More downside Friday - Dow 200 week MA retest likely

 Last night I didn't need to waffle.  I came right out and said "Going lower Thursday".  And did we ever.  Another 420 point  drop for the Dow to close at 10,990.  So tonight, I'm going to make it short (pun intended) and sweet.  The bad news first.  The Dow indicators have all peaked, including the stochastic which did indeed make a bearish crossover today.  We broke 11K support.  There is now no more support until 11,730.  That's where we held last week.

And why there?  It's the Dow's 200 week moving average.  And that's the good news, such as it is.  The 200 week MA is proving to be a tough nut to crack for the bears.  My best guess is that we're going back to take another look at it but that it will hold again.

Ergo, look for another downer tomorrow, followed maybe by a rebound early next week.  I note that the Dow weekly chart is looking much stronger than the daily.  The indicators there are approaching a bullish turnaround.  I don't think we're quite there yet though.  Longer term than that (like on the order of a year), things are looking grim.

The VIX

Last night I noted the bullish engulfing pattern in the VIX futures and called the VIX higher for today.  Sure enough, today the VIX gapped up huge, to close up an amazing 35% in one day to 42.67.  I looked back as far as I could, to 2003, and found five other instances of a big gap-up day that did not take us to the upper Bollinger band.  The next day, incredibly the VIX went still higher two of those times, and lower the other three.  So statistically at least, there's not much to take away from that.

The VIX however does tend to refill gaps, but it usually takes two days.  Meaning that it's not out of the question for the VIX to go still higher tomorrow, at least a bit.  More bad news for the bulls.

And finally tonight, all three market futures are lower at 1:40 AM.  ES is down 0.92%.  The daily pivot is nowhere to be found.  I'd like to make at least some case for the bulls tonight but I just can't find one.  I think we have still lower to go on Friday.

ES Fantasy Trader

Today I'm starting something new.  Every night, I will buy or short 10 ES contracts in my paper account (hey, I'm not totally crazy) and then post the results here.  Last night I started with $100,000 in worthless Obamallars.  I went short at 2:20 AM at 1181.50.  Here's the trades:

SLD    10    ES    false    SEP11 Futures     1181.50    USD    GLOBEX    02:20:05

BOT    10    ES    false    SEP11 Futures     1144.25    USD    GLOBEX    12:02:35

That one was good for 37.25 ES points, x $50 x 10 contracts = $18,625 profit.  To keep things simple, commissions are not included in the results.  If it matters, I use Interactive Brokers, which charges $2 a contract.  Account total now $118,625, up 18.6% since inception (today).  Ka-ching!  Too bad I didn't do it for real, eh?

Tonight, I'm going short again, this time at  1133.25:

SLD    10    ES    false    SEP11 Futures     1133.25    USD    GLOBEX    01:44:08   

We'll see how that works out.