Monday, October 7, 2013

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1679.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains long at 1695.00.

After a couple of disappointing days, the markets managed a gain last Friday despite the ongoing shenanigns in Washington.  How much weight should we give this move?  The charts will reveal all, so read on.

The technicals (daily)

The Dow: On Friday the Dow did manage a respectable 76 point rise.  The good news - it looks like support at 15K is holding, for now anyway, and the Dow remains oversold.  We're also real close to the lower BB at 14,972.  The bad news - we remains solidly in a descending RTC back to September 19th, so I'm reluctant to call this chart higher until I see some turn-around indications.

The VIXThe VIX was overdue for a retreat, having touched its upper BB all of last week until then and we finally got it on Friday with a 5.26% decline as a dark cloud cover.  With indicators remaining overbought, this one looks like it's got more downside risk than upside potential for Monday.

Market index futures: Tonight all three futures are lower at 12:38 AM EDT with ES down by a substantial 0.64%.  Technically, on Friday we got a nice bullish engulfing candle out of ES but the indicators are wandering aimlessly and there's no real short-term trend on.  But that's all overshadowed by the overnight guidance lower.

ES daily pivot: Tonight the pivot rises from 1672.59  to 1679.42.  But that move combined with a lower ES now leaves us  squarely below the new pivot, so this indicator becomes bearish.

Dollar index: On Friday the dollar gapped up 0.47% in a move that took the indicators off oversold and just barely exited the descending RTC for a bullish setup.  So this chart now looks bullish for Monday though the longer intermediate term downtrend remains in force.

Euro: Meanwhile, the euro took a big dump on Friday for a bearish engulfing pattern that also exited the rising RTC for a bearish setup.  We also now have a completed bearish stochastic crossover and indicators just off overbought.  So overall, this chart now looks bearish.

Transportation: On Friday the trans put in a bullish piercing pattern with a 0.54% gain.  However, it also put in a bearish stochastic crossover and we're coming off four days of lower highs.  Finally, being stuck halfway between BB's, this chart pretty much just reflects the general angst in the market right now and is accordingly too tough to call, for me anyway.

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    11      3      6           2        0.813    687
September  8      3      3           3        0.800 

October    0      0      2           1        1.000      0

     And the winner is...

Tonight the charts aren't really giving me any decent bullish turn-around indications and the futures are guiding lower, probably on comments Sunday from our esteemed Treasury Secretary, Jacob "Squiggles" Lew.  So as we stagger along towards Govergeddon on the 17th, the finger-pointing and political posturing continues unabated.  And until that's resolved, the markets will remain in flux.  Of course tonight, I think we're getting enough negative guidance out of the futures, combined with an absence of positive signs for me to call Monday lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we remain at 1695.00.

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