Monday, August 11, 2014

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence.
  • ES pivot 1914.08.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Last Friday was a textbook example of how headline risk can torpedo the technicals.  Late Thursday night there was news out that the Empty Suit was going to drop some bombs on a bunch of religious lunatics in Syria, and the futures weren't liking it.  But then lo and behold, come Friday morning, Adolf Putin announced the end of war games (which he had already said on Monday that they were going to end on Friday) and boom - the market shot up like a skyrocket.  Go figure.  Not that I'm complaining since I'm always net long, but none of this action made much sense to me.  Technically though, it provided us with some fresh meat to chew on, so pass the charts as we take on Monday.

The technicals

The Dow:  Friday's big jump for the Dow finally got the indicators off the floor, reinforced the bounce off the 200 day MA as support and even just managed to exit the recent wicked descending RTC for a bullish setup.  That makes tonight the first inkling of bullishness we've seen since July 23rd..

The VIX:  And the VIX was down 5.34% on Friday to form a bearish harami and a bearish stochastic crossover.  With its upper BB now history, this chart looks like it has more downside for Monday..

Market index futures: Tonight all three futures are higher at 12:42 AM EDT with ES up a respectable 0.21%.  On Friday ES had a good day with a vaguely bullish engulfing candle that just missed exiting its descending RTC for a bullish setup.  However the overnight is trading outside the RTC and that is a bullish setup.  We've also got indicators coming off oversold and a completed bullish stochastic crossover so this chart looks bullish to me tonight.

ES daily pivot: Tonight the ES daily pivot finally rises from 1910.25 to 1914.08.  We're well above the new pivot so this indicator is now bullish.

Dollar index:  On Friday the dollar put in a gap down star for a 0.19% loss.  This is 2/3 of a fairly rare pattern called a bullish tri-star.  A gap-up star Monday would confirm that.  We need to wait for that anyway, given Friday's star.

Euro: The euro had a big day on Friday, closing at 1.3413 to exit a week-long descending RTC for a bullish setup.  The indicators are mixed though and the overnight is running lower so it's not clear the euro isn't just going to take a rest on Monday.

Transportation:  And finally the trans did even better than the Dow on Friday, up 1.26% in a move that woke up their indicators, confirmed Thursday's spinning top, and jumped right out of their descending RTC for a strong bullish setup.  This one looks bullish now.


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      10      3           2       0.500    132

July       6       4      4           3       0.692    639
August     1       3      0           1       0.400   -209

     And the winner is...

Tonight we're getting some fairly decent bullish technical signs from the charts, enough in fact to simply call Monday higher.  But given the continuing unrest around the globe, it will take just one bit of bad news to send the market back down again.  We live in crazy times.

ES Fantasy Trader

Portfolio stats:  the account remains $114,250 after eight trades in 2014, starting with $100,000.  We are now 6 for 8 total, 4 for 4 long, 2 for 3 short, and one push.  Tonight we stand aside.

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