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OI Technical Staff : 4/20/2007 9:59:59 PM

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Keene Little : 4/20/2007 5:52:09 PM

If this market doesn't have a big bullish future ahead for the next 4-6 weeks, as shown on the DOW's daily chart, but still has a little more upside to go after pulling back/consolidating some, then the RUT's daily chart shows what I'm expecting to see: Link

Keene Little : 4/20/2007 5:47:32 PM

Here are the end-of-day roadmap updates on the 60-min charts that we follow:
DOW: Link
SPX: Link
NDX: Link
RUT: Link

Keene Little : 4/20/2007 5:17:41 PM

Monday's pivot tables: Link and Link

Keene Little : 4/20/2007 5:23:52 PM

Some of the intermarket bearish divergences are giving us a heads up for at least a near term top but the DOW's pattern looks like it could potentially press a lot higher before the bulls are done. While the move up from the end of March is subject to interpretation as far as what degree of the uptrend we're in, the bullish wave count shown on this daily chart shows we could be in the middle of the final move up. Link

This truly has the makings of a blow-off top and as irrational as it may seem, that's what creates blow-off tops. I have no idea if this is what we'll get but I wanted to show the possibility. Plan accordingly. As the daily chart shows, getting above 12814 was the key level for the bullish wave count and now I'm watching for where the turns might be next.

The most bullish interpretation says we need only a small pullback which will be followed by another press higher to a Fib target at 13167 to complete the 3rd wave of the rally off the March 14 low (where wave-3 = 162% of wave-1). That will be followed by a 4th wave correction and then a 5th wave to finish the rally. Wave-5 = wave-1 (using some assumed highs and lows for now) above 13500 by the end of May.

We are in bull mode until we break some key levels to the downside--the first being way down at 12511. The bearish wave count remains--the current leg up will finish wave-c of an a-b-c move up from March 14th and we'll then get a move back down towards the March low. A break of the uptrend line would be a heads up that something more bearish is happening. In the meantime, trade with the trend.

Keene Little : 4/20/2007 4:27:44 PM

Brokers (XBD) still struggling with the broken uptrend line from June. Banks (BIX) were up as well but neither participated with the DOW and SPX so once again, bearish non-confirmation. Link

Keene Little : 4/20/2007 4:21:15 PM

This another reason gold bulls need to be careful--as long as the gold stocks do not participate with the rally in the metals (and they are showing a bearish non-confirmation against gold's new high today) then the rally in the metals is suspect. Link

Jane Fox : 4/20/2007 4:15:57 PM

VIX did make a new daily low and ES and YM both made new daily highs. The laggart today was NQ.

Keene Little : 4/20/2007 4:14:06 PM

Like the NDX, gold bulls do not want to see a red candle on Monday after leaving a potentially bearish evening star at resistance. Link

Keene Little : 4/20/2007 4:05:39 PM

Not much of a change to CME's chart today, which is surprising. It had been looking bullish and yet after such a strong day for the market this one got only a little lovin' today. But by holding above its broken downtrend line from January it still looks like it could head higher, which it needs to do in order to wipe out the bearish divergence at the last high. Link

Keene Little : 4/20/2007 4:00:59 PM

Techs had a strong day today but once again not as strong as the blue chips. Rotation out of techs into blue chips is not a bullish sign. Techs did not follow the blue chips to new highs into the close. That's bearish non-confirmation.

Keene Little : 4/20/2007 3:58:55 PM

After GOOG's big day it hasn't been able to hold onto its initial gains. The short term pattern is ugly and subject to several different counts. I had a few different Fib projections and the 62% retracement pointing to 484 as an important level and it looks like it's going to settle just below that number. RSI is showing some negative divergence at today's high. Link

On the daily chart I attached a line to the January high that is parallel to the one along the lows from November. GOOG briefly jumped above it but looks like it will settle right at it. Interestingly it's at the same 484 level. It now leaves us to wonder if it will be resistance that kicks off the start to another leg down, or if instead GOOG will break it and head higher. Not a bad short here with a tight stop above today's high. Link

Keene Little : 4/20/2007 3:34:35 PM

Same story with the RUT--looks like a little higher should do it, maybe 832 if it can hit the Fib projection for the final 5th wave up. But heads up here as the 5th wave has now achieved the minimum expected so a drop below 824 would be a sell signal. Link

