Monday stock market forecast

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

• Monday higher.
• ES pivot 2111.17.  Holding above is bullish.
• Resr of week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: short at 17,670.

Recap

Hoo boy!  A way better than expected jobs number on Friday did a real number on  my call for a lower close as the Dow instead surged 251 points.  This was one of those classical days when the news trumped the technicals and there's not much we can do about that.  Fortunately, trading is one of those games where you don't need to be right all the time to still make out pretty well.  So let's take a look at the charts to see how this breakout changes the picture for Monday.

The technicals

The Dow:  On Friday the Dow finally awoke from its week-long slumber to rack resistance at 17,943, then pyschological resistance at 18,000, and then still further resistance at 18020 before finally coming to a stop just shy of its upper BB at 18,204 with a jolly gap-up green mrubozu that left the indicators all quite overbought and the stochastic threaded out at the top of its range.  In fact, we're now just short of the all-time closing high of 18,273 set in May.2015.  At this point, it's entirely possible for the Dow to want to check out that number again, or at the very least its upper BB.

VIX daily

The VIX:  After looking for all the world like it was bottoming last week, on Friday the VIX fell some more, down to year-long support at 13.20. While the VIX is now quite oversold on the daily chart, it's not oversold at all on the weekly chart.  The stochastic has literally fallen off the bottom edge of my chart and the lower BB isn't til 12.09.  If we can't hold the current level in the next few days, I think it's possible we could be headed down that way Real Soon Now.

Market index futures: Tonight, all three futures are higher at 1:18 AM EDT with ES up 0.39%. Like the Dow, on Friday ES broke out of its congestion zone  clearing resistance at 2116 on a tall green near-marubozu that neared the upper BB at 2132.  Indicators are now quite overbought but with the new overnight continuing higher and in the absence of any bearish candles, I can't call this oen lower yet.

ES daily pivot: Tonight the ES daily pivot rises from 2091.92 to 2111.17.  ES is now back above its new pivot so this indicator flips back to bullish.

Dollar index: On Friday the dolar put in a long-legged spinning top as a dark cloud cover.  While that was only good for a 0.05% decline the net impression here is bearish.

Euro:  And of course on Friday the euro put in its own long-legged spinning top, this one a mirror-image red one to the dollar's rise.  Indicators continue to fall and the new Sunday overnight is guiding lower again so there are no signs of a turn-around yet for the euro.

Transportation:  On Friday the trans outperformed even the Dow's big jump with a massive 2.55% pop with a gap-up green marubozu that just cracked their 200 day MA at 7673.  Indicators are now quite overbought but 200 MA crossings in the trans generally seem to be good for another few days of higher prices.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      8      6       6           1       0.600     222
April      6      4       8           2       0.667     416
May        9      3       4           4       0.813     756
June       8      5       7           1       0.643    1393
July       1      2       1           0       0.333    -305

     And the winner is...

With all the charts looking uniformly positive tonight, I'm going to have to call Monday higher.  I expect to see some trouble breaching last year's highs though.

YM Futures Trader

We remain short at 17,670.