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- Monday lower, low confidence.
- ES pivot 1707.75. Holding below is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1695.50.
Well I guess the technicals trumped last Friday's history of being positive, with a 185 point dump in the Dow resolving the uncertainty in a big way. Gotta love those crazy op-ex days. And big moves mean big changes, so let's get right to them as we run down the charts for Monday.
The technicals (daily)
The Dow: Friday's 1.19% move was the Dow's biggest loss since August 15th. But more importantly, it dropped it right out of a steeply rising RTC for a bearish setup. And as might be expected, it also formed a bearish stochastic crossover and drove the indicators firmly off their overbought peak. So this chart now is looking firmly bearish.
The VIX: The VIX continued its weirdness on Friday. I don't know it this was related to op-ex or not, but the VIX was down, slightly, even as the rest of the market was down. However, the candle was a hammer that just touched the lower BB which is a good combination for a reversal, so we could finally see a move higher on Monday.
Market index futures: Tonight all three futures are higher at 12:43 AM EDT with ES up by 0.12%. Unlike some other charts, Friday's drop in ES did not take it outside its rising RTC and the small gain in the Sunday overnight is enough to just keep us inside it, barely. Nevertheless, the indicators continue falling from overbought so this chart continues to look bearish.
ES daily pivot: Tonight the pivot drops from 1719.17 to 1707.75 That still leaves ES below the new pivot, but only by 3 and a half points, putting the pivot in play. While it remains bearish at this point, I'll be watching for any sign of a break above the pivot which would be bullish.
Dollar index: After a spinning top Thursday, the dollar put in a star on Friday for a small gain that took it out of its descending RTC for a bullish setup. So this downtrend may be nearing its end.
Euro: Same deal with the euro - two reversal candles and a rising RTC exit for a bearish setup suggest that its uptrend may be over. This chart is looking toppy.
Transportation: The trans only dropped half as much as the Dow on Friday but it was still enough to exit the rising RTC for a bearish setup. With no support til 6671 and indicators continuing to come off overbought, this one's looking lower 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 10 2 4 4 0.875 486
August 11 3 6 2 0.813 687
September 5 3 3 1 0.667 239
And the winner is...
There's no economic news coming out Monday and the SPX Hi-Lo index remains stuck on 100, not the sort of thing presaging a big sell-off. And the A/D line is closer to indicating a bottom than a top. However, ominously the Morningstar Market Fair Value Index hit 1.05 on Thursday, matching its previous high for the year on May 20th. And that was just before a long decline as you may recall.
So much as I dislike going against the futures, which are up at the moment, the preponderance of evidence seems to come down in favor of the bears on Monday, therefore I'm calling Monday lower.
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 remain short at 1695.50.