Market Update - 1/12/2010

Dow Jones Industrial Average: -36.73 or 0.34% at 10627.26
S&P 500 Index: -10.76 or 0.94% at 1136.22
NASDAQ Composite Index: -30.10 or 1.30% at 2282.31
CBOE Volatility Index: +0.80 or 4.56% at 18.35
NYSE Internals: 857 Advance. 2196 Decline.

Markets drop after AA earnings, financials weaken.

We broke through some minor support today, and stayed under it for the most part. We didn't really try to back test any of it.

As you can see from this SPX chart, we clearly have now broken out of the wedge... It is bearish, but we'll see if it plays out. For now, I will label yesterday's high as the "top" for P2, only because we can count 5 waves down, but we've seen this before... until we get another 5 down, I will be hesitant to call a "top"

For now, the degrees of the down waves doesn't matter.

If this count is going to play out, we may see another low tomorrow around 1130, or below, before bouncing for a wave iv. If we break over 1142, this count may be wrong. So that is the key pivot for now.

The daily candle stick pattern is now an Evening Star Reversal Pattern. This ovbiously is a bearish pattern. If this plays out, we may get some more down side.

The Nasdaq, which has reversed harder than the SPX and Dow, might have a potential H&S pattern in play, similar to Apple. I know it's not the cleanest looking H&S pattern we've seen, but I don't see a reason why it still couldn't play out.

The US Dollar still seems to be in Minor Wave 2, but it could have ended today. We have now retraced a little over 38.2%. This is enough for a wave 2 retrace. If we continue to go down more, we may run into support in the mid 76 area, but long term the US Dollar looks be to strengthening.

As for Apple, the H&S pattern I have been talking about for a few days now, is working out perfectly. The target still remains the same, ~202.30.

The disconnect between the indices continues. The Nasdaq was down 1.3% while the Dow was nearly flat, closing down 0.34%. If we continue down, I believe this pattern will continue, with the Dow being the strongest of the Big 3.

Also, since I had to bring the blog down, I lost all the people who were listed as "Followers" If you could please hit follow again, I would really appreciate it. Thanks!