Actionable ideas for the busy trader delivered daily right up front
- Monday higher, low confidence.
- ES pivot 1756.83. Holding above is bullish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Last Thursday night I called Friday as "uncertain" and I'm glad I did because I sure never saw Friday's 168 point pop in the Dow coming. It made for some interesting charts, which we will now pick over for clues to Monday.
The technicals (daily)
The Dow: On Friday the Dow powered to another record close, for no readily apparent reason. But more interestingly, we now have three days of alternating expanding up/down days, aka a megaphone pattern. The megaphone of course is bearish and reflects not just uncertainty but instability. It's like Mr. Market is skating along and suddenly develops the dreaded speed wobbles. So while the one-day pattern is bullish engulfing, the overall gestalt here is worrisome.
The VIX: Meanwhile, the VIX was down 7.26% on Friday. No megaphone here - in fact with the indicators turning downward again and Thursday's bullish RTC setup canceled, this chart is looking lower for Monday.
Market index futures: Tonight all three futures are lower at 12:23 AM EST with ES down by 0.13%. Friday's bullish engulfing candle came on high volume but resistance around 1767 remains a problem. The indicators are still not overbought but I don't see a lot of mojo here to make Mr. Market want to get on the bus.
ES daily pivot: Tonight the pivot bumps up from 1754.00 to 1756.83. Even with the slight overnight drift lower, we remain reasonably above the new pivot, so this indicator is bullish.
Dollar index: That pesky dollar surprised me on Friday by moving higher instead of lower, with a strong 0.66% gain to end above its upper BB..While this is nominally bullish, the behavior of the dollar lately has been so erratic I'm just not going to commit to that.
Euro: And on Friday the euro continued its plunge, now down to 1.3363 with its highs of 1.3819 of a few weeks ago now just a distant memory. We've now hit the lower BB but there's no real signs of a turn-around so I'd have to say more downside is possible Monday.
Transportation: On Friday the trans retraced most of Thursday's losses with a bullish piercing line pattern. That also caused the indicators to reverse course and begin moving higher, so overall this chart now looks mildly bullish.
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 8 3 3 3 0.800 485
October 7 5 8 2 0.643 674
November 2 2 1 0 0.500 122
And the winner is...
Tonight the charts are painting a mildly bullish picture in muted pastels as it were. I think we really need some good economic news to juice the markets higher at this point, and we're not getting it on Monday. Maybe the best sign is the NYSE A/D line which just turned positive after being rather depressed. So this is another of those nights where I'm going to call Monday higher as much because of an absence of bearish signs as a presence of bullish ones.
ES Fantasy Trader
Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17 total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13. Tonight we stand aside.again.