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Keene Little : 9/1/2008 10:38:43 PM

Tuesday's pivot table: Link

There's not much of a change to the daily charts I've been showing the past few days, even after Friday's loss that retraced most of last Thursday's big rally. Prices have essentially been chopping sideways to marginally higher for the past month. It leaves several potential patterns that could be playing out and I'll show 3 different ones for SPX, DOW and NYSE.

SPX dropped back down to its broken downtrend line from May on Friday and therefore is set up for a bullish resolution if it rallies immediately on Monday. I show the potential to rally in a 3-wave a-b-c move into opex up to 1350 or somewhat higher (dark red). But the price pattern leaves open the possibility we'll see price start to collapse at any time (pink) and therefore requires bulls to stay on their toes if playing the long side of the market. Daily SPX chart: Link

The DOW chart shows more of a sideways triangle pattern playing out since mid June and it requires only one more minor decline (11400 area) before it would be ready for a big rally up to the 12240-12250 area by opex (dark red). But, like SPX it could be ready for a decline right from here or after a relatively minor bounce up to 12K (pink). DOW daily chart: Link

The relatively minor bounce higher for the DOW is supported by the same potential for NYSE. The bear flag pattern shown on the NYSE chart calls for a rally up to a Fib projection at 8724 and the top of its flag by early this coming week. But Thursday's rally stopped at its 50-dma and a drop back below its last low near 8180 would be a sell signal. NYSE daily chart: Link

OI Technical Staff : 9/1/2008 9:59:59 PM

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