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Jeff Bailey : 9/9/2007 10:44:18 PM

Nikkei-225 ($NIKK) Link ... Down 341 points, or -2.11% at 15,782.

Jeff Bailey : 9/9/2007 10:41:06 PM

Japan: April-June Revised Real GDP -0.3% Q/Q
1st Contraction In 3 Quarters

Keene Little : 9/9/2007 10:06:45 PM

Monday's pivot tables: Link and Link

Friday night's commentary updated for tonight:

As I showed on the NDX 60-min chart at the end of the day Friday ( Link ) it looks like it's in the middle of a 4th wave correction that might give us a little pop on Monday morning before heading lower to finish a 5-wave move down from Tuesday, Sept 4th (or it might just head lower right away and not give us a little pop first and with futures down Sunday night this is looking like a more likely possibility at this point).

After the 5-wave move down completes (assuming we'll get the new low) then we should get a larger bounce to correct this past week's decline. There is a more bearish possibility that the pattern is a 1-2, 1-2 wave count to the downside and that calls for a very strong decline from here before it then stair-steps lower through the coming week (shown on the SPX chart below). So any selling early Monday will be tricky--it could gap down and keep running lower or it might make an early low and do an immediate reversal.

Looking over the SPX chart I could easily argue two different counts, both bearish until I see something change in the price pattern. The first one is the same as the one on NDX (dark red) but the pink one is more immediately bearish as it counts this week's move down as a 1-2, 1-2 wave count which means Friday afternoon was just the start of a stronger 3rd of a 3rd wave down: Link

I don't show a small bounce first on Monday but that remains a possibility. The dark red count calls for a low near SPX 1440 followed by a bigger bounce into mid week, perhaps up to the 1470 area, before tipping back over. The more bearish pink count calls for a hard decline on Monday that then stair-steps lower through next week. I used Fib price and time relationships between the waves to make a projection for each wave count: Link

Because of the small degree of the wave count, the difference between the two becomes somewhat neglible by the 3rd week of the month. What's interesting is how the counts landed on September 18th which is of course the next FOMC announcement. The pink count shows a positive reaction to the announcement while the dark red count shows a negative reaction (initially).

This is of course all speculation at this point but it will be interesting to see how Monday unfolds and then watch how the wave pattern develops as we get closer to the 18th.

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

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Jeff Bailey : 9/9/2007 4:23:47 PM

Closing Internals found at this Link

Jeff Bailey : 9/9/2007 4:18:42 PM

Closing U.S. Market Watch found at this Link

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