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Keene Little : 3/19/2007 12:29:34 AM

Christine sent me an email asking about the Transports and what that might mean for the market. First of all Christine, I've tried twice replying to your email but the email address you provided is bouncing back at me.

As shown in its 60-min chart you can see that it looks like it could have given us a heads up for the broader market. On Friday afternoon it rallied above Thursday's high and therefore at a minimum we've got an a-b-c bounce off the March 14th low. With the Sunday rally in the futures it looks like the broader market will follow on Monday. Link

The question now is whether the Trannies will fail below the high on March 12th or exceed it. As shown by the two different wave counts the bounce in the Trannies should lead to another sell off but it's a question how high the bounce will get to. So we'll keep our eye on this index since it seems to be ahead of the pack right now.

Keene Little : 3/19/2007 12:17:52 AM

As of the close on Friday I had mentioned that the bearish wave pattern was set up for a hard sell off on Monday and that it would probably start with a gap down and most certainly would need to sell pretty much out of the gates. With the futures up on Sunday night it doesn't look like the bearish scenario is going to play out. It's always possible futures are being manipulated higher but that's hardly something you can bank on.

So if the bearish wave count doesn't play out then we have two other possiblities, both calling for a rally before tipping back over. Actually we could get a dip before rallying so a minor dip on Monday morning followed by buying could see it head up to at least test recent highs. Link

It's going to be a challenge trying to figure out what's going on here with another rally leg. If it fails to take out the high on March 9th and 12th then we could see a hard sell off follow. But if those previous highs are exceeded then as shown on the SPX chart it could head for 1425-1430 before topping out. Both cases call for a decline to follow (to well below the March 5th low) so it's a matter of figuring out where to get short. Playing the upside could be difficult and certainly riskier as it could turn on a dime back down.

Keene Little : 3/19/2007 12:03:43 AM

Monday's pivot tables: Link and Link

OI Technical Staff : 3/18/2007 9:59:59 PM

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