1000 uses for a dead spi bear wednesday, page-2

Dear Subscribers,

Wanted to give you a technical market analysis update intraday on September 11th, 2007:

Heavy buying hit the markets hard at the open, driving prices higher from the get-go. We mentioned this possibility last night, but emphasized the risk imminent in the market should the PPT not intervene this morning. While it is too early to pinpoint the source of the buying, it is likely the PPT kicked things off, which led to short-covering, making sure markets reacted confidently on this historic and tragic anniversary. Our DP and SP figures tonight will give us the definitive explanation.

This rally doesn't surprise us, as we have seen markets rally hard in the face of scheduled fear points for years. This is part of the new paradigm of PPT active intervention.

As far as the technical damage to the Bearish scenarios at this time, this rally has done no damage. From an Elliott Wave perspective, what is occurring is the morphing of wave {2} up shown in last night's report from a .382 retrace of the decline from September 4th through September 10th to a phi or .618 retrace. That targets 13,313,71 in the Dow Industrials on the upside. September 10th's intraday rally ends up being wave {a} up of an {a} up,-{b}-down, {c} up affair for wave {2} up. Monday's late afternoon decline was wave {b} down, a three wave move if you look at the 10 minute charts at stockcharts.com, and today's rally is wave {c} up. While {c} up is incomplete at this point (11:00 am eastern time), it does look like a developing Rising Wedge, which if so is a termination pattern. We will show these patterns in updated charts tonight.

There is always the possibility that Bullish scenario # 4 shown over the weekend is occurring, as nothing has occurred to eliminate that possibility. The Industrials would have to drop under 12,517 to eliminate scenario # 4. But at this point, we do not believe that is occurring. Our feeling is that one of the first three scenarios is taking place, and that today's rally is merely a completing corrective rally of the decline that started September 4th. If so, a resumption of that decline would likely start over the next few days, and it would be nasty.

Best regards,

Robert McHugh, Ph.D.