Yesterday's small doji in the Dow indicated indecision in the market's ongoing advance and also brought us to the lower edge of an RTC channel going back to the end of last month. That was a bearish setup. Then today's 42 point decline was the trigger. According to this system one should be expecting lower prices tomorrow. I also note that the Dow broke below its daily pivot today on a red candle, also a bearish sign.And finally, Monday's top exactly hit the upper end of a longer RTC going all the way back to last July. The last time that happened was 11/4/10. What followed then was nine straight days of decline. Accordingly I'm taking the green swing trend arrow down and declaring the shorter uptrend over.
However, there are no fewer than nine pieces of economic news coming out tomorrow and all three futures are up about a quarter of a percent right now (1 AM EST). This is a very tough call. I think if the news comes out better than expected, the market could ignore the RTC and continue higher. And I note that the YM futures have not given a bearish trigger and remain within the rising channel.
In any case, on a purely technical basis, the Dow chart looks poised to go lower. This is just one of those situations where you really do have to wait and see. I think tomorrow is going to be more news-driven than technically driven. Right now, I'm just planning on sitting on the sidelines until I see which way the wind blows.
No trades today.
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