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Keene Little : 6/11/2007 12:15:16 AM

I've got two more days of driving ahead of me so I'll post comments as I'm able and when I see some setups. Hopefully the below charts will provide at least an updated roadmap for what might be facing us this coming week. Watch for either confirmation, or not, of the pattern and I'll update as I'm able to.

Keene Little : 6/11/2007 12:13:45 AM

With the big move in bonds lately, and PIMCO's Bill Gross turning bearish, here's the updated daily and weekly charts that I've been showing for a while now. The daily chart shows what I hope to see--a choppy sideways/down consolidation over the next month before pressing higher to a Fib projection of 52.85 (correlation with a shorter term Fib projection if the pullback finds support near 50.00): Link

The weekly chart is to keep things in perspective. While the shorter term (daily) chart shows potential to top out around 52.85, the weekly chart shows a better projection to the top of its ascending wedge. With a little throw-over it could hit near 55 (5.5%) Link

Keene Little : 6/10/2007 11:53:13 PM

As I mentioned on Friday, gold has confirmed its bearish wave count by dropping below its May low and 200-dma. Now the 200-dma (near 660) should remain resistance so look to short it there if retested. Link

Keene Little : 6/10/2007 11:49:08 PM

And lastly the RUT, with the same potential bounce pattern this week should see support around 830 and a rally up to around 844 for a 62% retracement. The RUT tends to over throw its Fib levels so be careful of the extra volatility with this one, especially with the rebalancing going on with this index. Link

Keene Little : 6/10/2007 11:45:33 PM

NDX already looks a little more bullish as far as getting back above its broken uptrend line from March. But assuming it follows a similar bounce path as the DOW and SPX then we could see a test of the 62% retracement by Thursday. Link

Keene Little : 6/10/2007 11:33:23 PM

Same setup for the DOW (and the rest). Ideally we'll see the DOW pull back and then give us another rally leg for another test of its broken up-channel. If it pulled back to around 13350 (13342 would be a 50% retracement of Friday's rally) two equal legs up from there would be to 13527 for the retest on Thursday. This would also be a 62% retracement of last week's decline and would very likely get the bulls very excited, as 2nd wave corrections do. Link

Keene Little : 6/10/2007 10:53:41 PM

Opex week will be a battle. We'll have the bulls who are convinced that last week's selling wasn't even as bad as February's and it was a great buying opportunity. Friday's rebound convinced many that that is the right call. The bears will say this is this time, really. The high is in, and they'll be selling the rallies. Add opex to the fuel mixture and we could see some wild swings. Don't get get caught in the cross fire.

At the end of the day Friday I posted this SPX 120-min chart showing the bullish and bearish wave counts. My preferred count is the bearish one, in dark red, which says SPX has seen the high (same with the DOW but not so sure about NDX and RUT). We might get a little more up on Monday, a pullback into Tuesday and then a rip snorting rally into Wednesday, maybe Thursday. That would be the leg that convinces the dipsters they're right and the bulls that they were wrong again. Link

I'm hoping it will play out this way--nice 3-wave rally back up to its broken uptrend line for a kiss goodbye. It would be too perfect really and not likely to happen but if it does then it will set up a nice short play with a tight stop. I will not discount the possibility that the bulls are going to do it again but I am going to test them. But before that short play set up I want to see if we can nab a good long play (but maintain good stop discipline no matter which direction you're trading).

OI Technical Staff : 6/10/2007 9:59:59 PM

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