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Keene Little : 11/5/2006 11:36:13 PM

One of the EW counts that I'm considering for the decline from Oct 26th calls Friday's low the completion of a 5-wave move down and that means we should get a bigger corrective bounce now. It also means the high for the rally is now in. Friday's low left a very bullish divergence and suggests that low should hold for at least a bit. If we do start a bigger bounce to correct that decline, a 50-62% retracement (common for a 2nd wave bounce) gives us a retracement zone of roughly ES 1380-1384. Link

A retest of the broken uptrend line from Sept 11th would be near 1384 at the end of the day this Wednesday. This is assuming the EW count is correct and we've completed an impulsive decline that now needs to be corrected. But I'm watching for another possibility that calls for a little lower first. I show a price depiction on the chart for price to chop a little lower in a bullish descending wedge before it rallies out of this, maybe even to a new high.

Resistance is about 1372 so if ES can rally above that on Monday and stay there (maybe a pullback to test the downtrend line), then I'll be leaning towards a bounce into Tuesday/Wednesday at which time I'll be looking to short the bounce for what could be a strong move back down to new lows. If it instead chops a little lower then I think we'll want to buy it and see what develops from there.

Keene Little : 11/5/2006 10:33:29 PM

Monday's pivot tables: Link and Link

OI Technical Staff : 11/5/2006 9:59:54 PM

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