Market Analysis for Nov 3rd, 2003

After two days of sideways digestion, we're on the upside again. Purely from a technical perspective that doesn't surprise us in that none of the patterns were broken in Friday's very late session weakness. So there was no reason to expect a sharp decline, but there were reasons to expect an upside continuation and today we have it. The pre-opening was very strong, and then you had economic data that was stronger than expect. That propelled the indices even higher, and as we speak through the mid-session lull, the indices are starting to grind a little bit higher still.

That brings up an interesting question as to where they're going on the upside. Our next target is 1058-62 on the E-Mini S&P. As we speak we're at about 1059 with a 1060 high, so we're getting very close to what my work considers to be a critical, optimal target zone. In that case, anyone long from a micro perspective for the last day or so should be taking some profits up between 1058 and 1062.

As far as the E-Mini December Nasdaq goes, it, too, has had the same trading type of action, although a different type of pattern since last week. Nonetheless, it has broken to the upside, and is headed for new highs above the October 30 high at 1445. Our target is 1449 to 1453, at which point I think holders of long positions should be liquidating in part or in total because at that point my work is warning that we'll get some sort of downside pivot reversal from in and around the 1450 area.

As for subscribers to my QQQ service, the QQQs are trading in a pattern that is very similar to the Nasdaq, of course. Our optimal upside target for the QQQs is anywhere between 35.95 and 36.25. The spike in the last part of the day could overshoot to 36.35, but in general target zones above 35.95 should be used to liquidate into strength.

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