Market Update - 12/31/2009

Dow Jones Industrial Average: -120.46 or 1.14% at 10428.05
S&P 500 Index: -11.32 or 1.00% at 1115.10
NASDAQ Composite Index: -22.13 or 0.97% at 2269.15
CBOE Volatility Index: +1.72 or 8.62% at 21.68
NYSE Internals: 996 Advance. 2026 Decline.

Markets slip on the last trading day of 2009.

According to Elliott Wave Theory, wave 4 must NOT cross into the territory of wave 1, regardless of the degree, unless the wave structure is an Ending Diagonal.

We got a 4-1 overlap today. Yesterday, I had warned about 1116. It broke today. 1116.21 was the magic number on the SPX. If we were to break through that, Minute wave [i] and [iv] would overlap, and according to Elliott Wave Theory, this cannot happen.

Now, I cannot see any other way to count this. I don't see us in an Ending Diagonal for Minor Wave C. It just doesn't make sense. But I can tell you that many people who follow Elliott Wave will change their counts if we continue higher, and I know exactly what they will change it to...

They will say that Minute wave [ii] was a "flat correction." A Flat correction occurs when wave B crosses over the starting point of wave A. The count isn't wrong, since on the Dow, we did not make a new high where Minute wave [i] ended on the SPX. So yes, technically, the count can be right... but I don't support it at this point.

However, I don't support calling a top yet either. I think Monday will give us a more clearer answer. We are sitting at a key point in the broad base indices. If Monday is down, and we break support at 1110, then I will feel more comfortable in calling a top. But at this point, we are getting clues that the top may be close, if not already here. The wave 4-1 overlap is only the first clue.

The Dow had been forming a small little H&S over the past few trading days, the target has now been met.

We are also sitting right on the support line for the main Primary Wave 2 Wedge. If we break this wedge, the rally is most likely over. But so far, it has held everyime we have tested it, but it will eventually break down.

So there are a lot of mixed signals out there. Financials were strong today, while the markets sold off. But at the same time, we had some major overlap in terms of Elliott Wave. But then again... the Dow met its H&S target, so it may be due for a bounce.

There are both bullish and bearish signals. The markets job is to confuse everyone, and right now, it's doing it perfectly. It is very hard to tell what is going on. It reminds of what happened when the market bottomed in March. After the market bottomed on March 6th, and bounced up a little, everyone was labeling that as wave 4, with wave 5 down still to come. We are in a similar situation now. The waves are hard to count, and everyone thinks that we have one more wave 5 up left to come, after we complete this wave 4... So it is hard to tell what will happen, but I do know that we will have our answer on Monday.

I will be posting some weekend updates, so keep checking back for that.

I want to wish everyone a Happy & Safe New Year! Best of luck in 2010! I hope it's a great trading year for everyone!!! :)

Market Update - 12/30/2009

Dow Jones Industrial Average: +3.10 or 0.03% at 10548.51
S&P 500 Index: -0.22 or 0.02% at 1126.42
NASDAQ Composite Index: +2.88 or 0.13% at 2291.28
CBOE Volatility Index: -0.05 or 0.25% at 19.96
NYSE Internals: 1377 Advance. 1627 Decline.

Markets squeeze out gains after choppy trading session.

Very choppy day today. The SPX bounced around in a tight 3-4 point range.

As I said yesterday, expect some sort of wave 4. My two options were either a Minuette wave (iv) or a Minute wave [iv]. They may sound the same, but they play two completely different roles. If this is Minute [iv] then we started wave [v] today, and it means the top of Primary Wave 2 is near. If this is Minuette wave (iv), we have a lot more to go before a top.

So if Minute wave [iv] ended today, we have ovbiously started wave [v]. We should come up in 5 waves. The target for right now is around 1145. The price target will become more visible once we start to develop some solid wave structures for wave [v].

If wave [iv] did not end today, 1116 must hold. If we break 1116, the top may be in.

Here is the bearish count on the Dow, suggesting that the top is already in. The count is not wrong, but I just think it looks a little messy to be in play, but regardless, it could play out only if we have topped.

I expect tomorrow to be extremely quiet. Hopefully volume will come back into the markets after the New Year.

Market Update - 12/29/2009

Dow Jones Industrial Average: -1.67 or 0.02% at 10545.41
S&P 500 Index: -1.58 or 0.14% at 1126.20
NASDAQ Composite Index: -2.68 or 0.12% at 2288.40
CBOE Volatility Index: +0.08 or 0.40% at 20.01
NYSE Internals: 1491 Advance. 1531 Decline.

Markets close flat/down after sluggish trading day.

Not much happened today, except the SPX did manage to squeeze out another high by about 40 cents. I was expecting a new high today, and we did get one. Yesterday, I said that today's new high would be the end of subminuette wave v. But was it subminuette wave v of (iii) or of (v)? Let's take a look...

