Monday, January 6, 2014

Monday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday uncertain.
  • ES pivot 182633.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside

Arrgh - I hate it when this happens - Last Wednesday night I said the market would go lower, so it went higher.  Thursday night I said it would go higher ... so it went lower!  (admittedly, the SPX did go lower but the Dow, which is my benchmark, went higher).  Doh!  Maybe with a normal full week of trading coming up, the technicals will become better behaved and we can get on with the business of making money.  So let's get right  to the charts and see what's what.

The technicals (daily)

The Dow: On Friday the Dow put in a small lopsided spinning top constituting something of a DCB.  But it still counted as a bearish RTC trigger and the indicators continued to fall off overbought so I can't get too excited about a 29 point gain.  Overall, this one continues to look bearish.

The VIXEmphasizing the confused state of Friday, we got a 3.30% decline in the VIX on a broad gap-down spinning top, despite the SPX moving lower too.  This moves makes a bearish RTC setup though and with indicators very nearly overbought, I'd say lower looks more likely than higher here on Monday.

Market index futures: Tonight all three futures are basically flat at 1: AM EST with ES down by all of one tick, NQ up 0.06%, and YM down 0.02%.  And the new candle is developing as an inverted hammer after Friday's tall spinning top.  The indicators are now close to oversold and momentum has actually just turned higher.  We're also right on the edge of a very steep descending RTC for a bullish setup.  So while it's not entirely clear that Monday is set to move higher, at least it looks like the stage is now set for a reversal within a few days.

ES daily pivot: Tonight the pivot dips from 1829.678  to 182633.  But that wasn't enough to put ES above the new pivot, so this indicator continues bearish.

Dollar index: It's lucky I decided not to go with the incomplete evening star here last Friday as the dollar still had enough gas in the tank to gain another 0.21% and close right on its upper BB.  But with rising indicators not yet overbought, more upside is still possible here..

Euro: At least I got the euro right when I wrote "This chart looks bearish" last Thursday, as it closed right on its lower BB on Friday.   And the new overnight is continuing lower, so with indicators still not yet oversold and no support til 1.3534, more downside seem possible here.

Transportation: In an interesting bit of bullish divergence, the trans on Friday gained 0.54% to the Dow's meager 0.17% demonstrating support at the 7300 level.  However, the candle also gave us a bearish RTC trigger.  That plus indicators now halfway between overbought and oversold leaves this chart too tough to call.

Accuracy (daily calls):

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    0      2      0           0       0.000     -164

     And the winner is...

I'm seeing some definite reversal signs in the charts tonight that suggest the recent sell-off might be washed up, but they're not conclusive enough to come right out and make a call for a higher close.  And after having been burned two days in a row, I'm just going to wimp out and call Monday uncertain.  I think we'll have more clarity for the remainder of the week by the end of the day.

ES Fantasy Trader

Portfolio stats:  the account continues the new year at $100,000 as we wait for the right moment to enter our first trade of 2014.

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