Losses may extend into Wednesday on weak technicals

Where's Cromwell when you need him?

In April 1653, Oliver Cromwell delivered a memorable address to Parliament, to wit:

“You have been sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go!”

That about sums up the way I feel about our own "Parliament". It's really a pity we can't be done with this collection of clowns and other assorted Twelfth Night characters as easily as Cromwell was 358 years ago.  Mr. President, Harry Reid, Nancy Pelosi, John Boehner, in the name of God, go!

The technicals

Meanwhile, back here in what's left of America, the market did not hold up today (Tuesday). The pivot proved to be the deciding factor. We were above it in the wee hours, survived a test around 5:30 AM, but then sliced decisively below right at the open and it was all over. I let myself be guardedly optimistic based on the futures last night and in retrospect that was a mistake. The candlesticks and the indicators were decidedly more negative than positive.

And I hate to say it, but we've got more of the same tonight. Only now at 1 AM EDT, ES isn't even above its new daily pivot of 1330.50. Today's ES action also took us completely out of the short rising regression trend channel from July 19th and that is a bearish trigger.

I also took a look at the chart of TNA, the preferred vehicle of J-Trader's Buy/Sell model. JT's system remains stubbornly long and I have to say I'm just not seeing it. After a doji peak two days ago, a second lower doji yesterday and a longer red candle on increased selling volume today, this does not look like a stock that's going higher tomorrow. The stochastic in particular executed a bearish crossover yesterday. Not good. And to the extent that TNA is a proxy for the broader market, I think we have lower to go before we go higher.

In addition, the Dow's daily chart is even more grim with a bearish three black crows pattern. You don't see the TBC too often but it's never good. The Dow also has no support from its close today of 12,501 down to 12,385, the support level from earlier this month.  And if that wasn't enough, the Dow has now clearly formed a double top, another bearish sign.

Then the VIX is back above 20 but still far from its upper Bollinger band at 21.68. And its indicators, though now rising, are still nowhere near overbought levels. I see no reason for the VIX to fall tomorrow. VIX no fall, market no rise. So all in all, I'm going to reach for my short hat but as I mentioned, with the current outbreak of total lunacy in Washington over the debt ceiling, I'm sitting this one out until some measure of sanity returns down there.

Of course, if by some miracle, Emperor Nerobama should somehow trade in his fiddle for a fire extinguisher tomorrow, look for the markets to go up. Absent that, I'm just not feeling the love from the technicals tonight.