My count from yesterday suggested that we were in Minuette wave (iii) of Minute [iii]. We got a new high today, then sold off, so wave (iii) has ended. We went sideways to slightly down for the rest of the day, typical for a wave 4. But after studying my charts more, there are 2 ways to count this. Either we ended Minuette wave (iii) or the entire Minute wave [iii].

This count gives the benefit of the doubt to the bulls, saying that today was only the end of wave (iii) of [iii]. We are now in wave (iv) of [iii], with wave (v) still to come. This count is more bullish than my next one.

My other count suggests that Minute wave [iii] completely ended today, and that we are already in Minute [iv]. This count is less bullish than the previous one, and suggests that the next set of highs we get, will be our last.

Either way, both counts call for a new high. The only bearish count is that we need to break below 1115. If we do break 1115, there will be some overlapping, suggesting that the top may already be in.


Throughout this rally, the Nasdaq has always remained the main leader. It has run up the highest from it's lows. While most of the stocks in the Nasdaq have virtually the same chart... 2 of them stick out to me. Bidu and Apple.

Here is the daily chart for Bidu.

As you can see, it has had quite the run-up. But the channel it has been in for the past 6 months remains in good shape. Bidu looks bullish until we break that channel, which lies around 404 this week.

But short term, Bidu looks a little weak. There are some sell signals on the hourly, but nothing too major. If Bidu continues to pullback, it should find support around 415. If it breaks below that, there is some good support in the lower 400's.

As far as Apple is concerned... only one word describes this chart. BUBBLE.

If that chart doesn't qualify as a bubble, I don't know what does. It has had an exponential rise in the past year. Just unbelievable. It has gained nearly 3 times its value.

A close up of that chart shows that we did break the "bubble" channel, and so far, it has failed to backtest. If we gain that lower line again, and hold it, I think we can get up to the 220 area. Breaking 200-202 will be bearish.

Market Update - 12/28/2009

Dow Jones Industrial Average: +27.35 or 0.26% at 10547.45
S&P 500 Index: +1.30 or 0.12% at 1127.78
NASDAQ Composite Index: +5.39 or 0.24% at 2291.08
CBOE Volatility Index: +0.47 or 2.41% at 19.94
NYSE Internals: 1560 Advance. 1488 Decline.


The indices made new highs again today.

I had talked about two options last week on Thursday. If 1130 was to break, then we were in Minuette wave 3. If we broke 1119, it was Minuette wave 2. We got neither. We popped to 1130 right off the open, and then backed down, but found support at 1123.

So after looking at the charts again, there is another way to count this, and it fits in pretty nicely. The count suggests that we are in fact in Minuette wave 3, but more towards the end than the beginning.


Theoritically, Minuette wave (iii) could have ended today, but I am going to give the benefit of the doubt to the bulls and say that we get another new high tomorrow for subminuette v of (iii) before starting wave (iv). I expect Minuette wave (iv) to be shallow and boring. Probably some sideways action between 1125-1130 for a day or two, before completing Minuette wave (v) of Minute [iii].

If we do make another new high for subiminuette wave v tomorrow, it will probably be around 1132. As of right now, wave (iii) is smaller than wave (i). Elliott Wave rules say that a wave 3 can NEVER be the smallest wave in the structure, but is usually the longest. So let's see what happens if we make it to 1132 tomorrow.


The alternate count is that we are already in Minuette wave (iv). The bearish alternate count is that ovbiously today was THE top, but I don't think so.


As expected, the US Dollar continued to pullback in its Minor wave 2.


Tomorrow, the S&P Case-Shiller HPI releases at 9:00 AM EST and Consumer Confidence releases at 10:00 AM EST.

Market Update - 12/24/2009

All 3 indices made a new high today.


The wave counts these past few days have been really hard to count. Every time it seems that Minuette wave (i) has ended, the SPX makes a new high. Today was my absolute limit for Minuette wave (i).


I am looking for one of two things on Monday. If we break below 1119, we are most likely in Minuette wave (ii), and we may get down to the 1110 area. If we explode to the upside and take out 1130, we are in Minuette wave (iii). If we get neither... well, I will have to re-evaulate the count then. :) But for now, those are the two moves I will look for.

By breaking over 1121, the SPX has just crossed some major fibonacci resistance. The next big resistance is 1130, if we can break over those fibs near 1130, I think 1150 may be a given.

Each line on that chart represents a point of resistance, and you can see that area around 1120 was pretty clustered.


Also, looking at the fibonacci time bands, the next time retracement falls in the second week of January. So for right now, a potential point for the SPX to top would be around 1150 in the second week of January. It also fits in nicely with the fibonacci price extentions.

The US Dollar also continued to pull back today, just as expected.

I will most likely not post a weekend update this week. But I want to wish you all a Merry Christmas and a safe and fun holiday weekend! :)

Market Update - 12/23/2009

Both the SPX and Nasdaq made a new high again today, Dow continued to lag behind.

