Monday, December 1, 2014

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower, medium confidence.
  • ES pivot 2068.17.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader standing aside.

I hope everyone had a happy Thanksgiving and got to take some well-deserved time off.  Here's why I took all of last week off: last Monday the Dow opened at 17,812.63 and last Friday it closed at 17,828.24.  After a whole week, that was a change of just 17 points.  Sure, there were a few day trading opportunities here and there but as far as swing trading goes, my time was much better spent relaxing, eating turkey and thinking about other things besides the market.

And I expect the same thing next month during Christmas week which I also intend to take off.  But for now it's back to work so with a new month on tap let's see what December might have in store and in particular if Santa Claus is going to show up this year.

The technicals

The Dow: Tee Dow basically spent a whole week going nowhere last week, putting on one meaningless doji after another.  The proximate takeaway is that we've got some strong resistance around 17,830 and with indicators crazy overbought right now the next move could be lower.

The VIX: In an interesting bit of bullish divergence last Friday the VIX popped 10.44% on a day the Dow went nowhere, possibly inspired by news of OPEC's policy problems.  Oh boo hoo hoo - poor OPEC.  Good riddance to ya, you money grubbing cartelistas.  Nevertheless, technically, the VIX put in a quite bullish candle, exiting its descending RTC is a big way for a bullish RTC exit and a bullish stochastic crossover.  So this chart really looks higher for Monday.

Market index futures: Tonight, all three futures are lower at 12: 28 AM EST with ES down 0.41%. On Friday ES put in a class bearish engulfing candle to the extent that that means anything in a low volume holiday shortened week.  But the indicators continue falling off extreme overbought and the gap down in the Sunday overnight seems to suggest some weakness coming into Monday.

ES daily pivot: Tonight the ES daily pivot drops from 2070.92 to 2068.17.   We're over 10 points under the new pivot now so this indicator is now bearish.

Dollar index:  The dollar continues to find resistance at 60 (on the $USDUPX) just touching its upper BB on Friday.  So given recent history I'd look for a lower dollar Monday on that basis alone.

Euro:  The euro chart is somewhat more confused with a drop on Friday negating the previous two daily gains.  With indicators halfway between extremes and trending nowhere, there's nothing to say about this chart.

Transportation:  Last Friday, such as it was, the trans put in a classic inverted hammer that just touched their upper BB on extremely overbought indicators.  And gave us a bearish stochastic crossover.  That makes this chart looks bearish for Monday.


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

     And the winner is...

December is historically the best month of the year for the SPX and second best for the Dow, but that's not generally true of its first day.  And with a number of bearish signs on the charts tonight it's not looking good for Monday.  So even keeping in mind the holiday induced  trading distortions last week, I think the only reasonable call I can make tonight is for Monday lower.

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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