Market Update - 1/26/2010

Dow Jones Industrial Average: -2.57 or 0.03% at 10194.29
S&P 500 Index: -4.61 or 0.42% at 1092.17
NASDAQ Composite Index: -7.07 or 0.32% at 2203.73
CBOE Volatility Index: -0.91 or 3.84% at 24.50
NYSE Internals: 1094 Advance. 1952 Decline.

Markets bounce around after Consumer Confidence numbers.

Very interesting day today. We spent most of the day testing both of my pivot points that I had listed yesterday. We fell a bit short of my target of 1085, making our low today at 1089, but then we didn't break 1105 either, the high was 1103.

What I can conclude from today's move is that we completed some sort of wave 4. Now was it subminuette wave iv or minuette wave (iv)? Here are a few options.

The first count suggests that today's low was the end of minuette wave (iii) and then the bounce was minuette wave (iv) and we are currently in wave (v). The target for wave (v) is anywhere between 1080 and today's low of 1089.

The second count is really bearish. It suggests that tomorrow we make a new low around or beneath 1085. But this low will end minuette wave (iii), not wave (v). After that low, we should bounce a little bit before going back down.

The last count, which is the bullish of them all, suggests that today's low was the end of minute wave [i]. And we should now bounce all the way back up to 1115-1120.

This count seemed to be in play all day, until we started to sell off at the end. But regardless, this count will come into play very soon. If we make a new low at 1085 tomorrow, and bounce up sharply, this count will be in play, and we could head back to ~1120.

The last scenario is that we are tracing out a wave (iv) flat. This is where wave b retraces 100% of a, and wave c retraces 100% of b. So in net, the move becomes "flat." If this is the case, we should test and hold 1103 tomorrow.

So once again, watch for the key pivot points. 1103 and 1105 on the upside, and 1089 and 1085 on the downside.

I will be posting an update later tonight on the Nasdaq and some key stocks in it that could lead the market down. So please check back for that!