Very Strange

 [The following post was originally written Wednesday night.  However, Blogspot went down before I could post it.  Therefore it did not appear until yesterday.  Then Blogspot went down again last night, not only taking this post with it but preventing me entirely from writing my usual late night forecast.  In this post "today" refers to Wednesady, ie. two days ago.

Since there's little point in making a forecast for a session that's already half over, I'll just (try) to republish Wednesday's post here and hope it sticks this time.  One more of these and I'll be looking for a new host for the Night Owl.]

I readily confess I found today's action baffling.  I guess this shows the limits of technical analysis.  By all rights, last night the charts looked ready to move higher today.  Instead, we got slammed, Dow down 130.  I blew this one badly.  And I'm still having trouble figuring out why.  According to the news today, it was the fault of either the dollar, the euro, silver margins, oil speculators, the Greek debt, Chinese inflation, the Mississippi floods, Raj Rajaratnam, J.C. "zut alors" Trichet, head of the ECB, or the phase of the moon.  Take your pick.


Either way, I found it untradeable.  My big fear right now is that we're entering a period something like we say back in the beginning of March, where we got jerked around up and down for eight straight sessions for no real good reason before finally taking a dive all the way down to 11,555 on March 16th.  Even the pattern looks the same: a three day decline followed by what looked to be the start of another uptrend, only to see it cut off well short of where it seemed to be heading.


Given this, I'm not making any market calls tonight.  I'm just not getting any good guidance from my charts tonight.  It's one of those times where the best course is to stand aside until the dust settles.  And I'm also not sounding the all clear on SLV yet either.

Still more gains possible

Yesterday I called the market higher for today and that's just what it did, to the tune of nearly Dow 76 points.  After three consecutive days of gains, the question is, can we make it four?  I think we can.  All of the Dow indicators are just coming off oversold readings.  The short stochastic looks particularly bullish.  Todays' green candle took us out of the descending RTC channel too (just as the ES did yesterday) and that is a bullish trigger.

I also note no resistance in the Dow until the 12,850 area from the start of this month.  The Dow's upper Bollinger band is even further away, at 12,962.  And the VIX is still coming down from overbought levels.  Today's drop only brought it back down to the middle of its Bollinger band range.  I see nothing on the VIX chart suggesting a reversal and that is also bullish for stocks.

Finally, all three futures (ES, NQ, and YM) are up right now (1:30 AM EDT), albeit only modestly.  So barring any catasrophic news items overnight, I see no reason why we can't extend the Dow's winning streak one more day on Wednesday.

Encouraging signs for Tuesday

Last night I called the market higher today and we did indeed see a nice 46 point gain in the Dow.  That was off its highs for the day, but I 'm always happier to see a string of modest advances than a single big run-up.  In any case, all of the forces that were in play last night appear to be still there this evening at 12:40 AM.  Admittedly the ES is down 0.24% and the NQ and YM are also down, though by lesser amounts.

However, I think I'm going to take my cue tonight from the VIX, which put in a classic bearish engulfing pattern with its long red candle today, in addition to looking rather overbought technically.  This makes me look for a lower VIX tomorrow and VIX down means stocks up.

Oil meanwhile, after rising most of the day is retreating back towards the $100 mark in the overnight.  I view this as positive for stocks too.  So I'm moderately confident we can go at least a bit higher tomorrow.

And finally, silver, in the form of the SLV, which gave a bullish setup on Friday, gave a bullish trigger today.  Sort of.  While it did put in a green candle today, it did so by gapping up rather than by a steady advance and that makes me at least a little nervous.  The market likes to fill gaps.  If this does not happen tomorrow and silver continues higher or holds its own, I intend to take out a partial position.  If it goes lower, I will wait one more day to let it sort itself out.

Trades

Today I bought a small position in AK Steel, AKS at 15.17 and that's right where it closed.  AKS has hit a strong support level, is looking quite oversold, and its indicators appear to have bottomed.  I think there is more reward than risk in this play, just as I think the same of the broader market at least for tomorrow.  Once again, I don't think tomorrow is just yet the time to "sell in May".

