Monday, December 15, 2014

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher, low confidence.
  • ES pivot 2008.67.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

Several times a year the stock market holds a sale.  After a 316 point cliff dive in the Dow on Friday, this is one of those times.  Of course the question now is how long the sale will go on?  Are these the best prices of the year or will there be even better bargains in the week ahead?  Let's go right to the charts for some answers.

This is a good time to note that we're looking at another big holiday week next week and accordingly the Night Owl will be taking the entire week off.

The technicals

The Dow:  Is the selling over?  Well one glance at the Dow's chart clearly shows a negative exponential curve and that's always a good sign that we're nearing the end.  Whenever something goes exponential, it's about done.  The indicators are now a quite oversold levels and we're way below the lower BB.  All we're missing now is a reversal candle.  That could come Monday.

The VIX:  Well hey now - speaking of reversal signs, on a day the Dow absolutely cratered, the VIX was up just 5% with a tall spinning top in perfect evening star position.  Indicators are now crazy overbought and the stochastic has flattened out in preparation for a bearish crossover.  This is a good sign we're getting ready to move lower.  If not Monday, then Tuesday.

Market index futures: Tonight, all three futures are higher at 12:31 AM EST with ES up  0.43%. ES had another ugly day last Friday, closing well under its lower BB and driving the indicators quite oversold.  Tonight we note the stochastic is getting very close to a bullish crossover and we're seeing a bounce in the overnight trade.  It's not clear if it's a bottom, a DCB, or just an echo of the trade we saw last Thursday after Wednesday's big decline.  But in any case, it looks like the selling's about done, at least for now.

ES daily pivot: Tonight the ES daily pivot dives from 2037.08 to 2008.67.   Amazingly, even after that massive drop and a substantial overnight gain in ES, we're still below the new pivot, though not by much.  So this indicator remains bearish but the possibility exists for an assault on the pivot.  A break above would turn things bullish.

Dollar index:  On Friday the dollar put in an odd little green spinning top that was nonetheless a 0.38% decline.  But with RSI looking to have bottomed and the stochastic real close to a bullish crossover, I'd say the buck is telegraphing a move higher on Monday here.

Euro:  And of course the euro did the opposite on Friday, stymied now for three days at 1.2450 resistance.  The overnight is gapping up but fading as we leave the rising RTC for a bearish crossover.  Can the euro make another move higher Monday?  I'm not at all sure about that.

Transportation: On Friday the trans retracted all of Thursday's gains and then some to continue dribbling down the lower BB and remain in a descending RTC.  But despite oversold indicators, I still don't see any reversal signs here.


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  6       6      5           2       0.571    376 
October    6       6      3           1       0.538    271 
November   4       4      5           0       0.444     38

December   3       2      3           1       0.667   -192

     And the winner is...

The Friday charts all look pretty ugly but the extent of the sell-off, the reversal hint in the VIX, and the overnight futures all seem to be suggesting a move higher Monday.  And I'll take that suggestion and call for a close Monday higher.

ES Fantasy Trader

Portfolio stats:  the account now stands at $110,500 after ten trades in 2014, starting with $100,000.  We are now 7 for 10 total, 5 for 5 long, 2 for 4 short, and one push.  Tonight we stand aside.

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