Monday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday uncertain.
• ES pivot 1926.83.  Holding below is bearish.
• Rest of week bias higher technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ no longer a swing trade buy.

Recap

Well last Friday saw some more crazy action as we got a mixed market with the Dow rising but the S&P and the Nasdaq both falling. But my call is always for the Dow therefore I was correct. So now let's move on to the last week of the horrible month of September and the end of the quarter as we see what's in store for Monday.
The technicals

The Dow:  Last Thursday the Dow put in a tall hammer that successfully tested its lower BB. Then on Friday it confirmed that hammer with a 113 point gain but did it on an inverted hammer. Nevertheless the indicators are all now oversold and stochastic looks like it has curved around and just barely squeaked out a bullish crossover. Friday's candle also traded outside the descending RTC so that is a bullish setup. So all in all this chart now looks bullish for Monday.

The VIX:  Friday was also one of these unusual days when the VIX rose while the Dow rose also. It put in a tall green candle with the net result of just a 0.64% gain. Still it traded it entirely outside its descending RTC and that makes it a bullish trigger. Indicators continue to rise but they are not yet overbought, so technically this chart looks bullish for Monday.

Market index futures: Tonight, all three futures are lower at 12:13 AM EDT with ES down 0.09%.  After a tall red hammer last Thursday ES followed on with a tall green hammer for a net change of almost nothing.  Indicators are now quite oversold and the stochastic is in position for a bullish crossover any time now.  We're also riding right on the edge of the descending RTC and about to make a bullish setup there.  But the overnight action isn't quite there yet.  It's not clear ES can muster the strength to advance on Monday.

ES daily pivot: Tonight the ES daily pivot rises from 1917.42 to 1926.83. And that's enough to keep ES below its new pivot so this indicator remains bearish.

Dollar index:  On Friday the dollar confirmed Thursday's tall green hammer just above its 200-day MA by gapping up with a 0.3% gain that just touched its upper BB before falling back a bit and caused the indicators to head back towards overbought - though they're not there yet. The stochastic is now in position for a bearish crossover but we still don't quite have it yet. Nevertheless the overall impression here is that there's more downside risk than upside potential for Monday.

Euro:  And as for the euro, on Thursday it put in a tall lopsided spinning top that was confirmed on Friday with another tall lopsided spinning top, this one ending almost exactly where Thursday's began. The indicators are now back to oversold but the stochastic is meandering around with no definitive crossovers in sight at the moment. The overnight is rising a bit so the overall impression is that we are simply consolidating in the area of 1.1205. Which way this one goes on Monday is anyone's guess. I will also note in that we are now just below the 200 day MA and that seems to be serving as some resistance at the moment.

Transportation:  Friday was certainly the day for RTC exits as the trans also put in a bullish setup on a solid 0.89% gain. That move caused the indicators to bottom at oversold and just barely squeaked out a bullish stochastic crossover. So the overall technical impression here is quite positive for Monday.

Accuracy: 

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      10      1       5           4       0.938   1212
August    10      2       3           2       0.857   2314
September  6      3       7           1       0.700   1215

     And the winner is...

After a mixed market last Friday, we've got some mixed charts tonight.  The trans and the Dow are looking higher, but the VIX is also looking higher and the futures are guiding lower.  So those opposing forces essentially cancel each other out and although Monday is historically bullish I'm not really seeing it right now.  Therefore I'll just have to wimp out once again and call Monday uncertain.

Single Stock Trader

Last Thursday night I called Verizon a swing trade buy for the adventurous. And that was indeed rewarded on Friday with a small gap-up hanging spinning top. It traded entirely outside the descending RTC for a bullish setup and the indicators now appear to have bottomed out at oversold, another bullish sign. However the spinning top is a reversal warning itself and the stochastic has now threaded out at oversold. Therefore the conservative thing to do would be to exit this trade on Monday.