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Keene Little : 9/7/2008 10:09:41 PM

Monday's pivot table: Link

Everyone likes a good bailout and the US government has completed a whopper of one. Equity futures are up huge (ES +33 and YM +250 as of 9:00 PM) so it's looking like we could get another 300-point day for the DOW. Just another bear market rally so don't get all bullish on the market here (let it play out for a great short play setup).

At this point it's looking like the pink wave count I've been carrying on the SPX daily chart, pointing to another rally leg as part of a larger A-B-C bounce off the July low, is going to play out. Two equal legs up from July gives us an upside target of SPX 1330. The 200-dma is at 1355 and the downtrend line from October is near 1370 so those are the upside potential levels for a long trade if you can get in tomorrow (and not get whipped out by a large pullback).

On Friday I thought we'd see a bounce early this week and that 1261 would be resistance but with futures at 1274 I'd say that resistance level won't mean anything. The uptrend line from July is currently near 1280 so that will be the first line of resistance if the cash market continues the overnight rally. Higher than 1285 and I'd say there's an excellent chance we'll see the rally extend into next week (opex) but obviously not in a straight line (the month is going to be very volatile). 120-min chart: Link

The daily chart shows the pink wave count as an A-B-C bounce off the July low with Friday's low completing the b-wave pullback: Link . The c-wave should be a sharp rally and that's certainly what we've got to start the day on Monday. The risk for the long side is that the rally might be over in a flash and strong selling will follow. But if it makes it over 1285 then we should be good for higher (after a steep pullback to correct what looks like will be a strong rally on Monday).

As for the S&P futures, ES has stopped at its downtrend line from May, at 1274, so that's the most immediate hurdle to get over. ES daily chart: Link

OI Technical Staff : 9/7/2008 9:59:59 PM

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Tab Gilles : 9/7/2008 8:38:46 PM

Paulson Does It!!! The largest nationalization in U.S. history, the U.S. Treasury took control of Fannie Mae and Freddie Mac. Link Link

Let's see what the Dollar does now? Link Link Link

How will commodities react? Link

Hurricane Ike is on the way. Link

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