Monday, September 22, 2014

Monday lower

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


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     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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