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Substantial Correction
By Mike Paulenoff, MPTrader.com

After yesterday's enormous up-move -- and I say that not in terms of just pure points but in terms of the relentlessness hour-after-hour with no selling pressure -- today is a different story. Believe it or not, as powerful as yesterday seemed, keep in mind that the E-Mini S&P, for instance, has retraced at its low this morning at 1052. It had gone down 8 points, or 40-42% of the entire upmove from Tuesday's low at 1041 , into last night's Applied Materials (AMAT) earnings report high.

So, we've had a pretty substantial correction, and after hitting 1052 this morning, we've rallied back to 1056-56 ,. When all is said and done, this particular bounce to me doesn't have the feel that it had yesterday when the market just felt like it wasn't about to give up.

We could still take off and go crazy on the upside, and in fact my work is arguing for another up-move that takes out 1060 and retests last Friday's highs at 1064 ,. The question is: Do we do it right from here, having made a low at 1052 in the S&P, or do we loop around and go down to 1050?

Right now it appears to me there's a much better chance that we can't seem to move directly higher and that we loop around down to 1050, give or take a point, and then turn from there and take off.

In the E-mini Nasdaq, a similar pattern has developed. The market has come down about 40% into today's low at 1430. We're trading right now at 1436. There doesn't seem to be much oomph off that turn at 1430, and my suspicion is we're going to go down into the 1426-25 area, hold there, and loop around and take off to retest that 1450-60 area from last week's highs.

As far as the QQQs are concerned, after hitting a high last evening on the AMAT earnings reports at 36.10, the Qs have pulled back to a low so far of 35.55 and hit that twice. Having said that, though, the rally to 35.75 hasn't exhibited all that much gusto, and it looks to me that like with the other stock indices the Q's are going to loop around, break 35.55, go into the 35.50-.45 area, before turning to upside for a run to that 36-36.10 area again.

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