Market Update - 2/4/2010

A new downtrend has been confirmed in the Equity Markets today. We broke through a lot of key levels. But most importantly, the volume ratio was heavily in favor of the downside. The final closing print of the volume ratio was about 36:1 down.

This is VERY impulsive. This is the first time we have had a down volume ratio close this low in a long long time. In the previous uptrend, each leg kicked off with a huge up volume ratio. Now, this downtrend has started with a huge down volume ratio. In terms of Elliott Wave, this strong bearish market internals signals a wave 3.

Minute wave [ii] is over. We are now in the start of wave [iii] down. The final targets for wave [iii] are ovbiously unclear at this point, since we don't have a lot of waves developed yet. But it could easly take us in the low 1000's on the SPX.

On the smaller time frame, it is a little unclear where we are. BUt I think we are in subminuette wave iii of minuette (i). Wave iii could have ended today, since I see 5 micro waves inside wave iii.

If not, we may open lower tomorrow, then bounce back up for a wave iv. The ultimate bearish count is that we get to 1050 or below tomorrow on bad Unemployment numbers.

The US Dollar continued it's up move today. The US Dollar Futures broke above 80. Here is the chart on the US Dollar ETF, UUP:

The wave structures look perfect. However, we may pullback just a little bit for wave (ii).

The VIX had another explosive move today, closing up over 20% @ 26.08. Here is a very rough count on the VIX.

Basically, it will continue to go up as the markets go down.

The US Dollar was strong today, and Crude Oil sold off over 5% and Gold sold off about 4.3% Financials led to the downside along with Tech. The Dow also broke below 10,000 intra-day.