Keene Little : 2/4/2008 12:11:39 AM
Monday's pivot tables: Link
The DOW 60-min chart shows price stopped just shy of the top of its parallel down-channel for price action since the October high, currently near 12770: Link
. I'm showing the possibility for price to either decline directly from here or rally just a little further before pulling back from the top of its rising wedge from the Jan 22nd low (watch for a potential throw-over finish).
It's possible we'll see a pullback to its uptrend line and then one final rally leg up inside the rising wedge (shown in pink). As indicated with the key level at 12900, any rally above that would suggest we'll see a rally up to the 13200-13300 area (it needs to get above the top of the rising wedge). The daily chart shows the downtrend line from October that would be an upside target for a continued rally: Link
If we do see a pullback the bulls will want to see the uptrend line from October 2002 hold (near 12100), or possibly as low as the mid line of the parallel down-channel, currently near 12K. Any break below 11800 would be a heads up for something potentially a lot more bearish, confirmed with a break of the Jan 22nd low near 11634.
As labeled in dark red, a break below the January low would mean we could be in the 3rd of a 3rd wave down and it would be a hard selloff. A failure to lock in a deal to save the bond insurers would be a reason for that kind of panic selloff so keep your ears on the tracks and listen for that train.
The SPX 60-min and daily charts show the same setups--the 1400 area looks to be resistance by the trend lines and 1406 is the November low. At 1416 is the top of the gap left on January 15th. And as can be seen on the daily chart, a rally would find potential resistance near 1430 (50-dma and 62% retracement, and then near 1470 where the downtrend line from October is currently located:
The RUT shows a little space available for a continued push higher--a Fib projection for two equal legs up from Jan 22nd (for a potential a-b-c wave count as shown on the 60-min chart) at 740.49, matches the top of its parallel down-channel from October (parallel attached to the December high):