Market Update Jan-07-2010 (Before the Bell)

Yesterday, S&P 500 (SPX) has reached as high as 1,139.19. This is very close to my target of 1,140. Because it took a week more than what I expected this to happen, my escalating upper trend line as per my Jan-4th chart is around 1,155. As it has not touched this, in the following chart, I am providing another possibility. Here the wave A of the ending triangle is on Oct-20th instead of Sep-23rd. With this wave count, we have a throw-over as of yesterday.

The most interesting fact is that on the following weekly chart in log scale, S&P500 is touching the upper trend channel line of decline we had since 2007.

To make it more interesting the Dow Johns Industrial Average (DJX) is also touching the upper trend channel line of decline we had since 2007.

E-Mini S&P 500 (/ES) reached as high as 1,135 yesterday at around 2:30 P.M. Since then it declined as low as 1,1,28.50 at around 4:50 A.M. In this decline, we could identify a possible 5 waves. This indicates a potential decline is on its way.

In the S&P 500 (SPX), the lower trend support line and the 50% retracement is at around 1,121. If this is a major decline, it should not have any issue in breaking thru this support level very soon. So I would wait for this to happen to call it start of a major bear trend.