Keene Little : 3/23/2008 10:18:46 PM
Monday's pivot tables: Link
There's been no direction to this market for the past two months and the challenge is figuring out whether that's about to change or not. The SPX 60-min chart shows the key levels, at least for a short term move, are the highs and lows we saw last Wednesday and Thursday (note that each of the morning high and low did not hold). A break above 1342 could see a move up to at least 1380 (for two equal legs up from Thursday's low). Link
Conversely, a break below 1295 could see a move at least down to 1285 for two equal legs down from Wednesday's high. Keep an eye on the trend lines to see how price behaves around them. A downside break could get nasty or it could chop lower and the daily chart shows the key levels to help guide us for market direction: Link
Then the SPX monthly chart shows why a downside projection to 1230 makes sense. If we see a decline to that level and it doesn't hold then it could start to get ugly. In the meantime, any rally that holds could see a move up to the downtrend line from October, currently near 1420. Link
There's clearly potential for this market to move but right now both sides are having difficulty getting out of a wide trading range and if for no other reason it tells us to be cautious about lack of follow through in both directions and getting whipped around. It's a wide range but anything between SPX 1388 and 1257 is subject to more of the same chop and whipsaw. Stay cautious.
One other chart I'll be watching carefully is the semiconductors (SMH). It's consolidation pattern looks bearish to me and I expect to see another leg down in this: Link
. That could be telling us the broader averages will do the same. A break below 27.83 should be a sell signal whereas a break above 30.24 would negate the sideways triangle pattern and would be a buy signal.