"the market may take a breather tomorrow. It now has support at 12,000 and resistance at 12,049. So I'm looking for a small range day tomorrow, with resumed upside later on this week."and sure enough, that's exactly what we got today. The high for the day was 12,051 and the low was 12,003, ending with a scant 18 point loss. But today I'm going to put up a chart of the daily VIX rather than the Dow. There's not much we can learn from the Dow chart today - just a small spinning top sitting at the top of a mountain of three big green candles. The VIX chart is a lot more interesting today.
Notice how we did indeed move lower in the VIX today, pretty much as you'd expect. However, today's drop was quite small compared to yesterday. And it stopped right on the 40 day moving average. This level has been providing support to the VIX for months now. In addition, the RSI and momentum indicators took a little hook up today. And the stochastic is entering oversold territory. Finally, the VIX is now right back in the middle of a region it has spent a lot of time in for a month now.
Based on this, I would not be surprised to see the VIX move higher tomorrow. Higher VIX implies lower stocks.
Supporting this is the fact that all three futures, ES, NQ, and YM are down right now (1:15 AM EDT) by 0.17%, 0.23% and 0.16% respectively. And ES broke below its daily pivot at 7:30 this evening. I note also that while the Dow did close over 12,000, the S&P was unable to recapture 1300 today.
Furthermore, while the news wire is fairly quiet this evening, crude oil futures are back on the rise again in the overnight. So all in all, I'm not looking for any advances in the market tomorrow and I would not be surprised to see us close back under 12,000 again.
Numbers to watch tomorrow
12,000 - psychological support
11,992 - this level is not only today's daily pivot, but also the 40 day MA. Below this is bearish
11,985 - minor support from back in January.
11,938 - the 25% Fibonacci retracement of the last three days' gains.
And on the other side,
12,050 - the pre-earthquake crash level, now resistance. Above this is bullish.
Trades
Today I got stopped out of my Ford trade at break even. I'll be trying to get back in again soon at a lower level.
Posts
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