Keene Little : 4/20/2007 3:25:06 PM

Here's the NDX 60-min chart showing upside potential to the 1861 area. Link

The daily chart shows why the bulls do not want to see a red candle on Monday otherwise today's candle will be interpreted as a bearish evening star. Again, whether that leads to just some consolidation or something more bearish won't be known until after the pullback gets started but this too is close to a good short play. Link

Keene Little : 4/20/2007 3:05:30 PM

My guess is that we're not going to see an end to this rally today. We could get a final flush to the upside but I'm doubting that will happen. It seems more likely, especially with the bullish papers this weekend, that we'll get a quick pop higher on Monday morning, maybe finishing before the morning is out, and then start a longer pullback (probably a minimum of 1 to 2 weeks).

Keene Little : 4/20/2007 3:00:48 PM

Into the last hour and here are updates on the 60-min DOW and SPX charts. There's a slight difference for the counts in the move up but both are looking for a minor new high to finish this move and set up at least a larger pullback (in time if not price):
DOW: Link
SPX: Link

Jane Fox : 4/20/2007 2:56:57 PM

YM is the closest to challenging its daily high but the move is just like I suspected, without a lot of power behind it.

Jane Fox : 4/20/2007 2:48:07 PM

The AD volume making new daily highs and the VIX hanging around mid range will allow the price to move upward. It will not move explosively but will move up. When the VIX is making a counter move to the AD volume like it was earlier that is when you get the sideways movement. This is not a time to be short folks.

Jane Fox : 4/20/2007 2:33:03 PM

SAN FRANCISCO (MarketWatch) -- Gold futures scored gains for the session as well as the week to close Friday at their strongest level since late February, finding support from a rally in crude-oil prices as traders moved to recoup the previous session's loss.

Worries that red-hot growth will force Beijing to cool the Chinese economy appeared to fade for now.

Gold for June delivery climbed 1.1%, adding $7.50 to close at $696.60 an ounce on the New York Mercantile Exchange. It traded as high as $698, its strongest intraday level since Feb. 27.

The contract closed at $689.90 last Friday, so it gained $5.90, or 0.9%, for the week.

Keene Little : 4/20/2007 2:27:37 PM

It's a minor change to the NYSE 60-min chart but actually this one looks a little better from an EW perspective. The 3rd leg up (either wave-(3) or C) probably started at the higher low on March 30th. That gives us an upside projection at 9728.49 for two equal legs up from March 14th. The projection for the 5th wave in the move up from March 30th, if it goes to 62% of the 1st wave, is at 9722.69. And for the move up from yesterday's low, the 5th wave will equal the 1st wave at 9720.01. Link

So it's a fairly tight correlation in the 9720-9728 range to look for a top to this move. The bottom line though is that we're now into the 5th of the 5th wave and they can fail at any time so chasing this to the upside is risky business, never mind the fact that the market is Really stretched tight to the upside.

Jane Fox : 4/20/2007 2:20:47 PM

NEW YORK (MarketWatch) -- Superior Offshore fattened its deal by about 17% and raised more than $150 million as Wall Street clamored for the subsea construction firm's initial public offering Friday.

Superior Offshore (DEEP) supplies deep sea diving services and ships equipped with helicopter pads and cranes for offshore drilling operations in the Gulf of Mexico.

The Lafayette, La. company priced 10.17 million shares at $15 a share in a bid to raise $153 million. The stock opened at $18 and traded at $18.01 in the open market for a gain of 20% over its IPO price.

In a sign of strength ahead of trading, Superior Offshore increased the size of the deal by 1.5 million shares.

Jane Fox : 4/20/2007 2:19:50 PM

If the VIX does make new daily lows that is a very clear indication daily highs will be tested and possibly broken.

Jane Fox : 4/20/2007 2:18:42 PM

AD volume is climbing once again and VIX is falling albeit not to new daily lows.

Jane Fox : 4/20/2007 2:18:05 PM

WE have some very nice looking reverse H&S formations on the 5 minute charts.

