“Markets don’t move in straight lines, and to me, it looks like the normal course of a little bit of profit-taking kicking in. Does it turn into that pullback that everyone is calling for? I don’t know"
You and me both. Yesterday I discussed the possibility of getting a doji or hanging man soon and sure enough, the Dow formed a doji/spinning top today. But that is not necessarily the reversal everyone is waiting for. Indeed, we remain above the middle of the ascending RTC, thus the uptrend is actually still intact, even though I got a bad feeling from today's action. I even tried to hedge my position with some SDS around mid-day and naturally the market started going back up. I got out at break even and then watched the charts gyrate aimlessly the rest of the afternoon.The closest thing I can figure is that today looked a lot like January 6th, and that was followed by two more down days.
And check out this ominous warning from The Stock Traders Almanac:
January Expiration Week Horrible Since 1999, Dow Down Big 8 of Last 11".This coming Friday could be really bad. And it would only take a 30 point drop over the next day or two to generate a bearish trigger.
At least I was right with my call that the 11,867 level was going to be tough to crack. Tuesday's high was 11,859 and today's was 11,861, with both days finishing off those levels. Where tomorrow goes, I have no idea, but I'm not as optimistic as I was at the start of the week and I don't see us breaking the 11,867 level once again, which means there's not much upside from here. And as of this writing (1:50 AM), all three futures (ES, NQ, and YM) are down slightly. I may try again to get a decent entry into SDS tomorrow to do some hedging if we're not up meaningfully by 11 AM.