Monday, February 9, 2015

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower.
  • ES pivot 2055.17.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a buy here..

After rising strongly three of the last four, Friday's action wasn't a sure thing so I called it "uncertain".  Which is jsut as well since we finished with a small red spinning top.  But this in its own way changed the picture so let's get to the charts to see how that helps call Monday.

The technicals

The Dow:  On Friday the Dow just touched its upper BB and it was like the third rail - it was all downhill after that.  The resulting candle left us overbought with a stochastic about to form a bearish crossover.  All in all, that means this one looks bearish for Monday.

The VIX:  After a gap down Thursday, the VIX gained 2.61% on Friday on a tall inverted hammer that was big enough to curl the stochastic around to line up for a bullish crossover and provide a descending RTC exit for a bullish setup.  That makes this one look higher Monday.

Market index futures: Tonight, all three futures are lower at 12:16 AM EST with ES down 0.34%  On Friday ES put in a classic red spinning top that just touched its upper BB - a pretty decent reversal warning which the overnight seems to be confirming.  With indicators back to overbought  I'd say this chart looks bearish now.

ES daily pivot: Tonight the ES daily pivot rises again from 2044.83 to 2055.17.  But that move plus the overnight skid in ES now leaves it below its new pivot so this indicator remains bearish.

Dollar index:  The dollar put a convincing end to its recent slide on Friday with a monster 1.19% skyrocket that exploded it out of its descending RTC and completed a bullish stochastic crossover.  That changes the picture and the dollar now looks higher.

Euro:  And of course as the dollar rose, the euro fell, right back to 1.1323, a level it's been at for nine of the past 10 days.  The red marubozu formed a bearish engulfing pattern that just fell out of the rising RTC for a bearish setup.  Along with a bearish stochastic crossover, this one now looks plainly bearish for Monday.

Transportation:  Though not quite as overbought as the Dow on Friday the trans gave us a near bearish dark cloud cover with a red spinning top and a stochastic flattening out before a bearish crossover.  So this one looks more bearish than anything on Monday.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   2      1       1           0       0.667     -9

     And the winner is...

I know I've been burned a couple of times recently doing this but by gosh the technicals do look bearish for Monday so I have no choice but to call Monday lower.  Being net long, I'll be happy to be proven wrong.

Single Stock Trader

VZ took a big and unexpected (by me anyway) gap up on Friday to break above its 200 day MA.  But it's now highly overbought and on the verge of a bearish stochastic crossover.  So while I'm sorry I missed this particular bus I don't think right now is the time to hop aboard.

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