Monday, August 19, 2013

Monday higher only if ES pivot passed

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher if ES pivot passed, else lower, low confidence..
  • ES pivot 1654.17..  Holding below is bearish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

I'm glad I called Friday uncertain because it would have been tough to come out on the right side of a meager 31 point drop in the Dow.  Now that we've got all the op-ex hoopla out of the way, let's dig in to a new week and figure out which way it's going.

The technicals (daily)

The Dow: The Dow did not bounce on Friday but neither did it continue it's previous plunge posting instead a stubby little spinning top at the bottom of Thursday's big red candle.  While we remain in a downtrend, all of the indicators are now quite oversold and down to levels from which previous rallies have begun this year.

The VIXAnd the VIX had an interesting tell on Friday.  It tried, and failed to break through its 200 day MA, ending with a spinning top of its own in bearish harami position.  We now have moderately overbought indicators along with a yawning unfilled gap here.  And VVIX is similarly overbought but in addition just formed a bearish stochastic crossover.  So it seems a good possibility we could see a lower VIX on Monday.

Market index futures: Tonight all three futures are marginally lower at 12:58 AM EDT with ES down by 0.03%.  ES made a bullish inverted hammer on Friday to go with some rather oversold indicators.  So while this chart is still pretty much in falling-knife territory, there is at least a few reversal signs on the horizon.  A move higher on Monday would not be out of the question if the current slight but persistent drift lower can be reversed.

ES daily pivot: Tonight the pivot drops from 1664.00  to 1654.17.  We remain below the new pivot but by less than three points now, so the pivot is in play.    But for the time being, it remains bearish until ES can break through.

Dollar index: On Friday the dollar joined the doji club with a star positioned for a 0.11% gain on the day.  It also caused a bearish stochastic crossover though, so this chart is now seriously conflicted.  No call here..

Euro:And to the further surprise of no one, the euro made, yes, a red spinning top on Friday to put a cap on Thursday's big gains.  And the Sunday overnight seems to be confirming that, now down 0.07%.  So with the upper BB touched, the euro could move lower on Monday.

Transportation: And in a bit of bullish divergence, on Friday the trans gained 0.58% to the Dow's 0.20% decline and did it on a bullish piercing pattern.  While we remain in a descending RTC, the indicators now seem to have bottomed at oversold.  With the lower BB already touched, chances seem to favor a move higher here on Monday.

Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

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      10      2      4           4        0.875    486
August     9      0      3           0        1.000    635

     And the winner is...

We have now left the historically poor first part of August and last Thursday's big sell-off had more of the feel of a clearing of the air than the start of a cataclysm.  The bullish glimmers on the charts last Friday are starting to get a bit more distinct though they're still not crystal clear.  Therefore I'm going to hedge a bit and make a conditional call: if ES can break through its pivot in convincing fashion by no later than mid-morning Monday, we'll close the day higher, else lower.

ES Fantasy Trader

Well I finally got this monkey off my back.  I took a 13 point loss on this dog on Friday, but when you consider that I was down over $30,000 at one point, this trade ended up feeling like a winner.  At least now we can get on with our life.

Portfolio stats: the account now drops to $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we take a break until a new trend develops.

BOT    10    false    ES    SEP13 Futures     1656.00    USD    GLOBEX    AUG 16 15:10:03

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