Yesterday, I wrote "My general feeling is that we may be in for several days of consolidation"and that's just what we got today, ending barely down just a couple of points in the Dow. Unfortunately, the candle it produced was a gravestone doji which is a bearish indicator. It also marks a failed attempt to breach the 11,440 resistance level. The market is going to need a few more days to regroup for another attempt.
In addition, today's action fell entirely outside the lower RTC line, and given yesterday's bearish setup, this has to be considered a bearish trigger. Therefore, I am reluctantly removing the green arrow since this uptrend is over. But I can't replace it with a red arrow since there's no evidence to suggest we're going to be trending lower just yet.
However, I do think we'll be lower tomorrow, so I'm reaching back into the closet for my short hat. The indicators are still all overbought and today's declining volume was higher than yesterday's. And the VIX, which was looking like it was getting ready to bottom yesterday, I think has now done so. Its daily stochastic is executing a bullish crossover, which is bearish for stocks.
We've now seen four consecutive days of tiny ranges and that can't last forever. Although I still think December as a whole will be higher, I can't say the same for tomorrow. I'm not looking for a huge drop, but I also don't think we're in for any gains just yet.
No trades today. I sold my entire position in DRYS last Friday, only to watch it rise further yesterday. Today however, it came back down and formed a dark cloud cover which is a very bearish candle. I guess I was just a day too early.
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