Keene Little : 7/27/2008 10:10:26 PM
Monday's pivot table: Link
The consolidation on Friday has me thinking we'll see a quick pop up on Monday morning but it could get reversed quickly as selling takes hold again. SPX could bounce up to 1264 (it closed Friday just under 1259) to complete the consolidation pattern from Thursday afternoon's low to be followed by another leg down to match last week's decline. The downside target would be near 1220 which is also where its broken downtrend line from May 19th is currently located. 60-min chart: Link
If SPX is able to rally above 1264 on Monday then the next upside projection is 1271 which would coincide with a 50% retracement of last week's decline. As shown on the 60-min chart, a continuation below 1220 would be bearish and a move down to the 1170 area would be likely. Otherwise a pullback to 1220 could set up another strong rally leg into August (pink).
If we're starting the next big decline then SPX will only get a bounce off the 1170 area and then proceed lower but for now I'll continue to show on the daily chart that a new low will be followed by a big bounce into September, as shown in dark red on the daily chart: Link
NDX continues to chop up and down inside what could be a bear flag pattern. I could easily argue for another leg up inside the pattern to perhaps 1900 (pink on the daily chart) or a new leg down to start from here (dark red): Link
. It needs to hold its uptrend line from October 2002 which is where it's currently finding support. That line is near 1796 on Monday.
Back to SPX, whether the market bounces back up from here, or from a little lower around 1220 or from even lower around 1170, I think the 1320 area will be the upside target. For now I need to wait for some more price action to help figure out which scenario is playing out. At least for Monday/Tuesday I think we'll see lower and if that happens then I'll have a better feel for what comes next.