Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday lower, medium confidence.
  
• ES pivot 1776.50.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside

Recap

Last Friday the Dow managed to eke out some meager gains after three ugly red candles in a row.  Does this mean Santa's on his way?  Let's run down the charts to see who's been naughty or nice.  With both op-ex and a Fed announcement, it should be an interesting week ahead.  It's also going to be my last week of the year as I plan to take next week off for the holiday.

The technicals (daily)

The Dow: On Friday the Dow arrested its week of losses with a little green spinning top sitting on the lower BB as indicators continued to decline towards oversold.  It's now a reversal warning but one that requires confirmation.

The VIX:  Meanwhile, the VIX defied expectations by putting in a 1.42% gain on a bullish engulfing candle to close right back to its upper BB.  With indicators still not yet up to overbought, there3 could be more upside potential from here.

Market index futures: Tonight all three futures are lower at 12:24 AM EST with ES down by a significant 0.49%.  ES put in an inverted hammer last Friday but the overnight doesn't seem to be confirming that.  In fact we're right back to the lower BB which is falling away.  Not a good sign.

ES daily pivot: Tonight the pivot ticks lower from 1776.92  to 1776.50.  We spent Friday threading about the pivot but have now clearly broken lower, so this indicator is bearish.

Dollar index: On Friday the dollar put in a fat red spinning top in evening star position.  It's now giving the impression that it wants to retrace some of last Thursday's big gains.

Euro: The euro had a red spinning top of its own on Friday and the overnight seems to be confirming it, up a healthy 0.12% so far.  But with the indicators still just inside overbought, I'm not sure how much upside is available here on Monday.

Transportation: Last Friday the trans confirmed Thursday's doji and bounced off the lower BB.  With RSI now having bottomed at oversold and the stochastic moving into position for a bullish crossover, this chart is looking at least a bit bullish.


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   6      6      2           1        0.538    123
December   5      3      2           0        0.625    298

     And the winner is...

The charts are somewhat mixed tonight with a slight negative bias but I'm afraid Monday's going to be news-driven, the news being some disappointing PMI data from China (to the extent you can believe anything from the Chicoms).  That's already reflecting in ES so it looks like we simply have to call 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.