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- Monday higher, low confidence.
- ES pivot 1870.58. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader standing aside.
It was looking good for my call for a lower Friday until a mid-afternoon rally put the kaibosh on that theory. But it was only a 45 point gain for the Dow so the damage was limited. DCB or trend change? We now consult the charts for answers.
The Dow: After two days of accelerating losses, Friday's modest gain in the Dow sure looks like a DCB to me, especially since the indicators are still not yet down to oversold. But this is a tricky chart - we're now right on a trend line of rising lows going back over a month. Going by that, I'd hesitate to call the Dow lower again on Monday..
The VIX: Way back last Thursday I wrote that I was bothered by "a star/inverted hammer combo in VVIX though, which suggests lower". Good suggestion as the VIX fell 5.554% on Friday on a big bearish engulfing pattern that bounced off the 40 MA. With support still down around 12.10, I think we could be in for more downside on Monday.
Market index futures: Tonight the futures are mixed at 12:15 AM EDT with ES up just 0.03% but YM down 0.02% so once again we have a pretty flat overnight. Friday's action in ES was vaguely bullish piercing line and while the indicators are not yet oversold, they seem to be flattening out in no-man's land halfway there.
ES daily pivot: Tonight the ES daily pivot dips from 1871.58 to 1870.58. That keeps us above the new pivot so this indicator now turns bullish.
Dollar index: While the dollar did put in a red candle on Friday, it came with a small gain which I wasn't expecting. But the overall thesis remains intact - overbought, bearish stochastic crossover, etc. I still say the dollar's looking lower.
Euro:After three big declines last week the euro seems to have found some stability around 1.3700. The indicators are all quite oversold now and we have exited that nasty descending RTC, so the next move seems more likely to be higher.
Transportation: This chart fooled me Friday as I dismissed the hammer and got hit on the head with it as the trans rose 0.83% with a bullish engulfing pattern to confirm that hammer in a big way. We also got a bullish descending RTC setup so I'd say this chart is now looking higher on Monday.
And the winner is...
Tonight the general gestalt of the charts is bullish, not roaringly so but just barely enough for me to cautiously predict Monday higher. I'm not expecting a big advance though.
ES Fantasy Trader
Portfolio stats: the account remains at $121,500 after four trades in 2014, starting with $100,000. We are now 4 for 4 total, 2 for 2 long, 2 for 2 short. Tonight we stand aside.