX finally gave up on Friday and dropped 4.74% to fall out of its recent trading range. Our close at 2.45 also made the indicators peak and brought us to within inches of a bearish stochastic crossover. With the lower BB still at 12.06 (which is also the next support line), the VIX still has room to run lower on Monday.
Market index futures: Tonight the futures are mixed at 1:23 AM EDT with both ES and YM up by 0.02% but NQ down 0.03%. So it's another basically flat night. Like the Dow, ES on Friday broke through resistance and closed on the left edge of its rising RTC. With an upper BB now at 1675, there's more room to run here too
ES daily pivot: Tonight the pivot advances from 1650.92 to 1659.00 . We spent all of Friday above the old number and even with this gain remain above the new pivot, so this indicator is bullish.
Dollar index: Wow - the dollar is going like gang busters. Every time I predicted a reversal last week I was wrong. And on Friday the dollar gapped up for the third time in the last five to close just above its upper BB. The indicators are broken here too and I'm not going to call it lower until I see it fall out of the steeply rising RTC it's in now.
Euro: And as the dollar rose, so the euro fell, down to 1.2831 on Friday as it continues to track down its lower BB. Last Thursday night I wrote "I'd expect to see it hit support at 1.2783 sometime next week. I really see no strength here." and that remains true tonight. Although the euro is actually up 0.16% in the overnight so far, it remains in its descending RTC and I don't think the sell-off is over, though it's closer to the end than the beginning.
Transportation: The trans continue to outperform the Dow, gaining an impressive 1.26% on Friday to the Dow's 0.80%. But like the Dow, the indicators are broken and we're still under the upper BB. Friday's move also continued the pattern of one-off down days recently. So there's nothing really bearish on this chart either.
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 7 5 2 0.500 121
April 7 5 5 3 0.667 328
May 1 3 5 4 0.625 -16
And the winner is...
With no bearish reversal signs on the daily charts, good support on the weekly charts, the TLT's ill-fated rally attempt last week cut short, copper looking about ready to put in a bottom, and no major economic news coming out to torpedo the markets, the logical call is for Monday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13. Tonight we go long at 1663.50. Although it makes me a bit nervous to hop on a moving bus, given the current picture I think I've about run out of excuses not to.