Looking good for tomorrow

Sunday night I was sure the market would go higher today and it sure did, giving us an excellent 128 point advance in the Dow to close at 12,570.  This is important because it definitely broke us out of the descending regression trend channel begun on May 2nd.  That is a bullish trigger.  It's also the first time we've had a four day winning streak since late April.  Can we make it five?  Let's see.

All three futures are up right now at 1:50 AM EDT by 0.18% to 0.26%.  Though not as good as the gains we were looking at last night, that's still non-trivial.  The action in ES in particular today was important because we blasted right through the 1338 resistance level.  And in the after hours, we've gained even more.  The ES is now at 1346.25, and that's just above the May 19th high of 1345.50.  If this holds, that will be very bullish as it will mark the first time ES has put in a higher high in over a month.

Meanwhile oil continues to hold above $100 and as long as it remains in positive correlation wit the market, that's bullish too.  The dollar meanwhile continues the fall that began on May 23rd.  We have now begun retracing the huge jump it took on May 9th.  I think the dollar has at least two more days of decline ahead and that is also bullish for stocks.

And our old friend the VIX did indeed move lower again today as I thought.  It just about touched its lower Bollinger band at 15.15 before closing at 15.45.  That means the VIX is now knocking on the oversold door.  However, tomorrow is the first trading day of a new month and that's historically bullish.  Also, I'd expect it to take a day before any turnaround in the VIX is reflected in the market.

So all in all, it looks like we've got the green light for more gains in the Dow tomorrow.  So far this week, I am 1 for 1 on market calls.

Trades

Today I dumped my AKS at 15.22.  It put in a classic hanging man and its daily indicators are all overbought.  Time to give it a rest.  I then used part of that cash to buy some TWO, Two Harbors Investment Corp., a REIT that's yielding a juicy 14.9%.  At 10.65, it barely misses getting into my low price/high yield portfolio, but I'll give it an honorary position there based on its yield alone.  It closed at 10.74.