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.