Monday, February 23, 2015

Monday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday uncertain....
  • ES pivot 2099.33.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ a swing trade buy.

In a good example of how news trumps technicals, on Friday we got some positive news about those Greeks and their perpetual money troubles and so the markets jumped.  Not that I'm  complaining since I'm always net long.  As long as I'm making money I'm happy.  So let's see how happy I'm going to be Monday at 4 PM as we begin the last week of the miserable month of February.

The technicals

The Dow:  Last week I thought for sure the Dow would break lower following a whole week of hanging men.  But the Greeks put the kaiboash on that idea and up we went to the tune of 155 points for another record close and reclaiming the 18K level.  Indicators are all now overbought-broken and have lost their predictive power so all I can really see here is the upper BB at 18,296 and the rising RTC.  IOW - nothing bearish here.

The VIX:  The VIX is now back in gear, falling when the market rises.  And on Friday it fell a good 6.47% out of its rising RTC for a bearish trigger and then right on through its 200 day MA leaving us with three black crows all cawing "lower lower".

Market index futures: Tonight, all three futures are mixed at 12:31 AM EST with ES down 0.05%.  On Friday ES smashed through resistance at 2098 to move back into record territory.  The indicators remain highly overbought but ES has shown an ability for over a year now to keep that up for a long time before moving lower.  That leaves nothing really to call this chart lower Monday.

ES daily pivot: Tonight the ES daily pivot rises from 2094.00 to 2099.33. We're still above the new pivot so this indicator continues bullish.

Dollar index:  After early gains Friday the dollar ended with a 0.16% loss on a red bearish engulfing pattern.  It does appear to me that after peaking on January 23rd the dollar seems to have lost its way.  I'm looking for some directionless trading the next day or so.

Euro:  The euro is also befuddled, putting in five dojis in a row with no end in sight.  Indicators continue to wander between overbought and oversold so to be honest I have no clue where this chart is going.

Transportation:  After a gravestone doji Thursday the trans motored higher on Friday anyway, though with a hanging man this time.  We've now touched the upper BB and the indicators remain extremely overbought, and we're hanging on the very edge of the rising RTC for a bearish setup.  So it looks like there's at least a chance of a move lower on Monday.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   5      4       3           2       0.636     91

     And the winner is...

One thing that concerns me is that the Morningstar Market Fair Value Index has now hit 1.06 - its highest level in a year.  The last time we hit 1.06 was December 26th and that marked the exact top of a nasty week and a half long slide.  And the chart recently are looking a lot like the run-up to the December high too (modulo the Greek pop on Friday which might be a one-off).

So I'm kind of torn between calling the market higher because of the absence of any outright bearish signs and calling it lower because of some slightly longer term toppishness I see.  Oh well, what the heck - I'll just split the difference and call Monday uncertain.  My personal bias is that I'm not looking to go long the next few days.

Single Stock Trader

Last Thursday I wrote that "
we're nearing a short-term bottom" regarding VZ.  And if you check the chart, that's about how it played out with a tall green hammer and oversold indicators .  It's now looking like a near term buy again.

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