Monday, May 11, 2015

Monday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday uncertain.
  • ES pivot 2102.00.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a swing trade buy.

The market took a big jump on Friday propelled by some jobs number Mr. Market evidently found quite appealing.  That changes the picture once again so let's take a step back and see what this all means for Monday.

The technicals

The Dow:  On Friday the Dow had its best day since way back last December 18th by the looks of it with a rocket ship that zoomed it right past resistance at 18,111 and clear to it supper BB.  And amazingly, even that wasn't enough to send the indicators overbought.  And the stochastic is still finishing up its bullish stochastic crossover.  So with the all-time high not too far away, I see no reason why the Dow would not want to revisit that level on Monday.

The VIX:  Last Thursday night I wrote that "[a bunch of technical mumbo-jumbo] makes it look like the next move is likely lower".  And was it ever, with the VIX gapping down a monster 15%, its biggest gap lower since the very same December 18th to crash right back through the 200 day MA in a move that just barely nudged the indicators off overbought and also formed a bearish stochastic crossover.  Support isn't til 12.04 so there's still room to run lower on Monday,

Market index futures: Tonight, all three futures are lower at 12:29 AM EDT with ES down 0.05%.  ES had a great day last Friday handily confirming a double hammer pattern and popping right back up to its resistance at 2111.  Indicators are all rising now and we have a completed bullish stochastic crossover so everything looks great - except that the overnight is drifting lower a bit.

ES daily pivot: Tonight the ES daily pivot leaps from 2076.50 to 2102.00. And even with that jump ES is still above its new pivot so this indicator continues bullish.

Dollar index:  Last Thursday night I wrote "this chart now look[s] bullish for Friday".  And it was, up another 0.16% on a bullish engulfing pattern.  With rising indicators only recently off oversold that makes this chart look continued higher for Monday.

Euro:  And last Thursday night I also wrote of the euro that some pretty persuasive stuff "adds up to lower on Friday".  And that's just where the euro went, back down to 1.1210.  And the selling doesn't appear to be over yet either with the euro down even more in the Sunday overnight.  With falling indicators, a completed bearish stochastic crossover and three black crows, it looks like a lower close on Monday.

Transportation:  Like everything else the trans were higher on Friday but unlike everything else they put in an inverted hammer sitting on their 200 day MA.  We have rising indicators and a freshly minted bullish stochastic crossover but there is a note of caution here.

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      3      8       7           0       0.273      1
May        3      1       0           2       0.833    411

     And the winner is...

Often the day after a big run-up the market takes a breather.  That was certainly the case on December 19th after the Dow's last similar-size gain as Friday's.    So while there really aren't any bearish signs about, I'm expecting something of a doji day on Monday and those are by definition uncallable.  Therefore I simply have to declare Monday uncertain.  I'm not expecting a big move either way.

Single Stock Trader

Last Thursday night I cautiously recommended VZ as a swing buy and it did indeed rise along with the rest of the Dow on Friday but it did it with a gap up doji that looks like 2/3 of an evening star.  And though it also formed a bullish stochastic crossover it's enough of a reversal warning for me to go back to neutral on this one.

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