Still more gains possible

[Note - unfortunately, Blogspot went down last night just as I was about to publish this post. So here it is on Thursday morning instead of Wednesday night. Sorry.]

Sunday night I wrote that the outlook for this week was "very gloomy". Right now, that's getting my nomination for my worst call of the year, and it's only half over. We've been up three for three. And like Doublemint gum, today's 73 point gain in the Dow gave us two, two, two bullish signals in one. First, we broke above the 12,189 resistance level that formed the top of the double bottom formed this month. That's a classic bullish signal. And second, the long descending regression trend channel from May 2nd is now definitely broken.

In addition, the daily 200 MA (dotted orange line in the chart) is now flattening out as the gains from earlier this year fall over the event horizon. This makes it harder for any drops to hit it (now at 11,802). And while we did hit the upper Bollinger band today, the weekly Dow chart remains quite strong.

I actually think we still have room to run higher over the next two days, mostly based on the VIX. Yesterday the VIX put in a big hanging man. That was confirmed today with a long red candle providing a nearly 10% drop to close at 17.27. VIX now has no support until 15.5 and its lower Bollinger band isn't til 13.45. Its indicators are also all on their way lower.  Lower VIX, higher stocks.