Support holding, look for higher on Monday

Right now (at 1:50 AM) it's looking like the support level we hit in the ES on Friday is holding and all three futures are trading higher between 0.37% and 0.5%.  Those kinds of numbers are significant.  The ES daily RSI and stochastic in particular are not just in oversold territory, but have turned inflection points and that is a bullish sign.  In addition, today's action (ie. the Sunday evening overnight) brings us fully outside the right edge of the descending RTC channel going back to the peak set on May 2nd and that is a bullish trigger.

The VIX meanwhile, was stymied in its attempt to go over its upper Bollinger band at 18.40 on Friday, just as I had predicted on Thursday night. With oil prices coming down, Bin Laden dead, and reasonable earnings reports coming out, I think the VIX will have trouble going higher tomorrow, implying that stocks will.

Finally, history is on our side.  According to The Stock Traders Almanac, the Dow has been up 12 of the last 15 times on the day after Mother's Day.  I guess all the traders have warm fuzzy feelings about mom that make them want to buy buy buy.  Mondays in general are typically good.

It may yet come time to "sell in May", but I don't think tomorrow is the exact day to do it.

Looking for a bottom in silver

What goes up...

Today's chart is, once again silver, specifically the SLV ETF, in weekly candles. You may recall that I called the top in silver last week and sold almost all of my SLV (now I wish I'd sold the last bit too, the one I was saving in case I was wrong). The price of SLV wobbled around my 46.50 sale price for a few more days, and then kaboom - the crash. Just look at this chart. Pretty amazing stuff, eh?

The thing is, is that just as there wasn't really any underlying reason for silver to go exponential as it did up to now (other than pure speculation), there is also no reason for it to just languish now that it has come back down to earth. Silver still has the same intrinsic uses it had before, and once the speculators have all gone on to play somewhere else, it might be worthwhile getting back in the game. But when and where might that be?

Fibonacci tells no fibs

That's where our old pal Fibonacci comes in. I drew in the weekly Fibonacci retracements from the recent high back to the long term resistance at 19.50, which is where silver stood until it started taking off just last August. Note how the giant drop in silver this week took us exactly to the 50% Fibonacci retracement, 33.85 (OK, SLV closed today at 33.72, but that's close enough).  BTW - that also happens to be the 20 week MA.

Depth sounding

So just as we had the blow-off top four days ago, we're now looking for the wash-out bottom. And today just might have provided it. Check out the enormous selling volume that accompanied today's gap down action (on the daily chart, not visible here). That, plus hitting the 50% retracement is always a good sign that a bottom is at hand.

So tomorrow we will watch for a confirmation of this. If SLV can hold its current level or reverse, then we're going to consider getting back in. On the other hand, failure to hold 33.72 means a trip down to the next level at 30.47 is likely. (Then the next stop down is the 40 week MA, at 30.13).  The 30.47 level also has support from the 2010 year end highs.

But the indicators are already starting to show oversold conditions.

Beware the falling knife

However, this is definitely a case where one does not want to be catching the falling knife. I still have the scars on my hands to prove it from earlier encounters with other technical train wrecks.. We are going to wait for clear signs of a reversal before coming back to this particular table.  I do think we're getting very close now.

And I guess I have to own up to the fact that I was wrong big time in my call for today. I really underestimated the strength of the commodity crash and the effects it had on the broader market. Also, I've had some personal issues to deal with this week that have prevented me from devoting as much time to my charts as I normally do. But things seem to be settling down so hopefully we can get back to making some money.

The Dow forecast

And as for the Dow, we're now is a downward swing trend.  The indisctors are still coming off overbought levels, so no sign of a turnaround there yet.  All three futures are lower too, though not by much at all.  However, the VIX today hit its upper Bollinger band to end with a doji.  This could be key.  As we've seen so often, once the VIX hits its upper BB, it tends to go back down within a day or two at the most.  Lower VIX -> higher stocks.  If we do go lower tomorrow (in stocks), I don't think it will be as bad as today.  And I would not be surprised to see a reversal by Monday.

Tomorrow going higher

Yesterday I called for the market to extend its losses today and that's what we got.  However, now I believe we've hit some support and I think tomorrow goes higher.

