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Marc Eckelberry : 8/7/2006 2:37:15 AM

Oil is breaking out overnight and we could see some selling pressure right off the bat on Monday.

Marc Eckelberry : 8/6/2006 11:13:37 PM

Beaten down techs will be the place to be if the Feds pause. As I mentioned this morning, I think we will have some initial selling pressure immediately after the news, as we were given a taste of Friday. "The economy is too weak, etc..". But we are still in double digit earnings growth and with SPX p/e dropping from the 20's to mid teens, we now have room to pump it up ahead of back to school and that is tech territory. Be patient and wait for the set up. It will come.

Keene Little : 8/6/2006 11:04:43 PM

BTW, on both SPX and ES charts you can see that spike above the top of the pattern and then a decline for the rest of the day on Friday. That was a throw-over that is typically seen as the final move that completes these patterns. For this reason, and the EW count inside this wedge, I'm leaning towards the bearish outcome here--I think we might see a pop higher in the morning that gets sold into again. Just a guess on the early morning pop but look for a decline to continue.

Keene Little : 8/6/2006 10:28:36 PM

Between the S&P futures and cash index we have a slightly different picture but the slight difference could be important for Monday. When looking at the 60-min chart of price action since the July 18th low we can see an ascending wedge with the negative divergences supporting the bearish interpretation of this pattern. The differences between the futures and cash is where price closed on Friday and it has a lot to do with price action after the 16:00 cash close.

As can be seen in this ES chart, the futures broke below the uptrend line from July 18th but then got a bounce into the close (closed at 1285.50) which kept price comfortably above the uptrend line at 1282. This gives us a bullish impression for Monday morning. Obviously if it drops back down below Friday's 1278 low then you'll want to get short but so far this could hold on for another trip up, especially if the market is held up into FOMC on Tuesday. Link

But SPX cash says things might not be so bullish first thing Monday morning. It dropped below the uptrend line and only managed to make it back up to the line at the close. Could this be a bearish kiss goodbye in the making? We'll have to wait for early price action to find out. Link

Keene Little : 8/6/2006 10:08:58 PM

Monday's pivot tables: Link and Link

OI Technical Staff : 8/6/2006 9:59:59 PM

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Marc Eckelberry : 8/6/2006 11:33:49 AM

Feds will pause, some selling on the news maybe, but a sustainced August rally once the dust settles. A look at NASDAQ new 52 week H/L charts: Link

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