No rally in sight, more bad news in store next week

Last night I thought the Dow would go lower today, but only by maybe 50 points. But I wasn't expecting the Spanish Inquisition. That or the 179 point tanking we got. We're now in one of these stages where Mr. Market is totally off his meds, up big, down big, up, down, with the VIX today blasting to 21.32 for nearly a 17% jump.

There's absolutely no way to predict where we're going the next day in this kind of environment, so I will bring back the daily chart I put up four days ago to see where we might be by the end of June. Recall that the descending RTC's we're in intersect the rising 200 MA at four different points I labeled A-D. Point A has already gone by. I still think we're headed towards point C, which would be 11,835 on 6/24, that being next Friday.

Point B is still not entirely off the table though.  After today's pounding, it's only 168 points away from here, and we dropped more than that today alone.  However, if we don't go down that much tomorrow, then we have a few more days to go before hitting the 200 MA.

Wherever it is, I still believe that when we do reach the 200 MA, it will trigger a quick drop to test the March lows at 11,615.  Below that, there's no support until 11,434.  Then we go straight to  the next support at 11,000, the early 2010 highs.

Until then, every time some overpaid, keep your hands off my stack Greek railroad conductor decides he needs to start throwing Molotov cocktails to ward off the possibility that he might (gasp) have to work beyond 50, then the market will go down more.  That or our pal J.C. "zut alors" Trichet opening his mouth for any reason, or Uncle Ben, or actually just about anything at this point.

Can we go lower tomorrow?  Sure - I see no technical reason not to right now.  At 1:30 AM the futures are all flat.  The daily ES pivot is now at 1271 and we're already 5 points below that.  ES is going to be hard pressed to break over that level tomorrow.  And tomorrow there's a whole slew of economic news coming out, including the Philly Fed that a lot of people seem to put a lot of stock (no pun intended) in.  And given how stinko most of  the recent news has been lately, I doubt we're going to get anything that will give the market a boost.

But right now, perhaps surprisingly, a higher close for the week is actually still not yet out of the question, as we're still only about 50 points below Monday's open.  And here's something reallystrange: today the weekly RSI number hit zero.  It doesn't go any lower than that.  That's lower than it was at any point during the Great Recession, including the Lehmann panic week.  In the whole time I've been trading, I've never seen RSI go this low.

Meanwhile the monthly charts are looking grim as ever.  The 200 month MA now stands at 9,532.  Since it's slowly rising, it's not even out of the question that we could reach that in a month or two.  The monthly indicators have all peaked, but they're still just coming off their overbought extremes.  And to round things out, the Morningstar numbers remain entrenched below 1.0.  Don't look for any meaningful rally until that improves.  It is what it is.