Market Update - 1/25/2010

Dow Jones Industrial Average: +23.88 or 0.23% at 10196.89

S&P 500 Index: +5.02 or 0.46% at 1096.78
NASDAQ Composite Index: +5.51 or 0.25% at 2210.80
CBOE Volatility Index: -1.97 or 7.19% at 25.42
NYSE Internals: 1752 Advance. 1295 Decline.

Markets rise on earnings expectations.

As I said in my weekend update, we could potentially bounce in a wave 4. We certainly did bounce today. A few of my counts get taken out of play now, but one of them has certainly played out well.

For most of the day, we were bouncing around in a defined range. Once we tested resistance in the 1100 area, we seemed to back off each time. We did not break out of the channel either. So as this count suggests, subminuette wave iv most likely ended at today's high of 1102.

According to that chart, we should continue down to 1080. If 1080 holds, and we bounce up, we could start Minute wave (iv). But for now, 1080 is my target. If we break 1080, wave (iii) could continue to extend.

Here is the count on the extension.

It suggests that tomorrow, we hit 1080, but that will be the end of Micro wave [5], which would end subimuette wave iii. This count is more bearish than the first, but could still play out. If we break 1105 tomorrow, then this count is out of play.

The bounce today was on much lower volume also. This is a good sign for the bears.

The market internals were also not very bullish, like they previously have been on up days following big down days.

Also, here is a rough count on the VIX. The degrees may not be right.

With Apple's earnings after the close today, tomorrow will be an interesting day. The previous big cap tech companies to report have sold off on good earnings, i.e. Intel, IBM and Google. I think Apple will follow, and bring down the market.

The key numbers to watch for tomorrow are 1105 to the upside, and 1091 and 1080 to the downside.