Yesterday, I said if the SPX made a new high today, it would mean that Minuette (ii) most likely ended at yesterday's low. Well, we did make a new high, but it wasn't in the fashion I thought we would. I was expecting a big move higher if wave (ii) ended yesterday. It looks like that subminuette wave v was an ending diagonal. See chart below.

I still think we come down to test 1110 before going higher. Perhaps bad data could do that tomorrow. Plus, we are also overbought on most time frames, the indicators need to recycle back down. There is a lot of support in the 1110 area. I expect it to hold for now.

As I said in my weekend update this past week, if the US Dollar pulls back in a Minor Wave 2, it will cause the Equity Markets to go on to make new highs. That's what happened today. The Dollar started to weaken, and stayed down all day. It finally caused the SPX to break over 1119, and make new highs at 1121.

With tomorrow being only a half day of trading, expect the market to be quiet. We may get another day like today where the data doesn't even effect the market. I guess that's what low volume does.

Market Update - 12/22/2009

Dow Jones Industrial Average: +50.79 or 0.49% at 10464.93
S&P 500 Index: +3.97 or 0.36% at 1118.02
NASDAQ Composite Index: +15.01 or 0.67% at 2252.67
NYSE Internals: 1897 Advance. 1131 Decline.
US Dollar: +0.24(0.31%) at 78.660 | Crude Oil: +0.42(0.57%) at 74.14
Gold: -11.30(1.03%) at 1084.5 | VIX: -0.95(4.64%) at 19.54

Markets bounce after worst than expected GDP, better than expected Home Sales.

Finally the SPX made a new high today. It took out its old high of 1119 by 1 point, making a new high at 1120. The Nasdaq also made a new high today, but the Dow was missed its high by about 30 points.

Now, like I have been saying for a while, the bulls needed to break above 1120. They didn't today. Each time the SPX approached that number, it backed off. Classic role of resistance. Also, the wave structure was looking for a new high, we got that today. But was this high the final high for P2? It might have been, but I don't think so. We didn't really sell off after making the new high. Plus, I don't expect the market to sell off during the holiday season.


So I guess then today's high was the end of Minuette wave (i) of Minute wave [iii] of Minor wave C of Intermediate wave Z of Primary Wave 2. Confusing, yes, but look at the notations to the side of the page so it makes it easier... But that's where the count stands now. I think we are due for a quick Minuette wave (ii) pullback, to perhaps 1107-1110, just to reset the indicators before we go on to make new highs yet again.

Right now, Minuette (ii) seems to be taking a form of a complex pattern. If we make a new high again tomorrow, Minuette wave 2 most likely ended at today's low.

The SPX has now also retraced 50% of this bear market.

The Nasdaq has now retraced the perfect ideal 61.8%

The US Dollar also made a new high today, but I still think it may retrace down a little before contuing its uptrend.

Market Update - 12/21/2009

Dow Jones Industrial Average: +85.23 or 0.83% at 10414.14

S&P 500 Index: +11.58 or 1.05% at 1114.05

NASDAQ Composite Index: +25.97 or 1.17% at 2237.66

NYSE Internals: 2197 Advance. 852 Decline.

US Dollar: +0.242(0.32%) at 78.420 | Crude Oil: -1.00(1.34%) at 73.42

Gold: -19.30(1.74%) at 1092.0 | VIX: -1.19(5.49%) at 20.49

Markets rally, led by Materials, Tech and Healthcare sectors.

The pattern that has been ongoing for over a week now occured again today. The Nasdaq was the only index to make a new high. The SPX came within 2 points, and the Dow was off by about 55. The Nasdaq is getting stronger once again, and the Dow is getting weaker. Similar pattern to what started this rally back in March, when the Dow was the lagger for quite some time.

But as you can see from this Nasdaq chart, it is running out of room quickly.

I posted about the Dollar in my weekend update, saying that it may have topped short term. While the Dollar was down throughout the night, it started to rally once the market opened. We saw an immediate turn around in commodities, as Crude Oil and Gold began to sell-off on the strong US Dollar, but it didn't impact the SPX or the Dow, another pattern that has been ongoing for a while now. But regardless, the US Dollar did not make a new high today, so I am going to stick with my count. It may break that high by a few cents here and there, but I think a decent pullback will come in the next week or so, then the Dollar will continue its uptrend.



For the SPX, it seems that we completed 5 waves up today. The degree at this point is hard to tell, but I will label them as Minuette for now. These 5 Minuette waves up probably completed Minute 1. I expect a small Minute 2 pullback before it goes higher. We may go back and test 1105-1110 tomorrow morning. The key number still to watch for is 1100. A break of 1100 to the downside could take us back to the 1085-1090 range. Breaking 1120 will be exteremely bullish.

Tomorrow is the big GDP report. I expect the GDP numbers to make the markets quite volatile, specially if the numbers are better than expected. If the numbers are good, it may be up big tomorrow. So watch for those numbers, they come out at 8:30 AM Eastern.

Some Changes

As you can see, I've made some major changes to this blog.

