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- Monday higher, low confidence.
- ES pivot 1652.08. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
[The Night Owl apologizes for the lack of a post last Thursday night. I try to avoid unscheduled skips but due to a set of unavoidable circumstances, it wasn't possible to do the analysis and put the post together in time.]
Looks like we didn't miss much on Friday - the Dow was down a bit, everything else was up a bit. But we got some funny candles so let's take a closer look.
The technicals (daily)
The Dow: Friday's small move came in the form of a big doji. Real big, evidently having something to do with Syria. I scrolled back two years and couldn't find a bigger one. In any event it left us real close, but not over the edge of the rising RTC and pushed RSI to overbought. So there's some indecision here but it will definitely require Monday for confirmation of any reversal.
The VIX: And on Friday the VIX gave us a big inverted hammer for a small 0.51% gain. That brought RSI to just oversold and the stochastic is moving lower too, though not yet in position for a bullish crossover. We remain in a descending RTC so it looks like the VIX is warning us of a reversal coming soon, but maybe not just on Monday.
Market index futures: Tonight all three futures are higher at 12:41 AM EDT with ES up by a solid 0.29%. We got two reversal warnings last Thursday and Friday and apparently neither one panned out. The new developing candle remains firmly inside the rising RTC although the indicators are becoming quite overbought and the stochastic is flattening out for a bearish crossover, though probably not on Monday. For now this chart looks bullish.
ES daily pivot: Tonight the pivot dips from 1653.92 to 1652.08. With ES moving higher in the Sunday overnight, this leaves us above the new pivot by a reasonably bullish margin.
Dollar index: And yet another doji on Friday, this time for the dollar, giving back all of Thursday's gains. Even with that though, we remain overbought, though right on the edge of the rising RTC. So this chart is pretty ambiguous and requires confirmation of direction on Monday.
Euro: After crossing under its 200 day MA on Thursday, the euro bounced right back above it on Friday, retracing most of the previous day's losses. Indicators remain oversold and the resilience shown in not caving on crossing the MA suggests a possible move higher on Monday.
Transportation: After two nice days of gains, the trans lost 0.13% on Friday on a classic spinning top. However, this traded entirely outside the descending RTC so that's a bullish trigger. The indicators are also not yet overbought, so this candle has to be taken with a grain of salt. This chart still looks like it has a positive bias.
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 10 2 4 4 0.875 486
August 11 3 6 2 0.813 687
September 3 0 0 0 1.000 129
And the winner is...
Tonight the charts reflect a lot of uncertainty, both about Syria and domestic economic news, leaving us in something of a quandary. We're seeing dojis galore all over the place but these are just suggestions of reversal possibilities, not direct predictions. The conservative play would be to simply call Monday uncertain, but I believe that the futures are the tie-breaker here, so I will go out on a limb and call 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.