The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Monday uncertain.
- ES pivot 2076.08. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: N:VZ not a swing trade buy.
Recap
| December 7th, 1941, a date which will live in infamy. |
Ho ho ho! Santa came early last Friday as the Dow rocketed up 370 points in a broad-based advance. Is this the start of the fabled Santa Claus rally or are there some lumps of coal in the pipeline? Let's check the charts for whither Monday.
The technicals
The Dow: Last Thursday night, the Dow was looking decidedly negative after having fallen right through its 200 day MA to drive the indicators all oversold. But what a difference a day makes - because on Friday it put in a giant green marubozu that popped right back up through the same MA and then some causing the indicators to all bottom at oversold and also gave us a new bullish stochastic crossover. So right now this chart looks pretty bullish.
The VIX: I often write that the upper BB is the third rail of the VIX. And that proved to be true once again on Friday at as the VIX fell a giant 18% after just touching its upper BB at 19.46 on Thursday. This move was enough to drive all the indicators lower just before they reached overbought and also just barely squeaked out a brand new bearish stochastic crossover. This tall red marubozu also crashed right through the 200 day MA making this chart look nothing but bearish for Monday.
Market index futures: Tonight, all three futures are lower at 1:11 AM EST with ES down 0.07%. On Friday, ES confirmed its successful test of its 200 day MA on Thursday with a giant green candle that retraced all of Thursday's losses and then some . That caused the indicators to stop falling off of overbought and also caused a fresh bullish stochastic crossover before ever reaching oversold levels. However that also placed it right back in a two week-long congestion zone and after such a large one day move it would not be unreasonable to expect a day of rest for ES. Indeed the move lower in the Sunday overnight seems to support that idea.
ES daily pivot: Tonight the ES daily pivot rises from 2062.17 to 2076.08. That still leaves ES above its new pivot, so this indicator continues bullish.
Dollar index: After its biggest fall since the Middle Ages on Thursday, the dollar recovered in decent fashion on Friday with a 0.73% increase for a classic doji star. That caused the indicators to bottom at oversold and makes it look like there is at least the possibility of moving higher again on Monday.
Euro: And similarly after a moonshot on Thursday, the euro retreated a bit on Friday as one might expect,closing back down to 1.0875. But even that move begs more replacement and the overnight is continuing lower again as indicators are now all overbought and the stochastic is starting to come around for a bearish crossover. My vote would be for another lower close on Monday here.
Transportation: The trans had a good day on Friday just like everything else, though not quite as good as the Dow. But it did bounce off its lower BB with a green hammer and that's a bullish sign. The indicators now appear to have bottomed at oversold and are just starting to come off that level. And the stochastic is now preparing for a bullish crossover, so overall this chart looks more bullish than bearish for Monday.
Friday's big move brought the market right back to earlier resistance levels. It's also not unusual for the market to take a break after a big one day move. Also, while the charts are bullish, the overnight futures are not. And it's always particularly difficult to call Mondays. I'm not expecting any big moves on Monday either. So I'm just going to call Monday uncertain.
Single Stock Trader
Last Friday Verizon was as surprising as everything else in the market gaining two and a half percent after looking pretty bearish Thursday night. That confirmed Thursday's fat spinning top as it bounced off the lower BB and squeaked out a new bullish stochastic crossover. In fact, Verizon had its best day since February 6th. This move left it just short of its upper BB and right on month-long resistance. So it's not clear if there is all that much gas left in the tank to move significantly higher on Monday.