Monday, June 15, 2015

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday lower.
  • ES pivot 2097.50.  Holding below is bearish.
  • Rest of week bias uncertain  technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.

Last Thursday night I wrote that "the market is feeling toppy tonight with a number of reversal candles on the charts.".  And that's all it took, with a broad-based decline on Friday  leaving hte Dow down triple digits.

The technicals

The Dow:  On Friday the Dow confirmed Thursday's inverted hammer with a 141 point dump to send the indicators lower before they ever even hit overbought.  Technically this all looks bearish for Monday.

The VIX:  And Thursday night I wrote that "the VIX may be moving higher within a few days."  And we didn't have to wait long, with the VIX rising 7.24% on Friday with a gap-up candle that popped it out of its descending RTC for a bullish setup.  That also curved the stochastic into position for a bullish crossover so this one looks like more upside is possible Monday.

Market index futures: Tonight, all three futures are lower at 12:16 AM EDT with ES down  0.44%.  On Friday ES confirmed Thursday's spinning top with a red marubozu that retraced half of Wednesday's gains.  Of more immediate concern is the Sunday overnight, which gapped down precipitously at the open, forming a bearish stochastic crossover before the indicators even got near overbought - nto a good sign.

ES daily pivot: Tonight the ES daily pivot falls from 2109.08 to 2097.50.   That leaves ES still below its new pivot so this indicator continues bearish.

Dollar index:  Last Thursday I wrote that "the dollar is having trouble getting into gear right now." and Friday didn't help it any with another 0.07% loss as we continued a month-long slide.  There are no bullish signs on this chart tonight.

Euro:  After spending a bunch of time last week noodling about 1.1292, the euro was ultimately unable to pass that resistance and closed Friday at 1.1261, but with yet another doji.  That makes four in a row as the euro struggles to find direction.  But with the Sunday overnight off non-trivially it looks like that direction will be lower on Monday.

Transportation:  Last Thursday night the trans gave no hint of a fall on Friday but that's what happened anyway.  The result was almost a dark cloud cover but certainly doesn't look encouraging.  I'd not be long the trans for Monday.

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        6      5       5           2       0.615    581
June       4      1       2           3       0.875    468

     And the winner is...

A down Friday followed by a down Monday is a well-known bearish sign and we already saw that a week ago.  Now we have yet another down Friday and the technicals sure don't look very positive tonight.  Also, the Morningstar Market Fair Value Index continues to lag at 0.99.  A reading below 1 can be bullish, but not if it drags on too long.  Then it becomes bearish.  With no real bullish signs to speak of on the charts tonight and the futures unambiguously guiding lower, I have no alternative but to call Monday lower.

Single Stock Trader

Well I guess that's the end of this trade.  VZ fell out of bed on Friday, along with the rest of the Dow.  That put a quick end to this rising RTC, erasing a week's worth of gains.  So we're back to square one, waiting for a likely buy point.

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