I've added a new layout/template. I think this new one looks a lot cleaner. I now have 2 sidebars, so all the information can be displayed, without having to scroll down too far. It also looks more organized.

I also added a new comment system called Disqus. The new comment system is more user-friendly. To make a comment, just click on the title of the post and scroll down. You will then see the options to log into Disqus, Facebook, Twitter or Open-ID account. You can post using any of those accounts. For Open-ID, it will require you to enter your name and e-mail every time you want to post. And please, feel free to comment any time.

So far, everything looks good. If you notice any problems with the new layout, i.e links not working, comments not showing up, etc... please let me know! :)

Thank you!

Weekend Update for SPX, Dollar, and Gold.

For the week, the Dow and SPX were down while the Nasdaq was up.

Mostly quiet week. Had some economic data come out, but nothing too disappointing or nothing too uplifting. With barely 2 trading weeks left in the year, except it to stay quiet. Just like it did last year at this time. I expect big volume to come back around the 2nd week of January, similar to last year. I also expect the market to make it's final top in these next few weeks. But where?

I think the SPX will make it to somewhere between 1130-1160. The Dow will probably make it to somewhere around 10,550-10,700. By looking at this SPX chart, any price between that range will complete a "perfect" looking triple zigzag.

The US Dollar has been in an uptrend for over 3 weeks now. It seems that the Dollar has started it's Primary Wave 3/C. But of course, this hasn't impacted the Equity markets... yet. Commodities have taken a hit, but I'll get to that. In the long run, if the US Dollar can sustain a rally, it will eventually catch up with the broad markets. But at this point, it seems that the US Dollar has completed Minor Wave 1.

If the Dollar pulls back, the most likely target is around 76.355, which is the 50% fib. retracement.

Also, looking at the RSI and MACD, the Dollar looks a bit extended here. It will only be healthy if it backs off a little from here. But of course, if the Dollar comes down a little bit, it will cause the markets to rally. I think this will help the SPX get to new highs.

Gold also looks like it may have topped. In the past few weeks, it has come down pretty hard. Mainly to due an up trending Dollar. Many say that Gold will make it to $2000+, while this may be possible, I don't believe it, yet. I think Gold will pull back to the $1000 level before going up again. But this time, an uptrend in Gold will not be caused by a downtrend in the Dollar, but rather as a "safe haven" from a falling market, similar to what we saw earlier in 2009.

By looking at this chart, you can see we have a lot of support in the lower 1000's. I think we will eventually break through the 2 upward sloping trendlines, but only to find support at 1000-1018.

Remember, next week is a shortened trading week, with no trading on Friday in the US Equity Markets. But also next week is huge on economic data. Nothing on Monday, but Tuesday has GDP and Existing Home Sales. Wednesday has Personal Income/Outlays, Consumer Sentiment, and New Home Sales. Thursday is Durable Goods Orders.

Good luck trading this week everyone! :-)

Market Update - 12/18/2009

Dow Jones Industrial Average: +20.63 or 0.20% at 10328.89

S&P 500 Index: +6.31 or 0.58% at 1102.39

NASDAQ Composite Index: +31.64 or 1.45% at 2211.69

NYSE Internals: 1788 Advance. 1236 Decline.

US Dollar: +0.055(0.07%) at 78.145 | Crude Oil: +0.23(0.31%) at 74.31

Gold: +5.10(0.46%) at 1112.6 | VIX: -0.73(3.24%) at 21.78

Markets close higher after volatile expiration. Led by Financials and Tech.

We slightly fractured 1095 today, but nothing too major. The low for the day was 1093. We rallied for the rest of the day after making the low in the morning. But we found resistance at 1100. Making our high at 1103.

It looks like the market is back in its range. The breakout we had last week was not confirmed with another close outside of the upper end. So it looks like the market wants to continue to go sideways.

The count from yesterday is the same. We did not overlap on any waves. We just broke yesterday's low by 2 points before rallying again. So I am going to mark today's low as the end of Minute 2. For the past couple of weeks, there has been overnight selling in the US Dollar on Sunday night. This has usually resulted in Monday's opening some what higher. If this pattern continues, and we open up higher on Monday, it may kick off Minute wave 3, which could possibly take us to new highs.

Again, it's very hard to count the move from Wednesday's high as a 5 wave move. Which means we aren't impulsing down, and that the small down move has only been a corrective wave.

I've also been talking about the disconnect between the 3 major indices. Today was another great example of that. Dow was down for a good part of the day, while the Nasdaq was still up. And the Dow closed up 0.2% while the Nasdaq was up 1.45%. This kind of activity usually occurs at tops and bottoms.

I will try and post more over the weekend if I can. Oh and, if you look to the right of the page, you will now see a Follow option. This means you can now follow my blog through your Google account. So please hit follow! :)

Market Update - 12/17/2009

Dow Jones Industrial Average: -132.86 or 1.27% at 10308.26

S&P 500 Index: -13.10 or 1.18% at 1096.08

NASDAQ Composite Index: -26.86 or 1.22% at 2180.05

NYSE Internals: 841 Advance. 2217 Decline.

