Looking for higher

Last night I thought that we might get a short respite from the month-long pummeling the market's been taking.  And after some give and take, the Dow actually managed to close up, a whopping one point, but hey I'll take one point up over 270 down any day.

Particularly telling was the action in ES.  Last night I mentioned the daily pivot at 1275 as being the number to watch.  And indeed ES came up to periscope depth at 8:35 AM, then actually surfaced shortly after the market opened, took a look around, didn't like what it saw and headed for the bottom.  Until 1 PM, when it came back up for another look around.  Then it slowly descended just underwater for the rest of the day.  But the important thing is that the markets did not tank today.

The pivot: And even more important, all three futures (ES, NQ,  and YM) took off around 9:30 PM this evening, possibly on news of China inflation, and right now (1 AM EDT) are up significantly, with ES up by two thirds of a percent, the highest gain at this hour in a long time.  That also brought it convincingly about its daily pivot, which for tomorrow becomes 1271.25.  We're now 10 points above that.  Watch this level closely tomorrow.

Technically, the slight stochastic reversal in ES I noticed yesterday is now more pronounced and RSI is also turning around.  Both of these are quite bullish in the short term.  And with the overnight action providing a relatively long green candle, it looks like a bullish resolution to today's doji, at least so far.

On to the VIX.  While it managed to climb over its 200 day MA today, it also hit its upper Bollinger band in the process.  As I've noted before, whenever this happens, the VIX goes lower, most often the next day or a day later.  That sort of reversal would also be bullish for stocks.

Meanwhile, longer term, looking at the Dow chart, there's nothing on the radar yet to suggest we're not still headed for the 200 day MA sometime before the end of the month, and that's sure to be bad.  We remain firmly in a descending regression trend channel.  But in the meantime, I do think we're going higher tomorrow.

And finally, Mark Hulbert had a piece in Marketwatch.com yesterday basically reiterating what I've been saying recently about market streaks.  This was accompanied by a particularly clueless comment from someone who claimed that market action is like flipping a coin and has nothing to do with what's happened before.  Of course, that's a quite naive view and demonstrably wrong.  At this point, if we do go higher tomorrow, I think we may even break the six week losing streak.  As I've been saying, going down for seven would be highly unusual indeed.  That's all, she wrote.