Actionable ideas for the busy trader delivered daily right up front
- Mmday higher, low confidence.
- ES pivot 1658.25.. Holding above is bullish.
- Rest of week bias higher technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
Woof woof - the dog days of August bark on as the Dow finished up an unimpressive 47 points on Friday. Nevertheless it was a win, and we'll take it. But subjective impressions are just that. We now dive into the objective technicals to determine the direction Monday may go.
The technicals (daily)
The Dow: It wasn't much of a gain, but it was a gap-up Friday on a hanging man style candle. However, the indicators remain considerably oversold and while we remain inside a fairly long-running descending RTC, the preponderance of evidence here now leans towards the bullish for Monday. If we can get just 20 more points that would be enough to give us a bullish RTC setup.
The VIX: Last Thursday night I wrote "I'm looking for more downside on Friday" and that's just what we got with the VIX down another 5.28% on a gap-down inverted hammer that just sliced right back under the 200 day MA and marked the payoff of the preceding evening star pattern. But while the indicators have come down a bit, they're still overbought and the bearish stochastic crossover is still playing out. With a modicum of support around 13.61, I'd say there's probably at least that much more downside to go here on Monday.
Market index futures: Tonight all three futures are higher at 1:00 AM EDT with ES up by a respectable 0.23%. Friday's green candle gave us a bullish RTC trigger and though not large was impressive nonetheless considering the size of Thursday's gains. The bullish pin action in the Sunday overnight is forming a three white soldiers pattern and with indicators just coming out of oversold and moving higher, I'd say this chart continues to look bullish.
ES daily pivot: Tonight the pivot steps up from 1648.00 to 1658.25. The move up in the Sunday overnight has helped keep us comfortably above the new pivot, so this measure remains bullish tonight.
Dollar index: The dollar fooled me on Friday by dropping 0.17% on a move that for once was not a gap down. Given that the indicators are in no-man's land between oversold and overbought and the fact that there's no RTC here, I freely admit I have no clue where this chart is going on Monday..
Euro: And of course I got the euro wrong on Friday too when it put in a long spinning top to just barely remain inside its rising RTC. The Sunday overnight is down just a tad but with the indicators appearing to have topped just at overbought, my guess is that we could go lower form here, but that's just a guess.
Transportation: On Friday the trans gained 0.11% on a dragonfly doji marking some indecision, or just plain resting after Thursday's big run-up. Since the indicators are only about halfway to overbought and we are now in a new rising RTC, I'd expect further gains 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 10 1 5 1 0.917 612
And the winner is...
We do seem to have developed some positive momentum of the past couple of days and that has helped turn the charts bullish. Not blazingly so mind you, but enough that in the absence of any truly bearish signs, logic dictates a call of Monday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $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 continue to stand aside - while I again think we're going higher from here, I'm not sure how long this will last.
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