Monday, July 20, 2015

Monday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday higher only if ES remains above its pivot, else lower.
  • ES pivot 2117.17.  Holding above is bullish.
  • Resr of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a swing trade buy.

Friday wasn't a bad day to take a holiday - a meager 34 point loss in the Dow and not much else going on.  We now look ahead to Monday and peruse the charts for clues.

The technicals

The Dow:  On Friday the Dow put in a nice classic red hanging man that was unable to top Thursday's peak.  It also fell out of a steep (Pearson's= 0.969) rising RTC for a bearish setup.  The indicators are now highly overbought and the stochastic just squeaked out a bearish crossover making me think this one is headed lower Monday.

The VIX:  The VIX only lost 1.33% on Friday but what was interesting was the fact that it tested year-long support around 12.  With a green candle closing at 11.95 I'm inclined to consider that a successful test.  Indicators are now quite oversold (RSI=3.72) and the stochastic is in prime position for a bullish crossover Real Soon Now.  It sure looks to me like a move higher is coming sometime this week.  I'm just not sure if Monday's the day, though that's certainly eminently possible.

Market index futures: Tonight, all three futures are slightly higher at 1:26 AM EDT with ES up 0.02%.  Last Friday ES put in a hanging man at the top of Thursday's candle.  The indicators are extremely overbought - RSI has hit 100 now.  And the new overnight is trading outside the steeply rising RTC for a bearish setup.  And ES still faces tough resistance at 2120.  I have to think this chart has more downside risk than upside potential at this point.

ES daily pivot: Tonight the ES daily pivot rises again from 2113.75 to 2117.17. That still leaves ES above its new pivot, albeit by less than before, but for now this indicator continues bullish.

Dollar index:  On Thursday the dollar put in a tall gap-up doji.  I would have thought for sure that meant it was going lower Friday but instead it gained another 0.19%.  That now leaves it at two-month resistance with overbought indicators.  We're still a bit shy of the upper BB though so in the absence of a reversal candle I can't call it lower just yet though it looks like it will be tough sledding from here.

Euro:  Meanwhile, the euro just continued to sink on Friday, right back down to two-month support at 1.0883.  With a lower BB-touch and oversold indicators, you'd think that would be a reversal warning, but no - we're going even lower in the Sunday overnight, and non-trivially at that.  With a descending RTC intact, there's no way I can call the euro higher on Monday.

Transportation:  And finally on Friday, the trans actually gained 0.67% in some bullish divergence relative to the Dow.  But they spent much of the day retracing early gains and in the end were unable to close above resistance at 8297.  Interpret that how you want.  With indicators quite overbought, this inverted hammer looks bearish to me.


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       8      6       3           4       0.706    552
July       6      0       4           0       1.000    854

     And the winner is...

We now have a number of technically bearish signs in the charts tonight but they're all of the sort that requires confirmation.  I think the market's looking pretty toppy right now but it's not clear that there isn't still one more push higher left in it before the pullback.  So with ES near its pivot I'm going to make a conditional call: if ES manages to remain above its pivot by mid-morning Monday, we'll lose the day higher.  If it falls through, we close lower.

Single Stock Trader

After some more gains on Thursday VZ came in a bit on Friday for a bearish harami that was good for a bearish stochastic crossover.  Add in overbought indicators and this one looks more like a short than a buy for Monday.

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