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Keene Little : 10/28/2007 11:40:56 PM

Here's the daily chart of gold (December contract) showing the parallel channels I referred to in my last post--the tops of both intersect just above 800: Link . Gold is already up to 796 this evening and climbing so it's looking like it could make it up to the round number $800 (and potential resistance just by that number). This should be tough resistance and I'll be watching it closely for the next shorting opportunity since gold should be ready for a sharp reversal (the kind that's hard to chase to the downside). It's a risky trade though (catching rising knives) so trade carefully if trying it.

Keene Little : 10/28/2007 11:28:03 PM

Monday's pivot tables: Link and Link

I got stopped out of my gold short at 792. At this point I'm watching a couple of different levels to see how it might set up from here. First there's the daily R1 at 793.90 which got tagged this evening but the daily R2 and weekly R1 are near 800 as are the tops of a couple of parallel up-channels.

The wave pattern still looks good for a completion of the gold rally very soon (and the excessive bullish sentiment also calls for a reversal soon). The rally from last week has gone parabolic so as soon as the steepest uptrend line is broken, confirmed with a break below 788, I'll be looking for a retest to get short and will call it out (hopefully during regular trading hours). I'm also watching for a break of the RSI uptrend line on this 60-min all-hours chart: Link

Keene Little : 10/28/2007 10:56:11 PM

The choppy price pattern in equities continues to have me leaning towards the possibility that we'll see a rising wedge into Wednesday's FOMC announcement, as depicted on this DOW 60-min chart: Link

This pattern assumes we'll get another pullback on Monday before rallying into the Wednesday high. This is obviously speculative since I'm not sure what we'll get on Monday. But it will be interesting to see if this sets up since it would call for a steep and hard selloff following the FOMC.

The SPX 60-min chart shows the same rising wedge idea as for the DOW (same for RUT) for the bearish wave count (dark red). I also show the bullish wave count (green) on its chart what a stronger rally might look like this week which could take it back up for a retest of the October high (showing the possibility for an an initial hesitation in prices following the FOMC and then a final leg up to complete the rally): Link

Keep in mind that a rate reduction by the Fed would likely mean they see more trouble ahead (credit crunch, slowing economy) and the stock market is not going to like it even if it first reacts positively to the cut. The euphoric rally following the Sept 18th cut was given back on this October pullback. Our savior (the Fed) is going to look more like Clark Kent than Superman by the time this is over. Either that or Superman surrounded by kryptonite, otherwise knows as a credit contraction.

NDX has been stronger than the other indices but it's starting to show the same potential for a rising wedge for its 5th wave (called an ending diagonal and common for 5th waves), shown in green: Link

Again, the additional choppy rise is speculative but would fit well for the pattern (and shows a brief rally following the FOMC before rolling over for good). A break below 2117 would say we've already seen the high.

OI Technical Staff : 10/28/2007 9:59:59 PM

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Keene Little : 10/28/2007 9:57:41 PM

Monday's pivot tables: Link and Link

I got stopped out of my gold short at 792. At this point I'm watching a couple of different levels to see how it might set up from here. First there's the daily R1 at 793.90 which got tagged this evening but the daily R2 and weekly R1 are near 800 as are the tops of a couple of parallel up-channels.

The wave pattern still looks good for a completion of the gold rally very soon (and the excessive bullish sentiment also calls for a reversal soon). The rally from last week has gone parabolic so as soon as the steepest uptrend line is broken, confirmed with a break below 788, I'll be looking for a retest to get short and will call it out (hopefully during regular trading hours). I'm also watching for a break of the RSI uptrend line on this 60-min all-hours chart: Link

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