Last night I wrote "Further gains possible tomorrow" and that's just what we got today, with the Dow's 14 point gain doubling the advance of the day before. And right now, it's looking like there may be more upside in store for tomorrow.
Starting with the VIX, we see that it continuyes to eat away at it's supprot around 16. After gapping up at the open, it just fell away to close at 16.27. At this point, I'm thinking that it's year-long support level at 15.5 might not be that far out of reach. A visit to that neighborhood will surely be positive for stocks. Also noteworthy is that today's candle was a bearish engulfing pattern. We saw what that did to the oil chart just a few days ago.
The Dow meanwhile put in a hammer pattern and closed at 12,285. Once again the 12,250 support level was tested and once again it held. You know the old saying, "That which does not kill me makes me stronger", well the more tests of this level we survive, the stronger that support becomes. In addition, the Dow's short stochastic began a bullish crossover today and both the RSI and momentum hooked upwards, also bullish.
The story is pretty much the same in the ES futures indicators. Turning to the ES regression trend channel, we see that three days of basically sideways action have brought us almost to the right edge of the descending channel. One more day of this will be a bullish setup. The only negative in the picture is the prices of the futures themselves. All three are down right now (2 AM EDT), though only modestly from 0.1% to 0.16%.
And historically, The Stock Traders Almanac tells us that Tax Day, April 15th, is historically bullish with the Dow down only five times since 1981. (OK, I know taxes aren't due til next Monday this year because of some holiday in DC, but I'm assuming the principle remains the same).
So basically all of the factors I talked about last night are still in play tonight, only more so. This means that although I generally don't like going against what the futures are telling me late at night, I'm going to have to go with the technicals on the charts and make a guess that tomorrow will end out the week on an up note.
Today I took a small position in Alcoa (AA) at 16.49. It's taken a beating over the last week and is looking quite oversold at this point.
When will the market top out?
9 hours ago