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- Monday lower, low confidence.
- ES pivot 1836.58. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Ho ho ho! I hope everyone had a merry Christmas. We're back and it looks like Santa showed up right on time bringing loads of profits to all the good little traders, the Night Owl among them, having hit her high of the year just last Friday. With the Santa rally wrapping up, the next obvious question is what of the January effect? And with a second chopped up holiday week on a row coming up let's see if we can make any sense of it. Speaking of sense, if I had any, I'd take this week off too. I'm only here because it's the very end of 2013 and the start of a new year so it seems like I should show up. So in the waning days of 2013, let's run down the charts once more.
The technicals (daily)
The Dow: It was quite a week for the Dow as it remains solidly inside a rising RTC while it climbs it upper BB. The indicators are all broken at overbought now (RSI is 99.75). The only notes of caution here are the look of an exponential run-up and the doji on Friday suggesting a pause may be coming. Year-end tax loss selling is also due to kick in (assuming it happens at all this year). So I'd at least entertain the possibility of a down day here on Monday.
The VIX: Supporting that notion is the VIX, which on Friday put in a small gain following a doji on Thursday. It has now found support in the 12 area and bounced off its lower BB. We also just got a fresh bullish stochastic crossover so this one looks ready to move higher.
Market index futures: Tonight the futures are mixed at 12:25 AM EST with ES down by 0.04% but NQ up by the same amount. The overnight action is pretty trendless. But Friday's candle was a perfect star that closed off the upper BB for the first time in five days. With the indicators majorly overbought and no positive movement in the overnight, there's a suggestion here of a move lower on Monday.
ES daily pivot: Tonight the pivot inches up from 1834.67 to 1836.58. That was enough to put ES below the new number so this indicator turns bearish.
Dollar index: On Friday the dollar put in one of these funny candles that's a tall green marubozu but still counts as a 0.14% loss because of a big gap down at the open. These "backwards losses" are always tough to figure, and doubly so in a holiday-shortened week so I'm not touching this chart tonight..
Euro: Friday's euro chart was a bit less conflicted, giving us a tall inverted hammer whose tail pierced the upper BB. After an attempt to move higher in the Sunday overnight, the euro has now fallen below its pivot and looks to be starting a dark cloud cover. There's not much of an RTC here and the indicators are of little help but the rest of the evidence suggests a move lower on Monday.
Transportation: The trans, like the Dow are quite overbought now. And on Friday they put in a hanging man that broke away form the upper BB. That, plus highly overbought indicators suggests a move 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 8 3 3 3 0.800 485
October 7 5 8 2 0.643 674
November 6 6 2 1 0.538 123
December 6 5 4 0 0.545 202
And the winner is...
Though Monday is historically bullish, that may not be the case this year as the charts are looking a bit toppy to me. In fact, I see enough reversal warnings out there to call Monday lower. Of course, it's another holiday-shortened week with the holiday in the middle so anything's possible, but that's just how the technicals look.
ES Fantasy Trader
Portfolio stats: I am now calling the ESFT closed for 2013. The account ends the year 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. We'll reset to $100,000 on New Year's day and start over for 2014.