- Monday higher, low confidence.
- ES pivot 1633.50. Holding above is bullish.
- Rest of the week bias higher technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Well I was uncertain about Friday but it turns out that the jobs numbers were BTE and that was enough to propel the Dow to a 208 point advance, its biggest daily gain since last December. So now what? Let's check the charts for Monday's direction.
The technicals (daily)
The Dow: Friday's big green marubozu confirmed Thursday's hammer and bounced the Dow right out of its descending RTC for a bullish setup. It also formed a weekly bullish hammer and sent the indicators rising off of oversold. There's really nothing negative I can see on this chart for Monday.
The VIX: Last Thursday night I wrote "this chart looks ready for more downside on Friday" and so it was, dropping nearly 9% to close just above its 200 day MA support in a move that dropped it out of a strong rising RTC for a bearish setup and also clearly completed a bearish stochastic crossover. I would not be surprised to see the VIX fall back through its 200 MA on Monday.
Market index futures: Tonight all three futures are higher at 1:42 AM EDT with ES up by 0.11%. After Friday's big move up, this is enough to get us out of the descending RTC for a bullish setup. The bullish stochastic crossover is also complete now and the indicators are rising so this chart is looking in pretty good shape for Monday.
ES daily pivot: Tonight the pivot jumps from 1614.50 to 1633.50. Impressively enough, even with that gain we remain above the new pivot by a good seven points, so this one remains bullish.
Dollar index: Last Thursday I was expecting a reversal for the dollar but wasn't sure it would come on Friday. Well it did, as the 200 day MA provided solid support. The dollar chart now has the look of an exponential run-down and those always end in reversals, often quite dramatic. With Friday's spinning top and support at the 200 MA, I'd expect more upside here on Monday.
Euro: Meanwhile the euro provided us with a spinning top of its own warning of a reversal. That seems to be getting confirmed in the Sunday overnight, already down 0.20%. That's enough to cause the indicators to start falling from their highly overbought levels, so I think the euro is going lower still on Monday. And that syncs with my call for a higher dollar.
Transportation:Once again the trans outperformed the Dow with a big 2.37% pop that confirmed what I wrote on Thursday night, "the technicals favor more upside here on Friday." That move was just enough to pull us out of the descending RTC for a bullish setup and clearly complete a bullish stochastic crossover as the indicators are now well on their way from oversold to overbought. So I'd be looking for more upside here, though with such a big gain Friday, the trans may shift into neutral for a day before resuming their advance.
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 3 4 6 4 0.636 85
June 1 2 2 0 0.333 62
And the winner is...
With no major economic news coming out on Monday and two big days of gains behind us, I see nothing bearish in the charts tonight. But I also think the market may need a day to regroup so while I am going to call Monday higher, I also think the gains will be limited.
ES Fantasy Trader
Portfolio stats: the account remains at $110,375 after 12 trades (10 for 12 total, 5 for 5 longs, 5 for 7 short) starting from $100,000 on 1/1/13. Tonight we stand aside just because I'm not seeing a lot of opportunity here.