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Keene Little : 11/11/2007 10:44:49 PM

The patterns in the different indices are very similar. It's questionable whether the strong decline at the end of the day on Friday will continue or if it was just an exaggerated move before the weekend. I've got two scenarios I think could play out here and the DOW shows one while I show the other on the SPX chart (dark red). On the DOW chart I'm showing the potential for a choppy decline in what could be a descending wedge into a Monday/Tuesday low that would set up a stronger bounce: Link

The SPX shows a larger 4th wave correction that will form before another leg down to finish a 5-wave move down from Oct 31st: Link . This sideways triangle 4th wave idea calls for a brief rally on Monday and then the 5th wave down into perhaps a Monday afternoon/Tuesday morning low to then be followed by a rally into the end of the week (opex rally?).

The scenario that's not shown on either chart, but noted on the charts, is a continuation of the hard selloff. A break below SPX 1415/DOW 12800 would tell me that we could be in the middle (start?) of panic selloff (1987 style). On the flip side is a more bullish possibility that could be triggered with a rally above the key levels noted on the charts (DOW 13446/SPX 1493). One bullish possibility that I showed Friday (not that I believe it yet) is shown by this weekly DOW chart: Link

Keene Little : 11/11/2007 10:08:42 PM

Monday's pivot tables: Link and Link

e-mini futures contracts you'll see traded on the Monitor and the current front month:
DOW 30 (YM), December
S&P 500 (ES), December
Nasdaq 100 (NQ), December
Russell 2000 (ER--may be different on your charts such as ER2), December
10-year Note (ZN), December
30-year Bond (ZB), December
Gold (YG), December
Silver (YI), December
Oil (QM), December

Approximate futures premium over cash (December futures):

YM -- +18
ES -- +4.50
NQ -- +10.00
ER -- +2.50

OI Technical Staff : 11/11/2007 9:59:59 PM

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