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- Monday lower, medium confidence.
- ES pivot 2005.50. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
Friday began with a big pop as the market reacted to the Scotland vote. Then Mr. Market got a bad case of buyer's remorse and gave up all those gains by 1 PM. Then a small afternoon rally helped recover some of the day's gains. And there was a last minute sell-off, who knows why five minutes before the bell. By the end, after all that excitement the Dow managed a paltry 14 points. But then it was triple-witching and all. So now with that out of the way, let's see where the new week is headed. To the chart-pole, Robin!
The technicals
The Dow: The Dow's Friday fade left us with a tall inverted hammer that traded entirely above its upper BB and exited the left side of the rising RTC, overbought indicators, and a stochastic on the verge of a bearish crossover. It's not clear how much of that is op-ex related but I don't like the looks of it. I cal this chart bearish now.
The VIX: On Friday the VIX gained 0.67% on a bullish piercing pattern. We remain in a descending RTC and haven't quite reached support or oversold levels, but there's at least a suggestion of a move higher here Monday. VVIX, which formed a spinning top sitting right on its 200 day MA supports that idea.
Market index futures: Tonight all three futures are lower at 12:37 AM EDT with ES down a significant 0.55%. We've not seen a drop this big in the wee hours for quite some time. But Friday gave us a long-legged doji centered on the upper BB and the new overnight has broken support at 2000, fallen way out of the rising RTC for a bearish setup and a clearly completed bearish stochastic crossover. All the indicators have now turned lower and RSI has come off overbought. That all spells lower for Monday in my book.
ES daily pivot: Tonight the ES daily pivot rises from 2001.42 to 2005.50. We now find ourselves considerably below the new pivot so this indicator turns bearish.
Dollar index: The mighty dollar seems unstoppable, gapping up on Friday to a level not seen in over a year. That completed a bullish stochastic crossover but the candle is a hanging man in evening star position. So this chart is conflicted and I won't call it.
Euro: The euro has now alternated between up and down for six straight sessions . Friday's down move closed at 1 2844, like the dollar a level not seen in over a year. But it's now very close to some strong multi-year support and the overnight seems to be respecting that so there's at least a chance of a move higher here on Monday.
Transportation: In a bit of bearish divergence on Friday, the trans lost 0.49% on a bearish engulfing pattern that bounced off the upper BB and sent all the indicators lower from overbought. And the stochastic is now on the verge of a bearish crossover. This chart looks bearish too.
Accuracy:
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
July 6 4 4 3 0.692 639
August 8 7 2 2 0.588 81
September 3 6 3 0 0.333 -15
And the winner is...
I'm hearing the growls of bears getting louder on the charts tonight, enough to just go ahead and call Monday lower.
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. It's a shame too because it looks like a good chance for a lower close on Monday. I'm just worried that we missed the boat on this trade. And multi-day shorts have been quite risky all year long.
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