Coiling the spring

Sometimes you're wrong, sometimes you're right. Today I was very right. Last night King Oil told me to put on my long hat and today the Dow rose 124 points. The central line of the rising regression trend channel held up nicely too.

And I noticed something interesting today. It looks to me like the Dow is now forming a symmetrical triangle pattern. I've drawn in the other leg of the triangle in this daily Dow chart. If this holds true, then tomorrow we should see a narrower range than today and bounded by both of these lines. It looks like this triangle should resolve itself within the next four days. We'll be watching for increased volume. When the breakout comes, it could be dramatic.

These triangle patterns are like springs that get compressed more and more as the days go by.  When they pop, they can go big.  And since the breakout is most often in the direction of the existing trend, and the existing trend going into this triangle was up, my bets are that we could see a big up day in the next few days.

Tonight, there's not much guidance from the VIX which today continued  its indecisive trip up and down (as led by Puck no doubt) in the middle of its Bollinger band range. And the futures are all meandering pretty much nowhere themselves right now (at 1 AM EST), with all three being down just a hair.

The only real pointer for tomorrow's direction right now seems to come from oil. Oil futures have been in a declining channel all evening. And since we have been in an inverse oil/market correlation since the end of January, this implies higher stock prices tomorrow.  But then we have this upper range limit right around today's close. And there's some significant oil-related economic news coming out tomorrow at 10 AM (crude inventories), so the day traders will want to be vigilant for that. All in all, I'd look for a smaller range day tomorrow than today, possibly starting off lower and ending around today's close or a tad higher.  That's about all I got tonight.

Numbers to watch tomorrow

12,125: Today's daily pivot (tomorrow's not available yet). Today we crossed above this number and never looked back. More of the same is possible tomorrow.

This number is also the lower edge of the symmetrical triangle. I'd expect it to provide support tomorrow.

12,210: The upper edge of the symmetrical triangle. This number is close to last month's resistance area too and has proven to be tough to crack since we dropped below it on February 22nd.

12,125: The lower edge of the symmetrical triangle. I'd expect this number to provide support tomorrow.

Trades

Today, I bought a small amount of my favorite little spec play OMEX, Odyssey Marine, the Treasure Quest guys, at 2.67.  It has pulled back a lot since its high last month and put in a doji on unusually high volume today.