Encouraging signs for Tuesday

Last night I called the market higher today and we did indeed see a nice 46 point gain in the Dow.  That was off its highs for the day, but I 'm always happier to see a string of modest advances than a single big run-up.  In any case, all of the forces that were in play last night appear to be still there this evening at 12:40 AM.  Admittedly the ES is down 0.24% and the NQ and YM are also down, though by lesser amounts.

However, I think I'm going to take my cue tonight from the VIX, which put in a classic bearish engulfing pattern with its long red candle today, in addition to looking rather overbought technically.  This makes me look for a lower VIX tomorrow and VIX down means stocks up.

Oil meanwhile, after rising most of the day is retreating back towards the $100 mark in the overnight.  I view this as positive for stocks too.  So I'm moderately confident we can go at least a bit higher tomorrow.

And finally, silver, in the form of the SLV, which gave a bullish setup on Friday, gave a bullish trigger today.  Sort of.  While it did put in a green candle today, it did so by gapping up rather than by a steady advance and that makes me at least a little nervous.  The market likes to fill gaps.  If this does not happen tomorrow and silver continues higher or holds its own, I intend to take out a partial position.  If it goes lower, I will wait one more day to let it sort itself out.

Trades

Today I bought a small position in AK Steel, AKS at 15.17 and that's right where it closed.  AKS has hit a strong support level, is looking quite oversold, and its indicators appear to have bottomed.  I think there is more reward than risk in this play, just as I think the same of the broader market at least for tomorrow.  Once again, I don't think tomorrow is just yet the time to "sell in May".