Market Update - 8/20/2009

Dow Jones Industrial Average: +70.89 or .76% at 9350.05

S&P 500 Index: +10.91 or 1.09% at 1007.37

NASDAQ Composite Index: +19.98 or 1.01% at 1988.22

NYSE Internals: 2233 Advance. 814 Decline.

Looks like major wave b has ended. We broke through 1004.

We have completed 4 waves up from the low of 98.12 on SPY. The fifth wave up has met the minimum target, but I still think it has room to go a little higher, given the way things have been going lately...

My first target for minuette wave 5 to end is right around 101.61. Which would then end Minor wave 1 up, which is where minor wave 2 down will start. We have some nice resistance there too, not to mention the 38.2% retracement of the entire bear market sits at 101.64. And that area is also our highs from last week on Thursday and Friday. But remember, when major wave A started back in July, at SPX 869, minor wave 2 retraced almost 100%.

Using 101.61 as the high for minor wave 1, any pull back will probably be shallow. The 23.6% retracement will be around 100.79. 100.75 is also good support. The 38.2% retracement will be around 100.28. Which lines up with the 1000 level on SPX, which should be some decent support.

^ Nice little Bearish Rising Wedge forming. The dotted line is the alternate resistance line. Fits in with the scenario of the wave 2 pullback starting if we break that support line.

Since this is most likely the start of major wave C up, it's time to predict a target for it. A good place for it to end is right around 1050 on the SPX. A lot of trendlines are crossing in that area. After that, it's good night for the bulls. :-)