Market Update - 6/30/2010

As I said yesterday, we could get a quick bounce back towards 1050 on the SPX. We got to 1048 and then started to reverse. We had a nice 3 PM reversal today, and we ended up making new lows and briefly breaking below the key pivot of 1029. With the breaking of 1029, this market has taken a lot of technical damage now.

Currently, I see 2 possible situations playing out. Both are bearish, however one is a little more extreme.

The first count, which is my primary count, is that we are in wave iii of (iii). This means we should have very swift and powerful down moves in the next few days.

The only option really for this count is to just keep going down with very small bounces along the way.

The second count suggests that we are about to complete the entire wave (iii). This makes a little bit more sense. Due to the July 4 holiday coming up, we could have light volume with some sideways action. This would be the perfect situation for wave (iv).

But, we could get one more quick low before we start the wave (iv). 1014 sounds like a perfect target.

So either way, we go down before we see any sort of bounce. It's just a matter of how powerful the down move is. Anything huge with strong internals will mean a wave iii of (iii).

If we do get a bounce, 1044 and 1050 are the key pivots to the upside.

And as you can see, 1029 is a very key area.

If the bulls lose full control of this pivot, we could drop further.