Another run at Dow 12,000 possible

Today's action ended up pretty much the way I called it yesterday, a pause, with the Dow losing just over 3 points. I was a bit surprised by the range though, hitting 11,898 intra-day before rallying back up to finish almost unchanged. The resulting doji clearly indicated uncertainty in the face of the double whammy of Obama's upcoming speech and the Fed meeting.

Anyway, now that the first of these events is out of the way it looks like the markets liked what Obama had to say on TV tonight, with the ES futures up 0.35% at this moment (12:45 AM EST) and the NQ and YM up almost as much. On this basis alone I'd say we're poised to take another run at the 12K level tomorrow. The only remaining wildcard is what pronouncements come out of the Fed but it doesn't sound like people are expecting anything dramatic.

Now let's look at the VIX. It hit its upper Bollinger band and formed a dark cloud cover yesterday. Sure enough, that bearish signal was confirmed with a red candle today. Note also that the VIX formed a double top intra-day today. And significantly, the VIX formed a bearish crossover in the short stochastic today, and that is always a very strong indicator. VIX lower, stocks higher.

And also take a look at the chart I posted yesterday from 2006, the last time we approached the 12K level from below. Doesn't today's action look a lot like what we saw back then? And finally note that the daily pivot point has now risen to 11,944 which means we're no longer as far away from it as we were yesterday, reducing the downward pull on the market. So all in all, the green swing trend arrow remains up and I'm fairly confident about tomorrow. Probably no big gains but almost certainly no big drops either. We may spend another day or two knocking on the 12K door before walking through. We'll see.

No trades today.