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- Monday lower, low confidence.
- ES pivot 1933.08. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
At 10:30 AM last Friday ES broke above its pivot and we closed the day higher, even if ES did dip back under for a while later in the day. Still, I consider this conditional call a success. We now begin a new week, fraught with an abundance of geopolitical rumblings. This nice thing is that this stuff is generally reflected in the charts, so we now give them the eagle eye for Monday's direction.
The Dow: ON Friday the Dow retrace almost half of Thursday's losses but remained in a descending RTC that along with falling indicators spells continued bearish.
The VIX: Last Thursday night I was looking for something of a topping move in the VIX. Well on Friday, it did try moving higher but never quite made the upper BB before falling back with a 3% loss and a bearish harami. But we remain in a rising RTC so this reversal sign requires confirmation. I can't really call this one.
Market index futures: Tonight all three futures are lower at 12:19 AM EDT with ES down a non-trivial 0.36%. ES found support at 1930 on Friday, retracing about a third of Thursday's losses on increased volume. But the Sunday overnight is seeing a breakdown and with all the indicators continuing lower but still not yet oversold, and remaining inside a descending RTC, this chart looks fairly bearish for Monday.
ES daily pivot: Tonight the ES daily pivot dips from 1934.33 to 1933.08. But with the overnight drop in ES, we're now a good five points under the new pivot so this indicator is bearish for Monday.
Dollar index: To my surprise, last Friday the dollar bounced off its 200 day MA and finished with a 0.09% gain on a little doji star. It did generate a bearish stochastic crossover though, so I'm going out on a limb and claim the dollar goes lower on Monday. Another test of the 200 MA seems in order.
Euro: Last week's big slide int he euro has clearly been arrested as the currency finds support in the 1.3542 neighborhood. Now we peeled off the falling lower BB three days ago and Friday's trade gave us a bullish RTC exit despite the lower close. So with indicators now rather oversold,I'd look for a move higher on Monday. The Sunday overnight action seems to be confirming that, for now at least.
Transportation: On Friday the trans fooled me with a relief rally good for a 0.75% gain. It was enough to cause the indicators to bottom but we're still waiting for a bullish stochastic crossover and we're still in the falling RTC, so it's not possible to call Monday higher from this.
And the winner is...
With a triple witching op-ex week and a Fed meeting coming up, things are bound to get interesting. Tonight, we see the charts having made a half-hearted attempt to rally from two big losing days last week. I'm not quite sure they've succeeded. I tend to put more emphasis on the futures on Sunday nights because that data is fresher than last Friday's candles and tonight, they're looking bearish. So given that, plus the absence of any clear bullish reversal signs, I'm going to call Monday lower.
ES Fantasy Trader
Portfolio stats: the account remains at $112,125 after six trades in 2014, starting with $100,000. We are now 4 for 6 total, 2 for 2 long, 2 for 3 short, and one push. Tonight we stand aside.