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- Monday higher, low confidence.
- ES pivot 1685.08. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1643.00.
Well I picked a good day to travel as nothing much happened in the markets on Friday with the Dow ending down all of five points. So does this mean anything for Monday? Let's check the charts.
The technicals (daily)
The Dow: On Friday the Dow failed once again to advance beyond the 15,545 level and closed with a small loss for a hanging man. This is technically bearish but requires confirmation on Monday so we can't read too much into it, especially coming as it did on an op-ex Friday.
The VIX: What was most interesting on Friday (to my surprise as I was traveling all day) was that while the market was little changed, the VIX dropped nearly 9%, its biggest loss since June 13th. This completely demolished the support at 13.53 and left the VIX to close at 12.54, right above its next support level of 12.41. And with a bearish stochastic crossover plus a lower BB falling away and now down to 11.64, it looks like the VIX could well go lower again on Monday.
Market index futures: Tonight all three futures are modestly higher at 12:18 AM EDT with ES up by 0.09%. After some indecision last Wednesday and Thursday on rising candles, ES put in a big advance on Friday totally canceling last week's bearish RTC exit. In fact we now have a new rising RTC. And this chart continues to look bullish. The indicators remain pegged on overbought and so have no predictive power. I'm hard-pressed to find anything bearish on this chart.
ES daily pivot: Tonight the pivot notches up from 1680.25 to 1685.08. We remain above the new pivot with little indication of a desire to test it, so that is a positive sign for Monday.
Dollar index: The dollar continued its recent erratic moves on Friday, ending down 0.29% after a series of spinning tops. The dollar remains oversold but I see little in the way of any trend or reversal signs so I'm not touching this chart tonight.
Euro: The euro is, not surprisingly, similarly conflicted, putting in a green spinning top on Friday and advancing further in the overnight but still unable to crack resistance at 1.3163. We also have indicators coming down off overbought so my wild guess would be that the euro could move lower on Monday, but I don't have much confidence in that.
Transportation: On Friday the trans gave us a small 0.11% advance on a classic spinning top that peeled off the upper BB. With overbought indicators, this now suggests the possibility of a move lower, but one that requires confirmation on Monday. So we can't call this one yet.
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 7 1 1 3 0.909 472
And the winner is...
I've been wanting to call the market lower several times lately but it's just not happening. And while once again there are a few reversal warnings on the charts, I see no real red flags and in fact a fair amount of continued bullish signs so the only logical call is for Monday higher.
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. Nothing new here.