Market Update - 1/22/2010

Dow Jones Industrial Average: -219.90 or 2.09% at 10172.98
S&P 500 Index: -24.72 or 2.21% at 1091.76
NASDAQ Composite Index: -60.41 or 2.67% at 2205.29
CBOE Volatility Index: +5.04 or 22.63% at 27.31
NYSE Internals: 557 Advance. 2525 Decline.

Markets continue to sell off.

Alright, yesterday, I said that if we broke 1100, I would most likely call a top to this rally. We certainly broke it today, and broke it hard. However, we did find support at 1090.

So now the big question is that do we bounce a little before going down more? We are pretty oversold on the smaller time frames. Another big question is that did we complete Minute wave [i]? Or did we complete Minuette wave (iii) of [i]? I think it's wave (iii). If this is the case, we should still bounce a little bit, perhaps back test 1100, then move down to 1075-1083 on the SPX. Here is a chart of what I think may happen...

The daily charts on both the Dow and the SPX look fractured. It's a very bearish looking chart. The SPX is still sitting on major support, but the Dow has broken below it.

The SPX also broke below the 50 day moving average. The 100 day moving average is at 1085. So that 1083-1085 level is very important. If we break below it, we could go a lot lower.

The US Dollar was actually down today. Crude Oil and Gold continued to go down as well. VIX had another huge move up today. Volume was 8:1 down.

I will post more charts and analysis over the weekend, so keep checking back for that.