Thursday, January 21, 2010

Thursday 1/21/10 Market Update

Resistance around 1141 on the S&P 500 was reached but the rally was not able to move beyond it. A big sell-off ensued that appears to have been wave (iii) within a larger impulse of minute degree. If a zigzag family correction down is unfolding or has unfolded, it would be hard to justify a larger advance on the major indices. Primary wave [2] appears to be complete from an Elliott Wave perspective.

Since wave (iii) is longer than (i) and a sideways correction appears to be unfolding, as the above 1 minute chart illustrates, a larger "3rd of a 3rd" wave down will probably not be unfolding within this minute wave [i]. Instead, expect wave (iv) to complete sometime tomorrow.

Not only is the Elliott Wave structure satisfyingly complete, the trend lines established months ago on both the S&P 500 (above chart) and Dow Jones Industrial Average (below chart) were broken today with determination. There are also a number of technical indicators turning over.

On 1/15/10, four days or one trading day before the top (exceeding the 1/14/10 afternoon top by 0.04 points on the S&P 500), there was a new moon and solar eclipse. This is a bearish confluence and works well with the proposed top.

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