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
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.
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