US Dollar: +0.765(0.99%) at 78.100 | Crude Oil: -0.56(0.75%) at 73.82

Gold: -36.60(3.22%) at 1099.6 | VIX: +1.97(9.59%) at 22.51

Markets drop as Financial stocks fall and US Dollar rallies.

As I posted in my bullish count yesterday, I was expecting a slight pullback to 1100 for Minute wave 2 on the SPX. We did slightly fracture 1100, but held support at 1095. However, the day ended a little bit more bearish than it seems. Yes, the broad base indices were only down about 1.2%, but the market internals were pretty bearish at the open, and remained that way throughout the day. Market breadth was about 8:1 bearish. Not heavily bearish, but never the less, Down volume was much higher than up volume. A/D was nearly 3:1.

So the bullish count from yesterday is still in play. We did not violate any type of wave count. If this count is correct, then either tomorrow or Monday, we should explode to the upside.

The wave structres from yesterday's highs are really hard to count as 5 waves down. This is the main reason I am leaving the bullish count up.

For the bearish side of things. It was a victory for the bears to break 1100 and close below it. The next barrier is 1095 then 1083-1085 area. If we can get enough sellers to break us below those levels, we may pick up some momentum to the downside.

The US Dollar also continues to be surging up. This will eventually catch up with equities. We have already seen it impact the commodities, as Gold and Crude continue to get hammered along with the Financials. Gold also broke below 1100.

Market Update - 12/16/2009

Dow Jones Industrial Average: -10.88 or 0.10% at 10441.12

S&P 500 Index: +1.25 or 0.11% at 1109.18

NASDAQ Composite Index: +5.86 or 0.27% at 2206.91

NYSE Internals: 1969 Advance. 1068 Decline.

US Dollar: -0.085(0.11%) at 77.215 | Crude Oil: +2.00(2.83%) at 72.69

Gold: +16.00(1.43%) at 1138.7 | VIX: -0.95(4.42%) at 20.54

Markets flat after Fed announcement.

Guess the bearish wave structure is out of play. Like I said yesterday, if we break 1110, the bearish count may have to be nullified. We made it to 1116 today. The high of 1119 from a few weeks back has held up pretty strongly though. Every time we come within 3-5 points of it, sellers come in and push it right back down. Same thing is happening for the Dow around 10500. And once again, the Nasdaq was the only index to make a new high today.

The extremely bullish count is that today ended minute wave 1. We have a small little pullback to 1100 for minute wave 2, then explde to the upside, making new highs for minute 3.

I don't favor this count too much at this point. It seems too perfect. Plus, I think it would just throw the bullish sentiment to exteremly exteremly bullish. As if it isn't extereme already...

But however, I do favor potential new highs coming. But nothing too big. Maybe a few points above what we have already hit. Perhaps 1125 or 1130 on the SPX.

The bearish alternate is ovbious. Break 1085.

Volume continues to be dry. Market breadth isn't strong in any direction. All in all, this market is very dull and weak right now. Some sectors and stocks have already shown signs of cracks. The US Dollar is strenghtning. It's really only a matter of time now until these markets turn around.

Crude Oil also looks like it may start to head south soon. The backtest of this line looks complete. If Crude Oil goes, so will the rest of the commodities. That should add fuel(no pun intended) to the surging Dollar.

Market Update - 12/15/2009

Dow Jones Industrial Average: -49.05 or 0.47% at 10452.00

S&P 500 Index: -6.18 or 0.55% at 1107.93

NASDAQ Composite Index: -11.05 or 0.50% at 2201.05

NYSE Internals: 1216 Advance. 1824 Decline.

US Dollar: +0.565(0.74%) at 77.300 | Crude Oil: +1.24(1.24%) at 70.75

Gold: +1.60(0.15%) at 1125.1 | VIX: +0.64(2.05%) at 21.79

Markets slip as US Dollar rallies after economic data.

The Nasdaq was the only major index to make a new high today, but only by 3 points. The SPX and Dow came close, but did not violate. As I have said in the past, the disconnect between the 3 indices is pretty noticable. They don't seem to "travel" together anymore.

Regargless, the bearish wave count I posted last week, may still be in play. If we count wave [ii] as a complex 3-3-5 zigzag, instead of the usual 5-3-5 zigzag, it works great.

If this count is in play, there is only one thing to look for. Tomorrow has to be down. The icing on top would be if we can break 1100 and 1095. If we aren't down tomorrow, it may nullify the count, and forcing us to go back to the drawing board. Also, a break back above 1110 could nullify the count. If we break 1110, then the bulls may be back in charge and could run us back to the highs.