Keene Little : 4/20/2007 2:16:27 PM

The NYSE remains the most bullish in that it has exceeded its February high by the largest percentage. A "normal" b-wave in an irregular flat pullback correction (where the b-wave exceeds the previous high) is in the range of 117%-124% of the move down (to the March low). As shown on the daily chart it has now gone nearly to 138%. That's what's giving me a bullish impression (but the Wilshire 5000 has gone to the more typical 117%). But it's still possible to count the rally off the March 14 low as an a-b-c move (which is supported by the count on gold). Link

Note also that the NYSE continues to press up to its broken uptrend line from July but can't get above it. If the rally from March 14th is in fact wave-B as labeled, then wave-C down should go to 162% of wave-A, giving us a downside target near 8654. That's based on the NYSE topping out around 9711. The 9711 number is derived from a projection for two equal legs up from March 14th, as shown on this 60-min chart: Link

The short term pattern would look best with a minor push higher, as shown on the DOW and SPX, so that 9711 area looks like a good place to watch for a top. Then like the others we'll watch to see if we get a corrective wave-(4) pullback or something sharper for the start of wave-C on the daily chart. We won't know until after the pullback is in progress but I like the short play setup here as well.

Keene Little : 4/20/2007 1:57:27 PM

A similar projection for the 5th wave up for the DOW, as I showed for SPX on its 15-min chart (for equality between the 1st and 5th waves), is at 12996. That puts is right on top of a projection for the move up from March 30th where the 2nd leg up is 162% of the 1st leg up. It's still a question as to whether it's an A-B-C move up from March 30th or a more bullish 1-2-3, which we won't know until the next pullback gets started, but I like the setup just under 13K for a short play and then we'll see what comes next. Link

Keene Little : 4/20/2007 1:40:31 PM

A trend line along this week's highs is currently near SPX 1487 so another reason a rally to there this afternoon could be the end of it. Link

Keene Little : 4/20/2007 1:22:15 PM

Assuming the pullback has completed (for the 4th wave correction in the move up from yesterday morning), equality between the 5th and 1st waves gives us an upside target for SPX at 1487.08. Believe it or not, that would make for a great short play into next week. Link

Jane Fox : 4/20/2007 1:16:54 PM

I don't believe I actually took a short with the AD line at +1000 and it worked.

Jane Fox : 4/20/2007 12:58:26 PM

... and that you made some de niro.

Jane Fox : 4/20/2007 12:57:55 PM

Hopefully U R out of you short.

Keene Little : 4/20/2007 12:49:18 PM

The daily chart on the gold ETF (GLD) shows potential resistance at the trend line across the highs from last July. There's a bearish as well as bullish way to interpret gold's price pattern since the May 2006 high but two possibilities look for gold to pull back from this level and that's what I still expect to see. Link

Keene Little : 4/20/2007 12:36:06 PM

With the bounce back up in the metals I'm trying to figure out what they're up to. Without the dollar sinking further I'm still not sure if the move up today is a last gasp measure or something more. The overlapping highs and lows in the rally is what gives me the impression we're in an ending pattern but it is still in an uptrend. Currently I see the possibility for gold (June contract) to push up to a Fib target at 700.60 to finish off a potential A-B-C count off the March 5th low.

The interesting thing about this pattern is that is remains very close to what we're seeing in equities, and that may be our clue as to what's next for equities. Because of the overlapping highs and lows in the move up from the end of March my preferred wave count is an ending pattern rather than something more bullish. In other words I prefer the A-B-C count for the move up from March 5th instead of a more bullish 1-2-3. Link

Therefore if equities and gold remain in synch, as they have been, then equities also are very close to completing an A-B-C move up from March 5th. Based on that interpretation, a minor new high from here, as shown on the SPX charts I posted earlier (around 1489), would be the top of this move and it'll be followed by a stronger decline (what that will be in the larger pattern will remain to be seen). In this case I would expect a move back down to at least the March lows.

Jane Fox : 4/20/2007 12:29:26 PM

I would put the stop at 831.20.

Jane Fox : 4/20/2007 12:28:31 PM

ER made a low of 829.30 and you should lower your stop now.

Jane Fox : 4/20/2007 12:22:20 PM

If you took ER short at 830.40 and put your stop at 832.20 you are still OK, the high on that last push was up to 831.90.

