Monday, January 19, 2015

Monthly update

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday closed.
  • ES pivot 1998.17.  Holding below is bearish
  • Next week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: waiting on new VZ entry.

The market is of course closed on Monday but I thought I'd just make a few comments on the monthly charts.  It never hurts to step back from the trees and take a look at the forest.

The technicals

The Dow:  I'll comment on the SPX here as a TickerSense poll participant, rather than the Dow.  They're both highly correlated anyway.  Here I note that the SPX has exited its monthly rising RTC.  This is a bearish setup.  But what concerns me is that we're still fairly overbought.  We had another such bearish setup back in October, but we were much close to oversold back then.  That implies that there's more potential downside here.  It's not a bearish trigger yet, but it's making me cautious about the upcoming month.

The VIX:  In the past four months, the VIX has made three stabs at its monthly 200 MA.  We also have a completed bullish monthly stochastic crossover.  The longer the time period, the stronger these indicators are, and this one looks like it's ready to move higher.

Market index futures: Tonight, all three futures are lower at 12:57 AM EST with ES down 0.07%, though there's not much to read into this with another holiday-shortened week.  On Friday though ES did put in a big classic bullish engulfing candle that honestly caught me by surprise.  The indicators are now oversold and so this chart is finally looking bullish to me, though we have one more day to mull it over.

ES daily pivot: Tonight the ES daily pivot rises from 1998.17 to 1999.17. We are now back above the pivot so this indicator turns bullish.

Dollar index:  With a monthly RSI of 100 the dollar is about as overbought as it gets.  And it just happens to be right at resistance from the June 2010 highs.  All I'm waiting for now is a reversal candle like we saw in 2010 to call the end of this dollar rally.  And I think it's coming soon.

Euro:  Ah the poor euro.  Its monthly RSI has hit zero but there's still no sign of a reversal as it continues to dribble down its lower BB.   I was half-kidding when I suggested last week it was going to parity with the dollar.  Now, after the Swiss bombshell  I'm not kidding so much anymore.

Transportation:  Here's a worrisome monthly chart.  You'd think lower oil would help the trans but nooo, we got a tall hanging man last month and a steep red marubozu so far this month.  And with the indicators on the longest monthly overbought streak since 1997 this chart looks ready to roll over to me - on a monthly basis - with all the negative Dow Theory implications.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    5      3       1           1       0.667

     And the winner is...

No call tonight.

Single Stock Trader

No changes tonight.

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