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- Monday higher, low confidence.
- ES pivot 1670.25. Holding above is bullish...
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1643.00.
Last Thursday night's conditional call for Friday worked out well. ES never dipped below the pivot and we did indeed finish the day with a gain. Even the Dow finished higher though it was down earlier due to yet another incident with Boeing and their new Ronson-liner. Well anyway, that was then, this is now. So we soldier on as always and move along to Monday.
The technicals (daily)
The Dow: Just like last Wednesday, on Friday the Dow turned in a classical star, just off the upper BB and well within the rising RTC. So is this a reversal sign or just another fakeout like Wednesday? The major difference is that the Dow has now cleared its last closing resistance line at 15,409. Also, volume was down on Friday compared to Wednesday. Nut with the indicators all pegged on overbought, there's really no way to call this without confirmation and we won't get that til Monday. I'll just mention that the weekly chart looks quite strong at this point.
The VIX: The VIX was unable to capitalize on Thursday's green candle and moved lower again on Friday, down another 1.21% on a small spinning top harami. Meanwhile RSI has hit zero - it doesn't go any lower than that. So like the Dow, while there's a hint of a move higher here, with so much downward momentum, one can't really call the VIX higher on this chart alone. I'll note too that VVIX seems to be in no hurry to rise either, so it's doubtful that the VIX will be popping anytime soon.
Market index futures: Tonight all three futures are higher at 1:05 AM EDT with ES up by 0.25%. After giving us a spinning top on Friday, we're already getting some non-confirmation as ES simply continues what is now a seven day uptrend. The indicators are all useless, being pegged on overbought, and we remain in the rising RTC so I see no sign here of a reversal for Monday.
ES daily pivot: Tonight the pivot continues upward from 1666.42 to 1670.25. And once again as we've been seeing so much recently, ES just keeps floating above. I don't think the bears can gain any real traction until we break under here.
Dollar index: I noted the huge gap the dollar left last Thursday and it indeed tried to do a little filling on Friday, up 0.30%. But with a red candle and indicators continuing to head towards oversold, I'm not sure we have the steam to push higher again on Monday..
Euro: And after Thursday's big pop for the euro, it tried to find some support at the 200 day MA on Friday but ultimately closed just below, at 1.3063 on a red hanging man. However, i the Sunday overnight, the euro has just broken back over the 200 MA, up 0.12%, so there may be some support here after all. We also just crossed above the pivot, so I'd expect the euro to continue higher on Monday. That squares with my expectation that the dollar will have trouble advancing.
Transportation: The trans are suggesting a move lower, having dropped 0.55% on Friday to the Dow's 0.02% gain. The red harami closed just outside the rising RTC and the indicators are slowly slipping off overbought, so there's some suggestion of continued lower 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 5 1 0 2 0.875 447
And the winner is...
We're now seeing a bunch of reversal warning dojis on the charts tonight, but those haven't been panning out at all well lately, so we'd have to wait for confirmation on Monday. But with the weekly charts continuing to look strong, the futures guiding higher, and some retail sales numbers coming out which I'm thinking could well be BTE, the only logical call here is for Monday higher. 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 remain short at 1643.00 and take even more more heat.