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Post Market Analysis, Friday January 29

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), GLD, IWM, QQQ, SPY, UUP, XLF

 The markets are looking extremely bearish. The most important news today is the fact that GDP and Consumer Sentiment reports both came out better than expected, and the markets sold off. Remember, how the market reacts to the news is more important than the news itself. If you will recall, back in March and April of 2009, the market responded to negative news with buying pressure. Right now, the markets are responding to positive news with selling pressure.

The S&P 500 (NYSEARCA:SPY) broke down out of a rising wedge on the daily chart and formed a high base. Today (and yesterday), SPY broke down out of the high base formation. All of this selling pressure occurred with increasing volume. That is significant confirmation of the bearish formations. Gold (NYSEARCA:GLD) has put in a short term top and the dollar (NYSEARCA:UUP) just broke out of a falling wedge and today broke above the 200 day moving average. Recently, the correlation has been that when the markets are up, gold is up and the dollar is down. These are all indicating bearish activity and probably more selling pressure to come.

The Nasdaq (QQQQ) was the leader to the downside today, followed by the Russell 2000 (NYSEARCA:IWM). These are leading indexes and they are adding to the selling pressure. The VIX popped about 3.75% today and tested the 25 mark. The TRIN, TRIN/Q, TICK, and TICK/Q each corroborated the moves in their respective indexes nicely today.

This is the worst pull back we have seen in a very long time. Unlike the head and shoulders break down we saw in July 2009, this sell off is being confirmed by extreme increases in volume. This is serious folks. I always say it, but I hope my repetition has not detracted from its value... Always trade with a stop loss and manage your risk appropriately! Capital preservation is a traders number one priority.

Have a great weekend. Thanks for being a part of Swing-High.com!

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Happy Trading,

Jason