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To: hawkeyefan who wrote (139786)	12/30/2006 11:56:39 AM
From: skinowski	Read Replies (1) \| Respond to of 209892

SPX is some 8 days away from a multi-year high. The uptrend is intact. There are some momentum divergences developing over the past couple of months on the daily and weekly... but no confirmation as yet. The decline since 12/18 so far is strictly a three-waver. The 50dema is near 1395 -- and the 200dma (simple) is just about a 100 points below the current price. There are no meaningful lower lows in sight. OTOH, the price action is stretched, and it is becoming more volatile - and maybe ED-like in appearance. The sentiment is very bullish (MC's favorite Citigroup's "panic" level measurements notwithstanding -g). The COT is decidedly bearish: softwarenorth.net Hussman (as I posted a day or two back) is quoting a study where only 1% of money managers were bracing for a more than a 10% correction next year.... which I find to be totally shocking. hussmanfunds.com NDX, of course, is more interesting from the short side. On NDX, the momentum actually seems to be changing. The first few days of the New Year (best wishes to everyone!) promise to be interesting.

To: hawkeyefan who wrote (139786)	12/30/2006 12:19:07 PM
From: Henry J Costanzo	Read Replies (1) \| Respond to of 209892

hawk...from a strict EW point of view, ...guess we could see SPX pullback all the way to the 1320s without "finishing" the rally. My stabs at EW counts have us now in a iv down off of the 9/11 low...The top of the corresponding 1 up...which cannot be overlapped....is 1324.89. However, anything that severe would certain raise questions...at the least...about the rally. The normal expectation here would be a pullback to no more than the bottom of the preceding 4th of lesser degree...and that's 1381.45. Beyond that would raise red flags IMHO...Also, TA-wise, any break below the 50dMA which has underlain the entire rally since last summer would raise red flags..(50d now at 1397 and rising). Re NDX...I don't try to count that..but I'd watch particularly here the ability to hold above last Tuesday's low...and the ability to bounce above the 50dMA it's been playing around with the past week or so.....I would not, at this stage, exclude that the pattern over the past month may be bullish.. Re that SMH wedge...I, too, wouldn't touch it UNLESS/UNTIL it breaks above the upper line of that wedge. Action here, btw, should be very relevant to action in the NDX...