Market Update - 6/7/2010

The sell off that we have had over the past few days has been very impulsive. The internals on Friday were almost 120:1 at the close. This is exteremly bearish. We also had follow through today and broke some key pivots. It seems like the market is picking up momentum to the downside.

We have a very nice looking impulse pattern down from our highs around 1105 last week. It looks like a text book 5 waves down. The pattern looks complete for now, but with the downside momentum, I wouldn't be surprised if we continue to sell off. After all, we are in a very powerful wave [iii] down.

However, I will be conservative and mark today's low as the end of wave (i) of [iii]. Because of the oversold conditions, we could see a quick bounce back towards 1075-1080.

But remember, the primary count is that we are in wave [iii] of 3. This is going to be a very powerful wave to the downside if it plays out the way it should. So don't be surprised if we continue to sell off with very little bounces.

The key pivots for tomorrow are 1040 to the downside and 1071 to the upside.

We have also closed below the expanding pattern that we have had on the daily charts. This could easily take us below 1000 on the SPX.

The daily counts also are in favor of more downside to come this week.

Watch for those pivots tomorrow!