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Keene Little : 7/22/2007 10:39:12 PM

Looks like a very quiet Sunday evening in futures land. There's not much to add to Friday night's charts, re-posted here:

Monday's pivot tables: Link and Link

The DOW's daily chart shows the bullish wave count that calls Friday's low as the end of the 4th wave pullback (the correction within the rally from June 27th) with a final 5th wave to a new high remaining. The bearish wave count calls Thursday's high as the end of the rally and Friday's drop was just the beginning of a long way back down. It takes a break below 13670 to prove the bears have taken the ball away from the bulls. Upside potential is first to 14052 and then 14208. DOW daily: Link

Its 60-min chart shows a closer view of what to watch for on Monday. If we get another leg up to the bounce that started from Friday's low, watch for two equal legs up (13935 which is near a 62% retracement at 13931) for signs of topping and then try a short. If prices head right up through the 78.6% at 13966 then be looking for new highs for the bullish wave count. Any drop back down below Friday's low should be solid confirmation that we've seen the highs (including if we drop out of the gates on Monday). 60-min chart: Link

The same is true for SPX--Friday's decline either finished the 4th wave correction (green wave-iv on the daily chart) and now we'll get a final 5th wave rally to a new high, probably around 1562-1563, or else the top is already in and a bounce on Monday will be followed by a drop below Friday's low. Link

The 60-min chart shows the bearish expectation for a bounce on Monday to set up a very good shorting opportunity (MOAP--Mother of All Puts) for a position kind of trade. Two equal legs up in the bounce off Friday's low would be near 1544.60 which is right on top of the 62% retracement. Any move above 78.6% (1549) would say we're in the 5th wave to a new high. Link

NDX had a cleaner topping pattern on Thursday and the drop from that high left a clean 5-wave decline. This is the one that has me leaning toward the bearish camp and I like the setup for a short play on Monday. The daily chart shows an evening star reversal candlestick pattern at trend line resistance and Friday's decline was impulsive, indicating a change in the trend to down. Daily: Link and 10-min: Link I zoomed in even closer with the 10-min chart to show how Monday could set up (hopefully we won't get a gap down on Monday and be forced to chase it lower).

The RUT has either a choppy month ahead as it works its way a little higher or else its rally is also done. By dropping below the July 11th low near 834 it gave a sell signal on Friday. RUT daily: Link

GOOG had an interesting day on Friday--gapping down nearly $37 before recovering some during the rest of the day. By its wave count, which I was calling complete to the upside on Monday, July 16th, the gap down should be the kickoff to a much larger decline. As such I do not expect to see the gap get closed. In fact I'd be surprised to see even 50% of it get closed ($530). It should stair-step lower until it's ready for a larger bounce. The daily chart is just speculation at this time as an idea of what may play out next. It will take a little more price action following Friday's gap down before I'll get a better idea of what comes next. Link

OI Technical Staff : 7/22/2007 9:59:59 PM

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