Monday, April 20, 2015

Monday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher.
  • ES pivot 2085.92.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ moving lower

In a model of understatement last Thursday night I wrote "the charts seem a bit negative tonight".  And on Friday we got hammered across the board for whatever excuse you like: options expirations, the Chinese, the Iranians, and of course the ever popular Greeks.  Despite a late afternoon rally attempt, some technical damage was done so let's take a look at that now as we begin a new week.

The technicals

The Dow:  The Dow provided scant warning on Thursday in the form of a small doji star of its massive plunge on Friday when it dove right out of its rising RTC for a bearish setup off a rising RTC.  It also gave us a fresh bearish stochastic crossover and sent the indicators right off overbought.  That leaves this chart looking full-on bearish.  The only saving grace here is something of a tail int he lower shadow.  That's the sort of thing we've seen before reversals in the last two big dumps we've gotten in the past month.

The VIX:  And on Friday the VIX took a big gap-up 10% jump to nearly hit its 200 day MA but ending with almost a tall gravestone doji..  It send the indicators off oversold but also qualifies as 2/3 of a bearish evening star.  We've seen this pattern before though and I'd give better than even odds this one goes lower on Monday.

Market index futures: Tonight, all three futures are higher at 12:25 AM EDT with ES up a non-trivial 0.40%.  This is a significant bounce off Friday's close and while that drop gave us a bearish setup on a rising RTC exit, the overnight seems to suggest a move higher on Monday.

ES daily pivot: Tonight the ES daily pivot dives from 2098.17 to 2085.92. That dump plus the rising overnight now puts ES back above the new pivot so this indicator turns bullish.

Dollar index:  On Friday the dollar gained 0.10% on a green bullish piercing pattern.  Indicators have been falling for a while now and are nearly oversold so I'd say the dollar is due for a bounce, maybe Monday but if not then then more likely Tuesday.

Euro:  The euro spent last week in a tight rising RTC but on Friday finally failed to make a higher high, closing at 1.0800.  We're now back to overbought for the firs time in a month and the Sunday overnight while gapping higher is forming a red hanging man making me think there's a warning here of a move lower on Monday.

Transportation:  The trans of course fell on Friday too though only half as much as the Dow.  Still, they sliced right through their 200 day MA and sent the indicators off overbought and continued a bearish stochastic crossover.  There's nothing bullish on this chart.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   6      4       5           3       0.692    183
March      7      6       5           4       0.647    976  April      1      5       3           0       0.167   -204

     And the winner is...

While we have now exited a two-week long rising trend, I think that last Friday's action was somewhat overdone.  When the traders all wake up Monday morning and discover that the sun is still rising in the east and the earth has not stopped turning, they may very well step in to pick up some bargains.  That still leaves Tuesday in question but I think for now I'm going to call Monday higher.

Single Stock Trader

On Friday VZ fell back under its 200 day MA with a perfect red gap-down spinning top that also caused a bearish stochastic crossover and sent the other indicators lower too.  This is what I've been waiting for.  I think there's still more downside to come but we're now getting ready for the next swing trade entry, probably sometime this week.

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