Monday, November 18, 2013

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, low confidence.
  • ES pivot 1792.00.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside
Quote of the Day
"Your winnings, sir."
"Financial market experts have long speculated that the $5.3 trillion-a-day foreign exchange market might be manipulated."
                      - USA Today news story, 11/17/13

What?!  The FX market is rigged?  I'm shocked!  Shocked, I say.


OK, so what happened last Friday?  Nothing particularly exciting - just another record close - ho hum.  Now you know they say that what goes up must come down.  Unfortunately, they never say when.  Will Monday be the day?  We now work over the charts until they cry Uncle.

The technicals (daily)

The Dow: The Dow just keeps on motoring higher with an 86 point gain that closed 20 points above its upper BB.  We now have three white soldiers marching uphill and although the indicators are oversold, they're still only just barely - so technically I still don't think this run is done.

The VIXLast Thursday night I wrote "with two black crows cawing away, I can't call this chart higher yet".   And it's good I didn't because the VIX dipped another 1.46% on Friday.  Now Friday's candle was a spinning top that closed on the lower BB, and I always say the VIX generally doesn't spend much time around its BB's - either upper or lower.  But this is just a reversal warning, and with the indicators still not particularly oversold, this requires confirmation on Monday.  A big bullish engulfing candle in VVIX admittedly does suggest that a higher VIX may be on the way soon.  On Monday?  Don't know.  This is a wait & see chart.

Market index futures: Tonight all three futures are lower at 12:35 AM EST with ES down by 0.13%.    ES closed Friday even higher above its upper BB than it did Thursday.  RSI is now quite overbought (at 92)and the stochastic has curved around for a bearish crossover any minute now.  So this chart no longer looks particularly bullish.

ES daily pivot: Tonight the pivot rises from 1784.67  to 1792.00.  Turns out we just fell below the new pivot as I write this, so unless ES can recover as the night wears on, this indicator now becomes bearish.

Dollar index: Last Thursday I wrote "The trend is quite choppy but still vaguely lower".  No manipulation here as the dollar continued its downward drift on Friday with a read marubozu that tightened up the descending RTC and left the indicators continuing lower.  So overall, it looks like there's still lower to come.

Euro: On Friday the euro rejected Thursday's spinning top and resumed its advance to remain in its rising RTC.  We remain above the pivot, the indicators aren't yet overbought and there's no resistance til 1.3519, so I expect the euro to take a look at that level on Monday.

Transportation: On Friday the trans made their winning streak six in a row, finally hitting their upper BB and sending the indicators overbought.  The stochastic though is still not quite in position for a bearish crossover and we do remain well inside a steeply rising RTC so it's too soon to call this one lower yet.  But Monday could be a topping day.

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    485
October    7      5      8           2        0.643    674

November   5      4      1           0        0.556    180

     And the winner is...

This is a tough one.  I'm beginning to see a few bearish signs in the charts that hint that a top is at hand.  Whether it lasts more than a day remains to be seen, but the futures and the VIX in particular seem to be suggesting a move lower.  The conservative call here would be "uncertain" but I think there's enough evidence to call for Monday lower.

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.

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