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Keene Little : 4/20/2008 11:35:11 PM

Monday's pivot tables: Link and Link

The VIX gave us a potentially important signal on Friday. It dropped down to its uptrend line from December 2006 through the June 2007 low. The uptrend line from June 2007 had been supporting VIX at each of its declines since last October but it has now dropped down to its slightly longer term uptrend line: Link

As noted on the chart the hammer candlestick at support is a potential reversal signal, to be confirmed with an "up" day on Monday. An up day for VIX would of course be a down day for the stock market. It's not a prediction but a warning. And while the VIX is at potential support we know that SPX is at potential resistance at its February 1st high: Link

If the market can rally a little higher on Monday we should see SPX tag its downtrend line from October, currently near 1412 and a Fib projection at 1415 for two equal a-b-c moves up from March 17th. If the bulls really get excited then they could push SPX up to its 200-dma near 1439. But I'm guessing 1415 will be about the limit of its bounce and I'll be looking for a short play there. It could coincide with the Transports reaching trend line and Fib resistance just under 5150.

The SPX 60-min chart shows a little closer view of how price could play out from here: Link . Any drop back below 1357 would say we've seen the top for now but until that happens I'm hoping we'll get one more push higher to 1412-1415. That would be about a 12-15 point rally from Friday's close.

OI Technical Staff : 4/20/2008 9:59:59 PM

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