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Keene Little : 8/17/2008 10:16:52 PM

Monday's pivot table: Link

The consolidation in SPX since Thursday morning's rally looks like a bullish continuation pattern and as shown in pink on the 60-min chart we could see a rally up to either 1319 for two equal legs up from Wednesday (which is very close to the 50% retracement of the May-July decline at 1320.60) or up to 1334 where the 2nd leg up would achieve 162% of the 1st leg up: Link

If the bears start to overpower the bulls and start the market down almost immediately on Monday and SPX drops below 1283 it will be a heads up that the bounce off the July low ended last week and the next leg down has already started. This would be confirmed with a break below Wednesday's low near 1274 (shown in dark red). In the meantime the bulls are still in control of the ball and I'll be watching for evidence of where they fumble. Risks are to the downside now.

Not much has changed on the daily chart that I've been showing. The bounce off the July low continues to look more like a corrective a-b-c bounce with the c-wave forming the bear flag pattern since the July 28th low. The bounce either ended at last week's high near 1313 or else it has another high before it ends (up to the 1320 or 1334 area). Daily chart: Link

OI Technical Staff : 8/17/2008 9:59:59 PM

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