Jane Fox : 4/20/2007 12:21:31 PM

I agree with McMillan as well Marc.

Keene Little : 4/20/2007 12:17:41 PM

The NDX 1850 area is of course tough resistance because of the two previous highs in January and February at this level. The bulls do Not want to see a triple top here.

Keene Little : 4/20/2007 12:14:28 PM

The techs are looking weakish here--just about to overlap yesterday's mid-day high which would negate the bullish wave count looking for a 5th wave up this afternoon (unless it's building a more bullish 1-2, 1-2 wave count). The key level for NDX right now is yesterday's low. After tagging the 1849.58 level (two equal legs up from March 14th) and 1854.01 (two equal legs up from March 29th), it has now backed off. It should hold above 1840 if there's another high (or retest of this morning's high) to come.

Marc Eckelberry : 4/20/2007 12:12:05 PM

I agree with McMillan.

Jane Fox : 4/20/2007 11:40:25 AM

If/when we get the short lived correction that McMillan mentions I will be using the jtHMA SS to identify the "dip" to buy.

Jane Fox : 4/20/2007 11:39:02 AM

McMillan's weekly commentary - The stock market continues to climb, defying its critics and even mystifying some of its supporters. $SPX made new 6-plus year highs this week, as we had expected. This makes the $SPX chart intermediate-term bullish. There is now support at 1460 and, below that, at 1450. There is also a clear uptrend in effect. However, the broad market has advanced so fast that it is a bit stretched, and therefore it seems that short-lived, but perhaps sharp, declines are possible. Even so, the market quickly recovered from another bout of potentially negative news from China Wednesday night. This is a strong market.

The equity-only put-call ratios continue to remain on buy signals. They will continue to do so as long as they are declining. These powerful intermediate-term indicators gave their buy signals about three weeks (near the first of April), at approximately the same time that $SPX was successfully testing the 1410 support level -- a level which is now major support. These put-call ratios will remain bullish until they roll over and begin to trend upward -- something that is not likely to happen soon.

Market breadth has been quite strong, although this week there has been something of a divergence in that the Dow Jones Industrials have advanced, along with $SPX and $OEX, yet breadth has been negative. Finally, the volatility indices ($VIX and $VXO) have remained subdued, and that is bullish. $VIX has been steadily declining since the market sold off sharply back in early March (Figure 4). The market can continue to rise as long as $VIX continues to languish at these low levels.

In summary, the intermediate-term indicators ($SPX and the equity- only put-call ratios) remain bullish, but the short term indicators (breadth and volatility) are more negative. Hence, there is a chance of a short- lived correction. However, any declines are considered buying opportunities as long as the uptrend in $SPX remains intact.

Jane Fox : 4/20/2007 11:36:29 AM

Here is the open number system. ES and YM are both at +6 and according to this system is at "no trade." ER under its weekly open at 829.10 is a +2 and short. Link

Jane Fox : 4/20/2007 11:29:02 AM

These two are supposed to trade opposite to one another and are the reason for this sideways move. Link

Jane Fox : 4/20/2007 11:27:02 AM

I wouldn't try for much more than 14-15 ticks.

Jane Fox : 4/20/2007 11:26:32 AM

A better stop would be at 833.20 but that is a longs ways off.

Keene Little : 4/20/2007 11:26:11 AM

SHM pulled back to the trend line along the highs of the 6-month consolidation, currently near 35.80 so as long as that holds it's a buy here. A drop back below 35.80 that stays there would be bearish.

Jane Fox : 4/20/2007 11:26:00 AM

IF short I would put at stop at 832.60.

Jane Fox : 4/20/2007 11:24:38 AM

ER made a low of 830.10 so the range did break downward but no follow through and not the quick move I thought would happen.

Jane Fox : 4/20/2007 11:23:13 AM

I think we are now headed lower even though the consolidation at daily highs is a very bullish pattern.

Jane Fox : 4/20/2007 11:08:59 AM

All I see is more of the same. Vix continues to make new daily highs and AD volume does as well and that means sideways. You could put a sell just under this range at 830.40 or a buy at 833.20. IF this breaks it could be a fast move.

