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- Friday uncertain.
- ES pivot 1310.83. Holding below is bearish..
- Next week bias uncertain technically.
- Monthly outlook: bias down.
- ES Fantasy Trader remains long at 1365.00.
Ugh. Not only did we not go higher today as I thought the charts might be suggesting, we had one of the biggest losses in the current downtrend. The Dow is now down five straight and 11 of the last 12. Its indicators have been oversold for nine days straight now. And still no end in sight...
The Dow: Last night I suggested that it would take a 90+ point loss to keep us inside the descending RTC. Well we got that and more, blowing off another 156 points today. And with today's close at 12,442, the 200 day MA now comes into view on my chart, at 12,196. That's now just 240 points away. With what's been going on lately, we could easily be there in a day or two. And there is only one minor line of support above that, at 12,200. So tonight we remain solidly inside the descending RTC on a solid red candle. And despite impossibly oversold indicators, there is still no turnaround in sight.
The VIX: After three days of small gains where it looked like the VIX was getting ready to move lower, today it instead shot up10%, way above its upper BB. This is now looking just like last August when the VIX broke through its upper BB and refused to come down. The only hope here is the looming 200 day MA at 25.86 which will serve as resistance. But even that has only worked 50% of the time in the past few years. Still, the RTC is finally looking like it's making a bearish crossover. And the VIX has now been overbought for 10 straight sessions. I went all the way back to 2007 and was unable to find any other time that was even close to this, even through the Great Recession. I want to say the VIX has to come down soon, but everything seems to be going crazy here and not working the way one would expect.
Market index futures: Tonight the futures are gloomier than they've been this entire downturn. At 1:346 AM, all three are significantly in the red with ES down another 0.58% and moving lower as I write. And the 200 day MA is coming into play on this chart too, at 1268.09. That's just 26 points away now. And like the Dow, we can be there in a day or two if the current sell-off continues. Today's loss and the continuing overnight decline have actually taken us way off the left edge of the declining RTC - very unusual. Supposedly, this can signal the end of a decline but that remains to be seen.
ES daily pivot: Tonight the pivot drops again from 1327.67 to 1310.83. But with ES in freefall, we're just as far below it now as earlier today. Very negative.
Dollar index: The dollar rose again today. Technically, it's nearing a big resistance level and it is now unbelievably overbought - RSI has been stuck on 100 for 8 straight days now. Now what goes up really must come down. It's just that in the current environment, there's no way to tell when that will be. The dollar remains firmly stuck in its rising RTC and that's about the only remaining working indicator we have.
History: According to The Stock Traders Almanac, Friday is historically bearish.
Month right wrong no call conditionalApril 7 9 2
May 6 5 1 1
And the winner is...
Impossible to tell. There is absolutely nothing in the charts tonight to suggest that this downtrend is even close to coming to an end. But Friday is a triple witching day and on top of that we've got Facebook going IPO. And we are now so overextended to the downside, the market just has to have an up day soon. If you go back to my last post on market streaks here, you will see that until now the longest losing streak in the Dow was of length 10. On the other hand, we are now completing only our third straight losing week, and we've seen much longer weekly losing streaks than this. The record there is seven.
But in any case, given that the charts are not working the way I expect and the fact that we are at so many extremes in so many places, there's no way I can make a meaningful prediction here. So I'm now officially taking a break and moving to the sidelines until some sanity returns to the markets. No call tonight.
ES Fantasy Trader
Portfolio stats: the account remains $150,125 after 35 trades (28 wins, 7 losses) starting from $100,000 on 1/1 Tonight we're once again still holding on to this long at 1365.00. At this point we're in too deep to get out now. But perhaps that's the problem. Maybe I should just throw this trade into the volcano to appease the angry market gods.