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- Monday higher, low confidence.
- ES pivot 1622.08 . Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside..
Friday's action, if it is to be believed, busted clear out of a five day trading range to close at 15,136 on the Dow. Sure it was a low-volume post-holiday, pre-weekend session, but you can be sure everyone is looking at the resulting candles. So let's see how that changes the picture. But first...
Southwest Airlines goes down
Over the weekend, the Nightowl heard back from Visa about the complaint she filed last month over the fact that Southwest Airlines was advertising a fare that costs as much as a business class fare, offers the same perks as a business class fare, is called a "Business Select" fare, for a flight formerly operated by Airtran as business class, but is actually only steerage class. Well Visa, which has been getting more and more hard-nosed about disputes in recent years, decided they agreed with me, that if it looks like a duck and quacks like a duck, but is in fact just a decoy, then that's fowl play, and they gave me the refund I requested. So round one goes to the Night Owl. Of course, SW has the right to appeal. I'll be curious to see if they really want to make an issue out of this. But for now anyway, fraud doesn't pay. Moving right along...
The technicals (daily)
The Dow: All of the daily charts for Friday have to be taken with a large grain of salt, considering the lower volume. Nevertheless, after an early false breakout, the Dow did grind steadily higher for the rest of the day closing at sessions highs with a nice green marubozu that finally got us off top-dead-center after five days of indecision. There is now some minor resistance at 15,177 but by and large this chart is now looking bullish, even with indicators having gone overbought.
The VIX: Last Thursday night I noted a big unfilled gap hanging below the VIX and posited that we were going to continue lower down to 16.0. Well 16 cam and went so fast on Friday I literally missed it with the VIX ending down 8.09% at 14.09, breaking through its 200 day MA at 15.06 in the process. While the indicators are very oversold here, there is now considerable downside momentum going and with a lower BB at 14.22, I'd not be at all surprised to see the VIX want to check it out on Monday. But we could be in for a bounce in a few days - VVIX did hit its lower BB on Friday, which was also five month support.
Market index futures: Tonight all three futures are modestly higher at 1:04 AM EDT with ES up by 0.06%. Friday's ES chart reflected the others with a big congestion-breaking move. I peg the next resistance at 1635 so in the absence of any bearish reversal signs, it seems reasonable that we'll check out that level next.
ES daily pivot: Tonight the pivot jumps from 1605.33 to 1622.08 With ES pretty much steady in the overnight, we're still comfortably above the new pivot, so that's a positive for Monday.
Dollar index: The dollar took off like a Fourth of July skyrocket one day late on Friday, gapping up big time for a 1.49% pop that closed above its upper BB and brought it back into its last rising RTC. It also just formed a bullish stochastic crossover from a high level and those are often good for one or two days of further gains..
Euro: And of course in mirror image fashion, the euro tanked on Friday, crashing right through support at 1.2987, more support at 1.2846, and its lower BB to close at 1.2833. The 200 day MA is now just a distant memory and the overnight is guiding lower still, down another 0.13% already. With no more support until 1.2785, I think the euro still has more downside available on Monday.
Transportation: Pretty much the same story as the Dow on Friday, only more so with an outsized 1.54% gain here. I think we go higher on Monday.
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 6 5 6 0 0.545 543
July 1 1 0 1 0.667 104
And the winner is...
Monday is historically quite bullish and with the VIX now back below 15, no particularly bearish signs on the charts, and no major economic news coming out, the most logical call is for Monday higher. There are however, some developing signs of a possible turnaround soon, so Monday might be a short-term topping day. That's all, she wrote.
ES Fantasy Trader
Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13. Tonight we stand aside again because I'm not really seeing an ideal setup for going long here.