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Holding WEEKLY pivots gives upside tomorrow.

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A good round of short covering and bullishness in the broader market has the major indexes now trading above their WEEKLY pivots, and a hold into the close above these WEEKLY pivots bodes for further gains into tomorrow morning's session.

I wanted to quickly show the same chart of the S&P 100 Index (OEX.X) 420.79 +2.9%, which we discussed in this morning's 09:00 Update, which I hope to tie in with a point and figure chart of the OEX in tonight's Index Trader Wrap, which has me not looking at the 423-425 zone as an early session rally point tomorrow morning.

S&P 100 Index Chart - Daily Interval

It's a bit tough for bears to step in front of a "freight train" near the end of today's close, but there's a good chance in my opinion that the OEX has some morning upside potential to the 423-425 zone, where I'm thinking bears are most likely going to try and wait before applying any further pressure to the OEX, especially after today's move above the WEEKLY pivot, which has found some light selling in the last hour of trade, but not overly so.

The "wait and see" approach is also a likely scenario for OEX bears that want to press the issue on the thought that the OEX may still be able to test its bearish vertical count of 390 from the point and figure chart in coming weeks, but by waiting until tomorrow, it will give bearish traders some time to see if European markets give back any of their substantial rebound in tomorrow's (Europe's session).

Treasuries closed, with YIELDs pegged at/near their highs of the session, and also give some hint of follow-through selling in the morning. The 10-year YIELD ($TNX.X) finished its trade at 3.732%, and closed right under some significant YIELD resistance, that was broken to the downside on February 28th at 3.75% on the point and figure chart. If the MARKET looks to hold a "defensive" posture then bearish equity traders would want to see the 10-year YIELD find buyers at some point tomorrow at/near the 3.75% YIELD level.

Jeff Bailey

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