More room to fall

Well the Dow was essentially flat today bu the S&P and the Nasdaq did close lower.  And with another doji day and still overbought indicators, I'm still looking for further declines tomorrow.

Looking for lower

Hmm - that was odd.  I was sure that what with "Obama Bin Laden's" demise (as Rick Santelli put it on CNBC today) and today being the first trading day of the month and also a Monday, that the market would end up.  And so it was, at least early until the OBL euphoria faded, ending basically flat with just a 3 point loss.

Be that as it may, today's action formed a long doji, indicating a potential reversal is in the works.  Coupled with tonight's losing futures and I have to think that we may be in for a down day tomorrow.

Osama Bin Laden Dead!

Finally. It's about time. May you rot in Hell, Osama.

And thanks for making tomorrow's call easy. The market will be up. End of story and Hallelujah.

Three white soldiers fighting higher

Last night I wrote that we had a good shot at going higher today, even after two days of impressive gains, and that's just what happened today. Take a look at this daily Dow chart. The interesting thing here is that we have now formed a "three white soldiers" candlestick pattern (OK, they're green, but you get the idea). You don't see this happen very often and it is generally quite bullish. We note also that tomorrow is a Friday and also the end of the month, and that is also bullish historically.

Then we have the futures, which are just turning positive at this hour (1:30 AM EDT) after meandering about earlier in the evening. Meanwhile the VIX closed near the bottom end of its new 14-16 range at 14.62. While this would suggest that the VIX has more room to rise than to fall from here, there is still just enough wiggle room left for the VIX to go a bit lower tomorrow before reversing, thus fueling higher stock prices.

And with the Dow now at 12,763, we still have over 200 points to go before hitting the next resistance mark at 13,000. I don't think we'll be up that much tomorrow, but I do think we'll close the day and the week at least somewhat higher than today.

Further gains possible tomorrow

Well the market certainly reacted positively to all the Fed hoopla today with a nice 96 point gain in the Dow.  And right now (12:45 AM EDT) it's looking like there may be still more upside to go tomorrow.  The last two days of April are historically strong and all three futures are up by 0.12% to 0.3%.

Additionally, the Dow has now put in two strong green candles taking us convincingly up over the 12,450 resistance (now support) level.  The further we get from that point, the weaker its attraction becomes.  Today's close at 12,691 also puts us squarely back in the center of the rising regression trend channel going all the way back to last July.  And there is now no resistance until the psychological 13,000 level last visited almost exactly three years ago in 2008.

Meanwhile, the VIX is now trading in a new range of 15 to 16.  With its former support around 16 now resistance, the VIX may have some trouble going higher from here.  And with the market once again ignoring the price of oil which has resumed its speculation-driven march upwards, it looks like the headwinds I feared earlier this week have pretty much subsided.

The only negative in the picture right now is that the Dow indicators are all in overbought territory.  However, as we've seen so often in this rally that began last July, the indicators can often show overbought and then just remain that way for days on end.  So my best guess is that we're in for a higher close tomorrow, and most likely Friday too.

Trades

I bought some Lowe's (LOW) yesterday at 26.38; it closed today at 26.74.  I also bought a bit more MFA, ZTR, and HIMX for my Low Price/High Yield portfolio.

Wrong on the Dow, right on silver

Well, turns out I was very wrong about the general market direction today.  I really wasn't expecting an advance today, much less such a strong advance.  But I was very right about SLV.  It closed at 44.03, down $1.80 today (though it recovered to 44.96 in the after hours).  I will now be waiting for signs of a turnaround to get back in.  Look at the chart again - yesterday was about as classic a textbook top as you're ever going to see.

Other than that, there's not much to say tonight.  The technicals are now looking strong for tomorrow, but with a Fed announcement and Uncle Ben giving a speech there's way too much uncertainly for me to try and make a call.  Tomorrow will be mainly news-driven, not technically.  I'll mostly be watching and waiting.  We'll see what happens.

Still looking for lower, and a top in silver?

Yesterday I wrote:

"it looks like we're going to go lower if not tomorrow, then on Tuesday."

