Banks and the equity sector followed through on the chart-based warnings we and others have been issuing, by rolling over today. I just posted a lot of charts at my UBTNB3 site, so be sure look at those for what the various markets are "saying". Equities look to me on a technical sell, not surprising with the banking sector looking like it's ready to go to a new low. Bonds and the dollar pushed up - no surprise to us here, right? since we've been following those and I've got target objective levels for both bonds and the dollar to push to a higher swing high. (Okay, not guarantees, but Fibonacci-based objectives that look to be in play with the technical indicators currently confirming.)
When you look at the VIX chart I posted there, it looks like the volatility index pushed up against the upper Bollinger Band which had been declining. Normally that could be a resistance level, so I'm not totally convinced that equities moving downward will continue to slice downward uninterrupted. Besides, the S&P500 bobbled around that 843 level that I posted some days ago as a theoretical "C" wave flat objective. I don't really believe that's the correct Elliott Wave count, but it is the 1.382 extension of what would be the "A" wave if it's a flat (if you know EW, you can "see" the potential flat in the zigzag lines I drew and posted with the chart here earlier today; or, search the site for my prior post showing two alternative Elliott Wave counts in the SPX and showing 843 as the alternate flat "C" wave possibility.
**[Let me interpret for those who don't know Elliott Wave: IF the idea that we completed today a "C" wave finishing an EW flat is right, then it would imply the next move in equities is onward and upward to higher levels. Personally, I don't think it's the right way to see it, and I tend to agree that either the equity indices drop down to test close by the November lows, or they lose support and move under the November lows to scare everybody with numbers like Dow Jones Industrial Average at 6,000 and the S&P500 at 550 to 600.]
The news out there is dismal - retail sales disappointing, strange things happening with Citigroup and in the banking sector generally, and more and more people figuring out that the economic problems are much deeper and messier than they first believed.
No wonder bonds and the dollar pushed higher today, and gold weakened in what looked like an inverse movement to the dollar and bonds. Oil looks a bit elusive; as you can see in the charts I posted at my UBTNB3 adjunct site (you can locate and click to get to it, at the right side of this page), the USO dig down a bit (perhaps to take out stops placed too tight) while $WTIC didn't do so. IF oil's a buy, it should move tomorrow - otherwise it will look like yet another failed rally.
Sentiment and technical indicators continue to look worrisome, although a few of them are at potential consolidation levels - and Friday is options expiration (opex). So once again, even though it looks like more of the bear market to come, it wouldn't surprise me if we see a bit of consolidation or pullback first. This would also be consistent with technical movements into opex. And we can almost expect any efforts by the Fed or similar institutions to try to "do something" to shore things up into Friday's opex. However, I think people are beginning to lose some faith in the ability of these institutions to "make a difference." The next FOMC date isn't for two weeks - Jan. 28.
In the meantime, any continued movement beyond today's levels will have the technical indicators look like they are confirming trends (up in bonds and dollar, down in equities).
For daytraders or those tracking intraday action - I may not be able to post the ChartsEdge Market Map tomorrow morning until an hour or so after the open, due to meetings that will take me away from the computer. As always, careful out there everyone!
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