Up and down

"Up and down, up and down,
I will lead them up and down"

Puck, Midsummer Night's Dream, III, 2

Hah, you always thought that impish Puck was talking about Hermia and Lysander, right? Heck no, he was talking about the stock market! Just look at the daily Dow chart. From right to left, two days down, one day up, one day nowhere, one day down, two days up, etc., etc.

Even intraday today, up nicely at the open, then down over 100 points, then back up in the afternoon, then down again into the close. I was down almost 0.9% right after lunch, but managed to finish the day with a loss of just 0.17%.

No rhyme or reason, just up and down, up and down. There is just one thing that makes sense here. Notice how the low of every single one of the last four sessions has bounced off the central line of the regression trend channel. OK, today it was the close, not the low, but we at least are seeing consistently higher lows since March 3rd. And oil was up again today. So that inverse relationship to the market is continuing, as I mentioned in my last post.

Whither oil?

And speaking of oil, while the oil futures continued higher today, I note that the XOI, the companies involved with oil, have put in two fairly large consecutive red candles, something that hasn't happened since last August. Oil itself went lower right after that back then. Also, this evening we have word that Kuwait, the UAE, and Nigeria may bump their output to offset the loss of Libyan oil.

The effect on crude futures was immediate and dramatic, to say the least. Just after midnight, or about an hour ago, the CL futures fell off a cliff. I've never put up a daily chart of CL in 5 minute bars before, but this one is worth looking at. Check it out.In fact, in this one day chart, you can see that CL wasn't feeling too healthy most of the day. And we know what that means, right? That's right, oil down, stocks up tomorrow. Also, CL put in a gravestone doji in regular trading today, a bearish sign.

The other indicators

Now let's check out the market futures. Right now (1:25 AM EST), ES is up nearly half a percent, the largest gain I've seen at the time of night in a while. NQ and YM are also up by almost as much. And they've been moving up pretty steadily all evening. This also looks bullish for tomorrow.

The only non-confirmation is from our friend the VIX, which remains firmly in Puck's grasp and is just bouncing up and down in the middle of its Bollinger band range. I know of no way to tell where it may be headed next. But the other signs tonight look pretty convincing to me.

It's not the start of a trend, but I think there's enough here to warrant reaching for the long hat for Tuesday.

One final note on oil

Much is being made right now about how the unrest in Libya could become a civil war that could last weeks or even months. Well, to me it already looks like a civil war, and it might last years. The big problem is Libya's geography. Rebels control the east, Khadaffi controls the west. In the middle is a vast expanse of nothing. Remember what happened the last time two armies decided to duke it out in northern Africa? Rommel and Montgomery spent the better part of 1941 and 42 chasing each other in and out of Libya.

So unless someone can get to the Infernal Colonel, this mess may go on for quite some time. I don't think oil is done going up just yet, but it looks like some of the speculators may be taking a few profits tomorrow before gearing up for the final push to the blow-off top that is surely coming in a few months.

Numbers to watch tomorrow

12,070: near-term support. A break under this would be bearish. I'm not expecting this.

12,120: this is tomorrow's RTC support level, the one that has been honored the last four sessions in a row.

12,173: the daily pivot. Climbing above this will be a bullish sign. Actually, that's today's pivot. Tomorrow's will be lower. I would not be surprised to see this level taken out early.

12,250: the mini-resistance level established last month.

12,000: the strong psychological support floor.

No trades today. I'm still waiting for the dust to settle.

What fools these mortals be!