Monday, June 30, 2014

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence
  • ES pivot 1949.58.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader stands aside.

With these dojis lately, it's hard to come up with a winning call.  When the Dow ends higher by less than six points, it's pretty much a toss-up.  This is why I include a "Dow points" column in my Accuracy section.  So even though we were wrong on Friday, the hit was only six points.

We now enter a big holiday-shortened week.  Not only is Friday the Fourth of July, but Thursday is only a half day.  And the One-Percenters have no doubt already helicoptered to the Hamptons. voyaged to Vail, or boated to Bermuda by now.  So this will be my only post this week, mostly because Monday is important, marking the end of the month and the end of the first half.  So let's get right to it.

The technicals

The Dow: Hmm - this is interesting.  Looking at just the real bodies, we now have a developing symmetrical triangle in the Dow.  .Following the current vaguely lower downtrend, this is de facto bearish.  But - notice that money flow turned higher on Friday and the stochastic is now on the verge of a bullish crossover.  With a double hammer going here, I'm going to guess the next move is higher.

The VIX:  Last Thursday night I wrote "I'm leaning toward calling the VIX lower on Friday"  And that was a good lean, because on Friday the VIX fell 3.18% with a red candle that prompted a bearish stochastic crossover and dropped it out of its rising RTC for a bearish setup.  So the VIX now looks lower again on Monday.

Market index futures: Tonight all three futures are higher at 12:32 AM EDT with ES up 0.05%.  ES continues in a short but rising RTC with Friday's gains non-confirming Thursday's doji.  That also took us just barely outside the descending RTC for a bullish setup  and the overnight  is providing a provisional bullish trigger.  Indicators have also now all turned higher so we're looking good here for Monday.

ES daily pivot: Tonight the ES daily pivot rises again from 1945.83 to 1949.58.  That leaves us above the new pivot so this indicator is bullish for Monday.

Dollar index:  Last Thursday night I wrote "I can't call this chart higher for Friday."  And good thing too because on Friday the dollar took a big 0.24% gap-down dump on a big red marubozu that closed just below the lower BB and keeps us in a long-running descending RTC.  So with the lower BB falling away, there's really nothing bullish about this chart for Monday.

Euro: And last Thursday night, my vague guess was that the euro go lower on Friday, but it was not to be.  The euro instead posted a big gain to close at 1.3649, its best close since June ninth.  This big move caused momentum and RSI to turn lower, but we remain overbought and well inside a rising RTC - and not too far from the 200 day MA.  I'll bet the euro is interesting in checking out that number (1.3664) on Monday.

Transportation: Last Thursday night this chart was a bit obscure.  The most I'd cop to was a vague bearish bias.  And it's good I went no further because on Friday the trans handily outperformed the Dow with a 0.31% gain and a bullish engulfing pattern.  And a new bullish stochastic crossover.  So this one looks bullish now for Monday.


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        6       7      6           0       0.462    -67

June       8       8      3           2       0.556    183

     And the winner is...

Last Friday's herky-jerky action was variously attributed to Russell rebalancing and pension funds doing end of quarter housekeeping.  Now the last day of June is typically quite bearish for stocks, but if we really did clean house last Friday, the technicals aren't looking all that bad tonight.  In fact we're seeing several signs that are usually quite reliable, like RTC exits and stochastic crossovers.  So while it makes me a bit nervous to do so, given the history, I'm going to go out of a limb and call Monday higher.

ES Fantasy Trader

Portfolio stats:  the account remains at $113,000 after seven trades in 2014, starting with $100,000.  We are now 5 for 7 total, 3 for 3 long, 2 for 3 short, and one push.  Tonight we stand aside.

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