Thursday, July 20, 2006


Here is an hourly chart of the September S&P e-mini futures. I last commented on this chart yesterday.

I think the market will react to support at 1258, perhaps dropping a bit lower to 1255. After this reaction I am expecting a move to 1280.

I strongly suspect that the June 14 low at 1229 will now hold. This is a reversal of my view earlier this week that the market will drop to 1219 before rallying above 1300. What changed my mind?

Well, one important consideration is the behavior of the daily advancing issues number. Another factor is the fact that the war news late last week couldn't drop the market below 1229. This is an example which illustrates the "dog that didn't bark" principle. Finally, I am finding that yesterday's rally is not getting any respect from those who comment on the technical aspects of market action. Admittedly this is a thin reed upon which to lean but I feel more comfortable holding a minority view of the significance of yesterday's rally.

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