And lower is just what we got today, with the Dow dropping 26 points.

But before we go any further, I want to show you this truly amazing chart:

This is the daily chart of SLV, the popular Ishares silver ETF. I usually like to wait for some sort of confirmation before calling a top, but if this isn't a top, I'll eat my short hat. Notice how SLV, which has been rising steadily for ages, suddenly went exponential on Aprill 14th. After that, it not only went up every day, it gapped up every day. Then today it hit a record 47.00 before retreating to close at 45.83.

And take a look at the eye-popping volume. Exactly when it started going exponential, the volume picked up, culminating with today's amazing 190,000,000 shares, more than double yesterday's. This is a classic blow-off top. The stock goes exponential, finishing with a hanging man on very high volume. The next day is generally lower. I have enough conviction in this pattern that I sold 3/4 of my SLV holdings today at 46.48, and these were practically heirloom shares that I bought way back at 11. I think that ultimately silver can go even higher, but this particular party that began last September is about over for now.

Anyway, back to the Dow. The Dow's latest weekly candle was also a hanging man and today's candle was also a hanging man. In addition, today's close at 12,480 took us to the right edge of the three day ascending regression trend channel, and that is a bearish setup.  And the indicators are all now firmly in overbought territory.

Then yesterday I noted that the VIX seemed to have a lot more chance to go up rather than further down.  And it did in fact rise today, closing at 15.77. As I've noted before, when you see the VIX put in a bottom, that is also a reversal signal for stocks.  For tomorrow, the VIX still has plenty of room to run.

And finally, all three futures (ES, NQ, and YM) are lower right now at 1 AM EDT, though admittedly not very convincingly, being off less than 0.1%.

So technically, I'd say that my call last night for a lower market on Tuesday is still valid. The only possible wild card in this mix is the fact that Uncle Ben Bernanke is going to deliver a speech on Wednesday. Now I can't exactly imagine him giving a speech designed to tank the markets, but there's never any telling how these things will play out. So I'm looking for another slightly lower day as the players position themselves for the real action which will unfold on Wednesday. Then we'll see.  That's all she wrote.

Trades

In addition to unloading my SLV today, I sold my Alcoa (AA) at 16.85.  And I sold Henry Schein (HSIC) in my IRA.

Reversal possible in the next two days

This evening we have the VIX sitting at its lowest level in four years. At 14.69, it seems to have a lot more room to rise than to decline further. In addition, as of Friday, both the Dow and S&P indicators entered overbought territory. The Dow hit its upper Bollinger band and the S&P is close.

On the other hand, we do have all three futures up at this hour (12:45 AM EDT), but only by small amounts around 0.1%. The ES, at 1332.50 is close to an important resistance level at 1338.

However, we have not yet seen a reversal candle on any of these charts.  And there certainly is no indication of a reversal from the rising regression trend channel, if you can call three up days a trend, given the choppy action of the past few weeks.

Based on all this, I suppose it's possible to see a bit more of a push higher tomorrow, especially if we get some more positive earnings reports, but technically at least there seems to be more risk than reward short term in this market. So it looks like we're going to go lower if not tomorrow, then on Tuesday.

Testing resistance - third time the charm?

Yesterday I took a wild guess that we'd be up today on the strength of the overnight futures. Turns out it was a pretty good guess with the Dow advancing a big 187 points. This was significant because today's close at 12,453 puts us right back to the 12,450 resistance level that has bedeviled the market all year with 13 failed attempts to breach it so far. But today's high of 12,475 was the highest we've hit yet.

Can we move higher tomorrow or will this attempt fail like all the others? I actually think we might have a shot at it, because unlike the other times, this time the indicators are not all in significantly overbought territory. Even with today's big gain, the indicators are now actually just coming out of oversold status. And it also took us convincingly out of the descending regression trend channel going back to April 8th.

But I'm putting up the daily ES chart today since at this hour (1 AM EDT) we have a new candle forming, and it's green, with ES now up a very decent 0.43% in the overnight. YM is up too and NQ is up nearly one percent. I've noticed that often resistance levels take three tries to penetrate and if we count February as number one, the beginning of this month as number two, then we're now going after this level for the third time.  And we now have to wonder if the third time will be the charm.

