Post-market analysis Jan 7, 2009

The market tanked today after the holiday rally. The first 30 minute today tagged the day as a down day. We started with a gap down, along with the TICK sliding downward all morning. The real confirmation came just before noon when the TICK broke above 1000 but the S&P 500 failed to break the 920 resistance. I knew we weren't going to close the gap once the writing was on the wall.

[caption id="attachment_1005" align="aligncenter" width="500" caption="S&P 500 intraday"]S&P 500 intraday[/caption]

Over the longer term, it's interesting to note that we tested the November 28 high today. Based on the higher volume (versus Nov 28), it seems we'll be able to break below it in the coming days. If that happens, I'm staring right at 820 or so, around the middle of my down channel and the 11/21 high as my target.

If we can bounce back from here though, I'm looking at the 11/04 low of about 970 as my target.

[caption id="attachment_1006" align="aligncenter" width="500" caption="S&P 500 ETF"]S&P 500 ETF[/caption]

What leads me to believe we're more likely to head lower at this point is the obvious double top with negative divergences on the indicators (figure below, pink trend line, lower right). We'll see how the market performs tomorrow around this critical 900 level.

[caption id="attachment_1007" align="aligncenter" width="500" caption="S&P 500 ETF"]S&P 500 ETF[/caption]