The only bullish thing for the markets right now is that the dollar may need a slight pullback. As you can see from this chart, the US Dollar is clearly impulsing up. But it looks like Minor wave 1 may be coming to an end. If the US Dollar is to pullback in a Minor wave 2, the Equity market may continue to bounce just a little. Either way, an uptrending dollar is not good for equities. If the dollar comfirms its Primary Wave 3 up, it's most likely game over for the stock market. :)

Market Update - 12/14/2009

Dow Jones Industrial Average: +29.55or 0.28% at 10501.05

S&P 500 Index: +7.70 or 0.70% at 1114.11

NASDAQ Composite Index: +21.79 or 0.99% at 2212.10

NYSE Internals: 2273 Advance. 786 Decline.

US Dollar: +0.23(0.30%) at 76.725 | Crude Oil: -0.20(0.29%) at 69.67

Gold: +5.40(0.48%) at 1125.0 | VIX: -0.44(2.04%) at 21.15

Markets bounce after Dubai Bailout.

None of the indices made a new high today, but the Dow and Nasdaq were faily close. The SPX was about 5 points shy of a new high as well. Volume was extremely light today. Might have been the lightest of the year. But with the holiday's approaching, volume is going to continue to be dry.

As I have been saying for a while, the 1110-1115 area on the SPX should be good resistance, and if this market wants to go higher, it needs to break through that level. We got to 1114 today, and backed off just a bit. But we hung around that level for most of the day. If we break through 1115, we may make it to new highs.

The only good news for the bears is that we finally managed to close out of the range today. Previously, we had only broken out of the range intra-day, but never broke out of it. Today, we got our first candle that broke through. In order for this breakout to be confirmed, we need to test and hold 1110 as support, then close above today's close.

Another hope for the bulls is that we can now count 5 waves up from the lows of last week. This may complete a wave [i]. We might be starting wave [ii] down to test support at 1100, then explode to the upside to make new highs.

For the bears out there... if there are any left. :) Your only hope is a break of 1083.

Market Update - 12/11/2009

Dow Jones Industrial Average: +65.67 or 0.63% at 10471.50

S&P 500 Index: +4.07 or 0.37% at 1106.42

NASDAQ Composite Index: -0.55 or 0.03% at 2190.31

NYSE Internals: 2023 Advance. 1029 Decline.

US Dollar: +0.49(0.64%) at 76.905 | Crude Oil: -0.80(1.13%) at 69.74

Gold: +-9.80(0.87%) at 1116.0 | VIX: -0.66(2.96%) at 21.66

Markets bounce after better than expected Retail Sales and Consumer Sentiment.

Looks like even good economic data couldn't get this market to break out of it's range. I've been saying for a while now, watch for resistance at 1110, and support and 1100. We tested 1110 once again today, making our high at 1108. But we failed to break it and sold off to test 1100 as support. But we failed to break that too, making the low at 1101. We then bounced around 1105 for the rest of the day.

Volume is contracting very rapidly, and with the holiday coming up, expect it to stay like that. There are really no wave structures to count, or any movement to watch for besides a break of either major support or resistance. Until 1110-1115 get taken out, this market isn't going higher. And until 1095-1100 get taken out by a big margin, the SPX won't breakdown either.

All we can do is wait until the market decides what to do.

The Dow tested it's highs of 10500 today, making a high of 10483 intra-day. The Nasdaq closed negative, despite the Dow being up 0.63% The disconntect between the indices is getting pretty noticable. Early in the rally, the Nasdaq was strong and the Dow was weak. Now it's the opposite. The Dow is making up ground that it lost early in the rally. Once the "catching up" is complete, then we may see all the indices move down together. Speaking of a disconnect, the equities and dollar have also gotten out of sync. The market isn't dropping on a strong dollar like its supposed to. The VIX also continues to drop. Complacency perhaps?

I'm not going to post any new charts today, since basically nothing has changed. I will review the charts over the weekend, and if something interesting sticks out, I will post it here. :)

Market Update - 12/10/2009

Dow Jones Industrial Average: +68.78 or 0.67% at 10405.83

S&P 500 Index: +6.40 or 0.58% at 1102.35

NASDAQ Composite Index: +7.13 or 0.33% at 2190.86

NYSE Internals: 1829 Advance. 1209 Decline.

US Dollar: -0.085(0.11%) at 76.340 | Crude Oil: -0.19(0.27%) at 70.48

Gold: +11.80(1.05%) at 1132.6 | VIX: -0.33(1.46%) at 22.33

Stocks rise after Trade numbers.

So far, both of my counts are playing out pretty well. As I said yesterday, look for a test of that 1110 area. We made it to 1106 today, then backed off a little bit. I had also said that we will break back above 1100. We did, and held it for most of the day.

The market is still in the tight range, and is still very choppy. For most of the days in the past month, we have made our highs or lows very early in the trading session, and have bounced around that level for the rest of the day.