Meanwhile the VIX actually broke under its strong long term support intraday today, though it did close at 15.07 on a gap down green candle. Right now, the futures seem to be saying that the VIX is unlikely to recover this level tomorrow.

Meanwhile oil actually went back up today over $111, a fact that the market totally ignored. All of this seems to be pointing to higher prices for stocks again tomorrow.  We'll see.

Confused and confusing

Well, Sunday night I thought the market would be up Monday.  It went down.  Last night I thought it would be down today, so naturally it went up.  At this point I will state right up front, while I still have any hair left that I haven't yet pulled out, that I do not understand what the market is doing right now.  It just gets into that state sometimes.

There's no guidance at all from the VIX tonight, which fell right back into its recent consolidation range.  And I just don't know what to make of the recent up down up down in the Dow.  About the only indicator we have for tomorrow comes from the futures, with the ES, NQ, and YM being up by a healthy 0.55%, 0.69% and 0.34% respectively at 12:40 AM EDT.  The ES has recovered nearly all of its S&P induced losses from Monday and its RSI and stochastic look bullish.

Unfortunately, I was away from my desk with other commitments today and wasn't able to spend as much time watching the market as I usually do, so my best guess, and at this point it's only a guess, is that we may be going higher tomorrow, mostly based on the futures and the VIX.  We'll see.

No trades today.

Dropping the bomb

Today was one of those days you just cannot see coming from the charts.  Everything looked technically like it was set to go up today, at least a little.  When I got up this morning and looked at the charts, I thought that reactor in Japan must have exploded in a giant mushroom cloud overnight or something.  Instead it was S&P dropping their rating bomb on the market.  When all of the action is over in the first 90 seconds of trading like that, I don't see how you can make any money there.

Thankfully, the Dow recovered somewhat as the day went on and I finished being down "only" 0.75% instead of the 1.5% I had lost at the open. But that left us with a problematic candle.  Not quite a hammer, not quite a bearish engulfing pattern.  I've seen this a few times before and generally the next day is lower.  And indeed the futures are all lower now at 1 AM EDT by about a third of a percent.

The only thing I got right today was that the VIX indeed could go no lower and in fact gapped up at the open.  Even there though we ended up with this odd case of the VIX closing higher on a red candle.  In fact at 16.96, it is now smack back in the middle of its recent consolidation range.  But its indicators suggest more upside is possible at least in the short term.

Now that S&P put the kabosh on what should have been a developing upswing, I think another leg lower is not out of the question.  Note also that we closed below the 12,250 support level today and are now right back into the descending RTC channel from April 8th.  The next support is at 12,070, which is also the lower Bollinger band.  After that, there's no support until 11,615, the March 17th reactor/tsunami low.  I don't think we're going that low tomorrow, but it's not out of the question eventually.  In any event, I'm turning the swing trend arrow back to red.

I think part of the problem is that this is a holiday shortened week and also a school break.  I'm sure a lot of the Wall St. Byg Wygs are on vacation leaving the market to pretty much careen along on its own for a few days.  Right now the daily situation is too tough to call, but the weekly chart I mentioned yesterday is starting to look even worse. I have removed my long hat and I'm putting on my medium term short hat.  I'm definitely not liking the market for the next couple of weeks at least.

The Contrarian Contrarian

Last Thursday night, I said we'd go higher on Friday and that's just what we got, with a nice 57 point gain to close at 12,342 in the Dow.

Technicals

So what's next? Let's look at the daily Dow chart here because that seems to be the most compelling right now. This is actually looking quite bullish to me. Friday's gain took use decisivly out of the descending regression trend channel going back to the peak on April 8th. And it also provided a bullish confirmation of the hammer candle formed on Thursday. And finally, all of the indicators are in oversold territory and have executed a bullish hook, signifying that they have bottomed.  We see the same story on the daily ES futures chart.  However, ES is actually down by 0.2% at the moment, although it's still early in the evening (8:50 PM EDT).

In any event, note that historically the day after Tax Day is bullish. The Stock Trader's Alamanc was right on the money with a bullish history for Friday. They say that tomorrow is also a good day.

