Market Update - 2/18/2010

We got those slight new highs I was talking about yesterday. I was expecting somewhere around 1104-1105 on the SPX, the high was around 1108. So we slightly broke above that resistance level. The Nasdaq also got to my target of 2239, making the high at 2243.

This wave that has been forming the past week or so has been a real pain to count. But that's what corrective waves do. They shake out all the weak shorts before going back down.

As I have said a few times in the past, corrective wave 2's at the start of a new downtrend have a tendency to be sharp, and have a deep retrace. Usually 61.8%. Here is what Minute wave [ii] looked like back in late October of 2007.

We could be getting a similar pattern.

Currently, the 61.8% retracement level on the SPX is around 1109. Let's say 1110.

The move up at the end today certainly caught a lot of people by surprise. If the momentum carries through, we could get up to this level tomorrow.

The Nasdaq has already hit it's 61.8% retracement, but it hung around that level when it got there.

There was no sign of a reversal.

The Dow has also hit it's 61.8% level.

But once again, there was no sign of a sharp reversal.

It seems like the SPX is lagging behind a little bit. If the SPX is going to play some catch up, it will either get strong and pull the Dow and Nasdaq up with it a little, or on the way down, it will not be as weak.

The US Dollar is continuing to show it's strength despite the equity market being strong. Here is an updated wave count on UUP.

It seems to have a bullish set up, it just needs to get above its wave i highs to start heading up again.