Monday, May 12, 2014

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence.
  • ES pivot 1870.33.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

I kind of ran out of time last Thursday and wasn't able to put my post together to call Friday.  Turns out Mr. Market was interested in revisiting the all-time highs even after an inverted hammer on Thursday suggested lower.  That leaves us in an interesting state, which we will now proceed to investigate for Monday.

The technicals

The Dow: The combination of green marubozu, inverted hammer, then higher hanging man is highly unusual.  The last one I found was over a year ago, in February 2013 The next day back then was higher and I suspect it might be here too.  We have now exited a descending RTC for a bullish trigger and  also gotten a complete bullish stochastic crossover.  We are admittedly right on the resistance that stymied the Dow twice before last month but this time we're in much better shape, indicator-wise implying there's more gas in the tank for a push higher on Monday.

The VIX: Whew - the VIX now appears to be back in gear, in inverse correlation, falling 3.80% on Friday as the markets rose.  And right back to recent support too.  Will this level hold?.  A bearish stochastic crossover and a VVIX lacking support both suggest "no" despite oversold indicators.

Market index futures: Tonight all three futures are higher at 12:55 AM EDT with ES up 0.20%.  ES ended last week with a spinning top on Thursday and a hammer on Friday.  The latter provided a bullish RTC setup and the new overnight is the trigger.  We also have a nascent bullish stochastic crossover forming so this chart would appear to be gearing up for another stab at resistance around 1880.

ES daily pivot: Tonight the ES daily pivot dips from 1874.00 to 1870.33.  After breaking above the old number last Friday, that still leaves us above the new pivot so this indicator is now bullish.

Dollar index:  Wow!  On Friday the dollar took a monster sky rocket 0.70% gap up to bust out of a nearly month-long descending RTC for a bullish setup.  It also confirmed a bullish stochastic crossover in a big way.  These yawning gaps always worry me though as they invite retracement, so I'd have to guess that Monday will see a pause in the dollar.

Euro:And on Friday the euro gave us a dark cloud cover.  The new overnight is wide-ranging but ultimately lower, seeming to confirm Friday's pattern.  I'd have to say the euro's going lower Monday.

Transportation: The trans chart from Friday is particularly confused with a tall gravestone doji Thursday followed by a hanging man Friday.  Indicators  are mixed, with half moving higher and the rest moving lower so this chart is just too tough for me to digest tonight.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      10      6           0       0.333
February   5       2      2           1       0.750    107

March     12       3      6           0       0.800    431
April      9       3      5           0       0.750    482
May        0       3      3           0       0.000   -158

     And the winner is...

The original Anschluss ballot, with sample voting instruction. 
Technically, the markets are looking fairly bullish tonight.  The only question right now is the headline risk posed by the Anschuluss referendum in Austria, uh I mean Ukraine, this evening.  Now Adolf Putin has admittedly promised he was withdrawing his Panzers from the border last week but golly, I'm not sure the man is entirely trustworthy.  But for the time being the only logical course of action seems to be to stick our heads in the sand mumbling something about "Peace in our time" and call Monday higher.  That could change...

ES Fantasy Trader

Portfolio stats:  the account remains at $111,625 after three trades in 2014, starting with $100,000.  We are now 3 for 3 total, 2 for 2 long, 1 for 1 short.  Tonight we stand aside.

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