The contrarian contrarian

So what's up with the "contrarian contrarian"? Well it seems to me that everything I've been reading on the web or seeing on the news lately is full of pundits claiming that there's a massive overload of bullish sentiment and that from a contrarian standpoint, this means the market is ready to go down. Well let's take this contrarian thing one step further: if all the analysts are bearish because everyone is bullish, should I then not become bullish because of their bearishness? OK, this is about where my brain starts to hurt, but you have to admit, the daily chart doesn't look bearish in the least right now.

On the other hand, the weekly Dow chart is not looking nearly as good. In fact, on the weekly Dow, we have a doji followed by a hanging man on increasing negative volume. And all the weekly indicators are overbought. Also, the weekly VIX is now down hard against a support level going back a year now around 15.25. Unless it somehow manages to break under that (and I don't think it will), the VIX has nowhere to go but up, and that's bearish for stocks.

Oil

Also oil has now regained the 110 "alarm level" after two big down days at the start of last week. I don't think oil is nearly through with its run up. I remain convinced that this is 100% speculation driven, not supply and demand. I give it another two months. That coincides quite nicely with the peak in 2008, which came at the end of June.  This will also put the squeeze on stocks.

So right now I'm thinking that tomorrow, Monday, is going to be up, but the rest of the week is in doubt.

Performance

I'm not really doing as well as I'd like at this point. My performance has been hurt by the fact that it seems that all of the members of my low price/high yield portfolio (which is part of my trading account) suddenly decided to do secondaries in the last few months, tanking their stock prices. Still I am up 5% year to date, which is just over 27% annually. That's not too bad, although the Dow is now up 6.6% and that's the benchmark I try to beat. And for the week, I was down 0.16%, or a bit worse than the Dow.

Another thing that's limiting my results is that I've been raising cash lately. I think this year I'm going to "sell in May and go away". I didn't do that last year and subsequently regretted it.  Right now the monthly chart is looking even weaker to me than the weekly, with a hanging man followed by what is at the moment a doji.  We'll see.

Outlook mostly positive for tomorrow

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.


Trades

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.

Further gains possible tomorrow

Yesterday's post was titled "Now looking for higher" and that's just what we got today. Admittedly a 7.4 point gain in the Dow isn't exactly the big score, but it represents a victory for the bulls nonetheless.

And President Nerobama made a speech on TV this afternoon. In case you missed it, I can summarize it real fast: "blah blah blah". That was good for about a 10 point drop in the Dow, but it regained all that and more after he quit (quit speaking, that is).

Moving right along, today's daily chart is not of the Dow but of the VIX. I've been using the VIX lately to guide my market forecasts and it's been working pretty well. Note in this chart how the VIX has been drifting lower over the past two weeks. And the past two days have been interesting. Yesterday it gapped up but ended up putting in a red candle and today we got the exact opposite - a gap down that ended up as a green candle.  That's a real tug-o-war.

But note how today's open, at 16.2 was lower than any point since February 18th. The VIX support at this lower 16's level seems to be softening. If the VIX cannot muster a gain tomorrow, I think it's likely to go lower, to its baseline support at 15.44. That's a level that goes back a whole year. One might even note the lower Bollinger band at 13.74, though I don't think a trip down that far is in the offing any time soon.

Also, the VIX indicators, which just a few days ago were indicating oversold, are now out of that region. By contrast, all of the Dow indicators are now in oversold territory. We also saw another test of the 12,20 level today and once again, it held. The Dow ended up forming a doji indicating corresponding indecision and a loss of downward momentum after yesterday's big drop.

Oil meanwhile sank into the 105's today before recovering but only back to the low 107 area in the overnight.

Finally, the futures are all up at this hour (1:15 AM EDT), and although admittedly only by a small fraction, the trend has been up since around 9:30 PM.

So overall, I'm liking the prospects for another gain tomorrow. With the VIX still unable to find the gas pedal and the Dow having dropped into oversold territory, I think we've got more upside potential than downside risk at this point.  That's all, she wrote.

Trades

I got back into my MGN silver play at 2.86 today.