Market Update - 1/20/2010

Dow Jones Industrial Average: -122.28 or 1.14% at 10603.15
S&P 500 Index: -12.19 or 1.06% at 1138.04
NASDAQ Composite Index: -29.15 or 1.26% at 2291.25
CBOE Volatility Index: +1.08 or 6.14% at 18.66
NYSE Internals: 785 Advance. 2266 Decline.

Markets drop after financial earnings, housing data.

A big reversal down today, but it quickly recovered as usual. Yesterday, I said we needed to break Friday's low in order for a bearish count to develop. We broke that low today, landing at 1129. But we bounced nearly 10 points after that though. However, the bearish count is now in play.

We came down in 5 clear waves on the Dow. The SPX and Nasdaq may have a truncated minuette wave v. But it looks good on the Dow.

As you can see, after we bottomed, we have a quick reversal back up for the rest of the day. We retraced nearly 50%. This could have ended Minute wave (ii). We'll find out tomorrow. If Minute wave (ii) is over, we need to explode to the down side tomorrow for wave (iii). If wave (ii) is not over, watch for an up open, then a quick reversal down.

However, the bullish count is also still in play. We have not violated any major support. We may have broken under some minor support levels, up the major lines are still in tact.

Here is a modified count of the Nasdaq that I posted yesterday:

It seems to have come up sharply. I believe we are still in Minute (i), but it may end sometime tomorrow, then we will get a quick wave (ii) before going higher.

Also, on the daily charts, we broke through some trendlines intra-day, but closed above them. So no major harm done yet.

And here is the line coming from the March lows:

Still in good shape, but it's close to breaking. We need to watch that line carefully. A break of that could be bearish.

The US Dollar was up today, and Gold and Crude Oil sold off.