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Keene Little : 1/7/2009 12:01:45 AM

Wednesday's pivot table: Link

The price action since last Friday is either going to be a pause that refreshes or else we're seeing a topping pattern for the rally leg from Monday, December 22nd. The excessive amount of bullishness in the market combined with overbought indicators (and bearish divergence), not to mention a pattern that looks more like distribution over the past two days, has me thinking we're nearing an end to the past week's rally, if it didn't end on Tuesday. I'd certainly be in protection mode if long the market as there is the possibility the next leg down could drop to the November low, as shown in pink on the SPX 120-min chart: Link

But the pattern is not at all clear and there remains the possibility we'll see a bullish consolidation and then continuation higher (dark red) and that makes short entries tricky right here. Even credit spreads could get into trouble with a big move into opex which at this point looks probable. Bollinger Bands have contracted and the spring is winding tighter for a big move over the next couple of weeks. Don't let the market move against your position. The updated daily chart keeps the possible moves in perspective: Link

OI Technical Staff : 1/6/2009 9:59:59 PM

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