Last night I wrote that it would not surprise me to see the Dow go lower today, but that an overall up week was not out of the question.
Well the Nasdaq did go lower today but while the Dow also went lower for a while today it finally managed to close up a respectable 64 points. And it was the kind of points I like to see. I'd much rather get two 64 point up days than one 128 point up day followed by 192 points down. And interestingly, unlike the last 10 straight sessions the 3 PM sellers failed to show up today. That's different. Indeed rather than knocking 'em down into the close, they kicked 'em up.
Turning to our daily Dow chart with my four 200 MA possible intercept points, we see that the 200 MA continues to creep up, standing now at 11,726, just 236 points away from today's close. Point B is now off the table, but my earlier prediction of point C (11,835 next Friday) is still on track. That said, being as today's close actually leaves us 17 points above Monday's open, it's also still possible for us to end the week up, thus breaking the six week losing streak.
So will the Dow close higher tomorrow and break the streak? Hard to say. The VIX today put in a shooting star today, albeit not a great one. Shooting stars are usually really good reversal patterns, but the real body of this one is a bit on the long side, so it may not work. However, today makes two days that the VIX closed above its upper Bollinger band and even in the depths of the Great Recession, whenever this happened, it goes lower the next day, implying higher stocks.
However, all three futures are lower right now at 1:30 AM EDT and ES in particular just broke under its new daily pivot at 1267. That is bearish. On the other hand, ES is near a support level (1266) that has been tested three times in the last five sessions and has held each time.
Unfortunately, tomorrow is a triple witching, with all the volatility that implies. According to The Stock Traders Almanac, the Dow has been down 7 of the last 12 years on this day by an average of 0.5%. So it really could go either way.
As I write this, ES has found support and bounced off 1266.25. If we do go lower tomorrow, that will be particularly bearish, momentum-wise for next week. It will be very interesting to see what happens when we reach the 200 MA. But I'm still not comfortable making a call right now for tomorrow. Just watch that pivot. On the other hand, I'm fairly sure we're going to see some lower action by the end of the month.
I just completed a quick trade in OMEX, Odyssey Marine. In at 3.02 on Tuesday, out today at 3.63. In this kind of crazy yo-yo environment, I'm making trades that are either shorter or longer than usual, when I'm trading at all. I'm now overall 2/3 cash, 1/3 long.
Imagining the next bear market
11 hours ago