In Absence Of Outright Bearish Signs, Monday Forecast Uncertain

Published 02/01/2016, 12:49 AM
Updated 07/09/2023, 06:31 AM

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

  • Monday uncertain.
  • ES pivot 1913.17. Holding above is bullish..
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • YM futures trader: still long at 16,434 .

You will note that last Thursday night I wrote "The possibility exists that we could be breaking out of a week-long trading range soon." And yowsa, last Friday the Dow had its best day since last August, blasting out of that range like a rocketship. So with that out of the way, where is Monday headed? We go right back to the charts as usual to search for clues.

The technicals

The Dow: On Friday the Dow put in a jolly green giant marubozu to pop nearly 400 points on high volume. That blasted it right through the upper boundary of its recent trading range at 16,168 to close at 16,466. And that sent all the indicators overbought though not excessively so, and the stochastic has yet to start curving around for a bearish crosover. So there's nothing bearish about this chart tonight.

The VIX: And on Friday the VIX correspondingly fell out of its own trading range to drop nearly 10% on a giant inverted hammer that sent its indicators oversold and left the stochastic lying flat on the floor. With no real support until other lower BB and the 200 day MA, both around 18.11, I see nothing bullish about this chart tonight.

Market index futures: Tonight, all three futures are lower at 12:24 AM EST with ES down 0.13%. ES had a monster day last Friday that just like the Dow took it out of a week-long range-bound morass and kept its indicators rising all the way to overbought. The new Sunday overnight seems to be giving a bit of that back, but after such a big move, that's not entirely unexpected.

ES daily pivot: Tonight the ES daily pivot rises again from 1883.00 to 1913.17. That leaves ES far enough above its new pivot to call this indicator bullish tonight.

Dollar index: Like everything else, the dollar had its own dramatic move on Friday, jumping 1.13% on a tall green marubozu that was stopped only by its upper BB. And even that wasn't enough to send the indicators overbought. In fact the stochastic completed a bullish crossover. However, that leaves the dollar now at some big resistance around 66.66, so I'm a bit hesitant to call it higher again on Monday.

Euro: And on Friday the euro fell out of its week-long rising RTC to drop right back down to 1.0839 on tall red marubozu. That left the indicators halfway between oversold and overbought though we now have a fresh bearish stochastic crossover. However, the Sunday overnight seems to be rallying a bit so I'm not calling this chart tonight.

Transportation: On Friday the trans put in a big marubozu of their own, with a 3% pop that topped the Dow's 2% gain. Volume was up here too and indicators are still not yet overbought so there's nothing bearish here either.

Average Points

The first day of most months is bullish and February is no exception. But it is also often the case that the market takes a break after a big one-day run, particularly one that takes the indicators to overbought. And with the futures guiding lower, that's what I'm expecting tonight. However, in the absence of any outright bearish signs from the charts I can't come right out and make a bearish technical call. We could see a topping day. In any case, I'm afraid the best I've got tonight is Monday uncertain

YM Futures Trader

Nothing new again here.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.