Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday lower, low confidence
• ES pivot 1975.83.  Breaking below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader stands aside.

Recap

Well I hope everyone had a happy Fourth of July and enjoyed a good barbeque.  Turns out the market provided the fireworks as the Dow cracked the historic 17,000 level for the first time last Thursday while we were on vacation.  Now that all the big players are coming back to work, what's this going to mean for Monday?  We carefully scour the charts, as always, for clues.

The technicals

The Dow: It was what I call the "knock knock" effect.  The Dow made two attempts to crack 17K earlier last month and both were rebuffed.  But I've noticed that often when you see a chart make two big pushes at a resistance level but fail, the third time is the charm.  And so it was last Thursday with a .nifty 92 point gain to get July off to a rousing start.  So we've now hit the upper BB and indicators have gone quite overbought.  But we remain in a rising RTC and in the absence of any bearish signals, I'm not calling this chart lower just yet.

The VIX: Wow - while we were gone the VIX just fell off a big cliff.  After dropping out of its rising RTC a week ago, it's gone from 11.57 to 10.32 in a reverse exponential waterfall.  I had to back out to the monthly chart to find the last time we were this low.  It was way back in February of 2007.  So with major support broken the lower BB now not til 10.06 and falling away, a solid descending RTC going, and indicators only just now entering oversold, I see nothing at all bullish about this chart.

Market index futures: Tonight all three futures are lower at 12:29 AM EDT with ES down  0.09%.  Tonight, this chart gives us something of an early warning because it did trade for a while on the fourth.  And didn't do so well unable to push past Thursday's highs.  The indicators are now quite overbought and the stochastic looks about ready to form a bearish crossover.  And the Sunday overnight continues to sag, giving this chart an overall bearish impression.

ES daily pivot: Tonight the ES daily pivot rises from 1973.92 to 1975.83.  After a late evening dip, ES is making an attempt as I write to break under the new pivot.  So at the moment, this indicator is up for grabs.

Dollar index:  After putting in a star last Tuesday the dollar took off with two consecutive gap-up days to blast out of a long-running descending RTC for a bullish setup.  We also got a bullish stochastic crossover and all the indicators are rising off oversold so this chart looks bullish for Monday.

Euro: The euro fell out of its rising RTC last Thursday for a bearish setup and then traded lower again on Friday for a bearish trigger.  The Sunday overnight is confirming that so with indicators still not yet oversold, this chart looks lower on Monday.

Transportation: The trans just barely broke resistance at 8295 intraday last Thursday before falling back for nonetheless a record close.  The tall green marubozu keeps us well within a rising RTC and we've yet to touch the upper BB, so while indicators are now moderately overbought, I see no immediate reversal signs here.

Accuracy:

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    5      10      6           0       0.333     64
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      10      3           2       0.500    132

     And the winner is...

Most of the charts are fairly old at this point and the ones that aren't are now looking vaguely bearish technically.  My general thought is that when traders come back on Monday and look over their gains from last week they may be inclined to take some money off the table.  I think Mr. Market may need a day to digest this all so I'm going to call Monday lower.

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.