For right now, I think 1095-1100 may hold as support, and 1110 will continue to be resistance. Breaking back below 1083 may trigger a larder sell off. And breaking above 1115 will most likely take us to new highs. Either of this could happen tomorrow with some key Economic Indicators releasing. Retail Sales, Consumer Sentiment, Import/Export Prices and Business Inventories are all due out tomorrow morning. Retail Sales will definitely drive this market. It is very likely that tomorrow could be the day that we break out of this range.

This daily chart shows the tight narrow range we have been in for the past month. On a closing basis, we have virtually gone no where. There is very heavy resistance right above 1110, with the upper Bolligner Band coming in at 1116, and the 50% fibonacci retracement at 1121. Right in the middle of the range, we have the 20 day simple moving average, and the 5 day simple moving average. And directly below us, we have the lower Bollinger Band at 1086 and the 50 day simple moving average at 1081.

Who knows how long it could take us to get out of this range. But the longer it takes, the bigger the move will be when we do break out. The longer we go sideways, the tigher the Bollinger Bands will get, and the closer in the moving averages will get. My wave counts from yesterday still remain the same.

Should be exciting to see how it all plays out!

Market Update - 12/9/2009

Dow Jones Industrial Average: +51.08 or 0.50% at 10337.05

S&P 500 Index: +4.01 or 0.37% at 1095.95

NASDAQ Composite Index: +10.74 or 0.49% at 2183.73

NYSE Internals: 1646 Advance. 1351 Decline.

US Dollar: -0.27(0.35%) at 76.360 | Crude Oil: -1.78(2.45%) at 70.84

Gold: -12.50(1.09%) at 1130.1 | VIX: -0.94(3.97%) at 22.75

Markets rebound as Dollar backs off.

Exactly what I said yesterday happened today. From yesterday's post: "I think we will make a lower low tomorrow in the lower 1080's. I think 1083 may hold for now. After hitting the lower 1080 range, I think we are going to bounce back up toward the mid-1090's..." Today's low was 1085. We tested the 1083 area and it held up. We later on bounce up towards 1095, sold off again a little bit, then went back up making new highs around 1097 towards the close.

We completed 5 waves down today. Which means at least another 3 up coming our way. I think we will break back above 1100. That 1110 area will most likely be tested again. 1110 is also the upper end of our closing range. If we break above 1110, I think we will get a run back up towards our highs around 1119, and we may perhap make another new high above that. But remember, if we break 1083, the bears may be able to get enough momentum to send us down to the 1060 area.

There is not a lot of big economic data coming out this week besides Trade and Retail sales. With no "noise" in the market, we may finally see some clear waves develop, meaning no interference from the data that comes out. So the key numbers to watch for right now are 1083 and 1060 on the downside, and 1100 and 1110 to the upside.

The bearish count suggests that we completed wave 1 down today, and are in wave 2 up. Wave 2 should take us to around 1103-1108 before selling off again. For the bullish count, we completed Minor Wave B today, and are starting Minor Wave C up to complete Intermediate Wave Z of Primary Wave 2. The target for that is around 1135 for now. We will get a clearer target once more waves start to continue up.

Bearish:

Bullish:

Currently, I don't want to pick a side that I favor more. The market is getting choppy. Just like it does at tops and bottoms. Wave counts get unclear, just like they did at the March lows. So, the bearish count may be wrong because we are not impulsing down. Market breadth is not screaming bearish. But at the same time, we aren't impulsing up either. Price action may be more important than market internals at this stage.

Once again, those pivot points I listed will show us the way. Whatever side we break, will decide which wave structure we will follow.

Market Update - 12/8/2009

Dow Jones Industrial Average: -104.14 or 1.00% at 10285.97

S&P 500 Index: -11.31 or 1.03% at 1091.94

NASDAQ Composite Index: -16.62 or 0.76% at 2172.99

NYSE Internals: 921 Advance. 2076 Decline.

US Dollar: +0.47(0.62%) at 76.250 | Crude Oil: -1.32(1.79%) at 72.61

Gold: -33.10(2.84%) at 1130.9 | VIX: +1.59(7.19%) at 23.69

Markets skid as US Dollar rallies again.

Broke below 1100 today. As I suggested yesterday, there was a big move coming. Looks like for now, the market has chosen the downside. The market opened up pretty bearish, then tried to rally, but sold off again as it approached that 1100 level. We seemed to stall at 1090 as well.

SPX Daily Chart:

If we break below 1083 on the SPX, we may be headed down a bit further to test 1060. Breaking back above 1100 and 1108 could send us back to test the highs. No major damage was done today, as we are still in that same range we have been in for a while now. 1090-1110 on a closing basis. We have broken those numbers intra-day, but haven't really closed too far out of that range.

SPX 5 Minute Chart:

For now, I am going to stick with the bearish count. I think we will make a lower low tomorrow in the lower 1080's. I think 1083 may hold for now. After hitting the lower 1080 range, I think we are going to bounce back up toward the mid-1090's for a wave iv. But of course, seeing the power of wave iii's, we could break 1083 tomorrow and continue downward. But for now, I think it will hold. There is still a lot of bullishness out there, and there was no heavy damage to market breadth today.

