Monday stock market forecast

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

• Monday higher.
• ES pivot 2153.58.  Holding above is bullish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• YM futures trader: short at 17,670.

Recap

It's certainly good that I called last Friday's market as "uncertain" seeing as how the Dow finished just 10 points higher while the SPX ended all of two points lower.  I've been patiently waiting for some topping action for a while now.  Is this the sign that we might see a move lower?  We go right to the charts to search for clues.

The technicals

The Dow:  On Friday the Dow put in a small doji star, itself a reversal candle.  In addition, it fell out of a very steep two-week rising RTC for a bearish setup.  Indicators are now at extreme overbought levels (RSI = 96.5) and momentum has actually been declioning for three days now.  That all spells at least the possibility of a reversal in my book but the way this market has been unstoppable lately, I'm going to have to see some confirmation first.

The VIX:  Meanwhile, the VIX fell .17% on Friday on a red dark cloud cover to end back below 13 with a weekly close not seen in a whole year.  Next weekly support isn't til 12.10 and the daily lower BB is way down at 9.49 so conceivably there's still room to run lower despite oversold indicators.

Market index futures: Tonight, all three futures are higher at 12:56 AM EDT with ES up 0.15%. After a long-legged red spinning top last Friday that left the indicators highly overbought, ES seems to be moving higher again in the new overnight.  There's every indication here that a down day is imminent but this is one bus I definitely don't feel like standing in front of so I'm going to have to wait for confimation first.

ES daily pivot: Tonight the ES daily pivot rises from 2156.00 to 2153.58.  ES remains just above its new pivot so this indicator contiues bullish.

Dollar index: After a big dump last Thursday the dollar rebounded nicely on Friday, up 0.47% on a tall green candle that just tested its 200 day MA before falling back a bit.  That leaves the indicators wandering around between oversold and overbought though the stochastic looks ready for a bullish crossover.  At this point, I'd expect another shot at the 200 MA on Monday.

Euro:  After breaking above its 200 day MA last week, the euro fell right back below it on Friday, down to 1.10885.  That was enough to generate a bearish stochastic crossover before the indicators got anywhere near overbought.  The new Sunday overngiht gapped lower to week-long support leaving this chart in a bit of a muddle.

Transportation:  On Friday with indicators extremely overbought, the trans dropped 0.38% o a dark cloud cover that broke away from their upper BB.  They also exited a rising RTC for a bearish setup.  So there's at least some sign of a reversal here.

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       2      3       3           1       0.500    -249

     And the winner is...

OK, I'm throwing in the towel.  I keep seeing potential signs of reversals but they never seem to come to pass and tonight is the same story all over again.  I do note though a developing hammer in crude oil, and that coud be a positive for the market.  So I guess it's time to just go with the flow and call Monday higher.  We'll see.

YM Futures Trader

No trade tonight.