Keene Little : 4/20/2007 10:56:46 AM

Focusing on the short term move here, and sticking with the SPX for the moment, I'm showing the wave count for the move up from yesterday morning's low. The 3rd wave looks complete and now we've started a 4th wave correction. Link

A 38% retracement of the 3rd wave (typical but it could be shallower especially if it does a sideways triangle consolidation) would be at 1478.57. Wherever the 4th wave ends, and using that 1478.57 level as an example, a projection for the 5th wave to be equal to the 1st wave gives us 1488.43 for an upside target, which ties in nicely with the 1489 Fib target shown on the 60-min chart. Then a larger pullback at a minimum will be the next move next week.

Jane Fox : 4/20/2007 10:40:30 AM

VIX making new daily highs but so is AD volume and this is very very clear sign that we are into chop.

Marc Eckelberry : 4/20/2007 10:39:32 AM

NQ reached my target for the week and we might see some profit taking soon. YM is very extended. Semis are down. Watch NQ 1862 resistance.

Keene Little : 4/20/2007 10:27:59 AM

Another reason to expect resistance for SPX at 1489 is the trend line along the highs from May 2006. Stripping away a lot of the noise on the daily chart, this SPX chart shows just trend lines and a wave count from the June 2006 low that calls for higher before the bull is dead. Link

I'm making a couple of assumptions here as for where the current leg up will stop (assuming 1489) and then a pullback next week. If that is then followed by another leg up (as drawn on the chart), then Fib projections for the move up from the March low point to a potential top near 1530 which is the September 2000 high. This is all somewhat speculative at the moment but it would be an interesting setup to disappoint people positioned for a new all-time high.

Jane Fox : 4/20/2007 10:11:17 AM

AD line is a very bullish +1950 and we are consolidating at daily highs.

Keene Little : 4/20/2007 10:03:28 AM

With SPX pushing above 1474 and holding (clearly) that triggered the bullish wave count so now it's time to figure out what could be next. I've got the move up from yesterday morning's low labeled as an impulsive move with this morning's high potentially completing the 3rd wave of that move. That would mean a pullback/consolidation is needed for the 4th wave (looks to be starting as I type this up) and that should be followed by another press higher, possibly by this afternoon, and that's when the 1489 Fib target will come into play. Link

That kind of move would then complete a larger degree 5-wave move up from the March 30 low. Then it'll be decision time for the market. The rally from the March 14 low will then be a completed 3-wave move and will either be the completion of an A-B-C or a 1-2-3. The pullback next week will tell us which it is and then we'll get some clues as to whether or not the market will rally higher (SPX to new all-time highs, or at least near it for a retest, so above 1500 anyway).

Keene Little : 4/20/2007 9:47:45 AM

While the bulls are at it, they should just press the DOW up to 13K today so that the weekend papers can splash that across their headlines. There will of course be a hangover next week since the market is stretched to the upside by just about every conceivable measurement but for now don't get in the way of this. And when it's this stretched, any buying of the dips needs to be done carefully.

Keene Little : 4/20/2007 9:34:21 AM

At this point I'd be very surprised if the SPX didn't make it to its first Fib target at 1484. Maybe a pullback from there and then press up to its 1489 target.

Jane Fox : 4/20/2007 9:18:52 AM

Here is your jtHMA spreadsheet as of last night. It will certainly change this morning. Link

Jane Fox : 4/20/2007 9:09:07 AM

The bulls were alive and well overnight, even in the Gold and Oil markets. Link

Keene Little : 4/20/2007 9:07:59 AM

To say we've got a bullish start to the day would be an understatement. We had steady buying all night in equities and the metals. The US dollar barely moved so I'm not sure what's driving the metals but they're right back up to where they were, with gold making a minor new high to boot. GOOG pressed back up near 495 this morning so it's a real bullfest this morning. The bond makret hasn't moved much. We'll have to see how much follow through there will be after the cash open.

Jane Fox : 4/20/2007 9:02:37 AM

All PDHs were broken overnight and the bulls are back in town, like they ever left! Yesterday started out very bearish but as you probably noticed the bears were never able to get a good foot hold and eventually the constant pressure of the buyers brought price back to test PDHs. This kind of action is indicative of very strong bull markets. Link

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