Let's see what happens. :)

Market Update - 12/7/2009

Dow Jones Industrial Average: +1.21 or 0.01% at 10390.11

S&P 500 Index: -2.73 or 0.25% at 1103.25

NASDAQ Composite Index: -4.74 or 0.22% at 2189.61

NYSE Internals: 1661 Advance. 1368 Decline.

US Dollar: -0.17(0.22%) at 75.800 | Crude Oil: -1.48(1.96%) at 73.99

Gold: -9.90(0.85%) at 1159.6 | VIX: +0.85(4.00%) at 22.10

Markets go sideways on low volume.

Most of the day today was spent in a very tight trading range. Low volatility and not much price movement. But, we did see a little push down towards the end of the day. So far, this all looks like consolidation for another big move.

Which way the move will go seems a bit unclear at the moment. The wave counts aren't as easy to count as they have been in the past. There are obviously two scenarios. A bullish and bearish. Regardless of which way the move goes, it will probably be big. For right now, the move can be counted as a i-ii-(1)-(2) down, or a (i)-(ii) up. The next wave in both cases is going to be a wave 3. This chart explains it more clearly:

Follow the leader? Let's hope so. Through out most of this rally, big cap stocks like Goldman Sachs, Apple, IBM, etc etc have been leading to the upside. If we continue to follow these big time names... things may get a bit ugly. :)

Goldman Sachs:

As you can see with the chart of GS, it looks like that it has already topped and completed it's Primary Wave 2. The move down so far looks impulsive. If the bearish count is right for GS, we are in Minor wave 3 of Intermediate wave 1 of Primary Wave 3. If the broad market is following this big name stocks, as many people suggest, the major indices should be starting their Primary Wave 3 down soon as well.

Apple:

The count for Apple is the same as it is for GS. Except, Apple is most likely starting a Primary Wave A down, not Primary Wave 3. Regardless, the trend is down.

Market Update - 12/4/2009

Dow Jones Industrial Average: +22.75 or 0.22% at 10388.90

S&P 500 Index: +6.06 or 0.55% at 1105.98

NASDAQ Composite Index: +21.21 or 0.98% at 2194.35

NYSE Internals: 2171 Advance. 870 Decline.

US Dollar: +1.16(1.56%) at 75.835 | Crude Oil: -.71(0.93%) at 75.74

Gold: -54.70(4.49%) at 1163.6 | VIX: -1.21(5.39%) at 21.25

Markets bounce around after better than expected Unemployment numbers.

The SPX once again made a new high at 1119 today. Coming within 3 points of the 50% fib retracement at 1122. But just like yesterday, after making a new high, we immediately sold off about 20 points before rallying again into the close. A pretty volatile day.

But we still are continuing the same pattern. The market is not near it's highs or lows. The candlestick continue to print as Shooting Stars, Doji's, Hammers or Hanging Mans. And once again, we are still closing in our range between 1090 and 1110. We haven't closed too far above or below that range for a long time now. It has been almost a month.

The US Dollar was also incredibly strong though, but that didn't seem to impact the markets negatively.

I will try and post more charts and info this weekend after I review over some of the wave counts.

Market Update - 12/3/2009

Dow Jones Industrial Average: -86.53 or 0.83% at 10366.15

S&P 500 Index: -9.32 or 0.84% at 1099.92

NASDAQ Composite Index: -11.89 or 0.54% at 2173.14

NYSE Internals: 1066 Advance. 1958 Decline.

US Dollar: +.045(0.06%) at 74.750 | Crude Oil: -.73(0.93%) at 75.87

Gold: -1.20(0.10%) at 1211.8 | VIX: +1.34(6.34%) at 22.46

Markets sell of fast after making new highs.

The SPX made a new high at 1117 today. Only 5 points within the 50% Fibonacci price retracement at 1122. After we hit 1117, we immediately sold off, and sold off pretty hard. The SPX came down about 19 points after making its high. The Dow sold off about 150 points from high to low. The bears also finally got the SPX to close under 1100.

But of course, how many times have we seen the market sell off before coming back and making new highs? As I said yesterday, "We may pull back a little further before moving higher, perhaps back to 1085, just to fool some bears thinking that 1115 was the top." We made a new high at 1117, but the concept still remains to be the same. We sell off to perhaps 1083-1085, then go on once again to make new highs. But for now, 1122 should serve as good resistance.

The bearish case? Plain and simple. Today was the top, and we continue to sell off from here. But the real question is how valid is this count. A few times in the past we have seen an impulse down, and the wave structure looks bearish, but the market has never continued down. The first key area to watch for is around 1085.

If this bearish case is in play, I think we open lower tomorrow, bounce a little bit, then make new lows again before the close.

Of course, all of these counts depend on the Unemployment numbers tomorrow. It is expected to come in around 10.2%, but if it disappoints big like last time, we may sell off. Remember, October and November are the two months where Unemployment always jumps.