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Simple Correction within Ongoing Upmove
By Mike Paulenoff, MPTrader.com

With a little more than two hours left in today's session, the E-mini indices have slowly grinded to the downside. But when you look at the net decline, which is now down 3 points for the S&P, 7-8 for the Nasdaq and 18 points for the E-mini Dow, after yesterday's explosive move and in relation to the moves that started last week (for instance, at 1120 in S&P up to nearly 1160) the move back down to 1152 doesn't seem to me to be too significant.

In the last 10-12 hours of actual trading from yesterday afternoon, the indices worked off their overbought condition and are nearly oversold. So you have a move in the S&P since January 29 from 1120 to 1159, and it pulled back to 1150 on today's low, and they're oversold already. So, here's where things get kind of interesting. Both the pattern and the underlying technicals argue that this is a simple correction within the ongoing upmove that started a week and a half ago.

If that's the case, then somewhere around 1150, the March E-mini S&P is going to take off. And my next upside target, which should be the final thrust in this upmove from 1120, is1160-63. That's where I would be lobbing out whatever intermediate-term positions I was holding.

At what point on the downside would we need to get to where we would stop expecting a rally? Well, 1148 is really where it broke out yesterday after Greenspan first started speaking. So I would say under 1148, maybe down to 1147, that is the worst case, and that is where the E-mini March S&P would arguably be at the point of no return.

So, right now we're at 1152. 1150.50 is the low. 1148-47 is the cut-off point, and 1160-63 is the upside target.

With regard to the QQQs, they're trading similarly in that the Qs yesterday hit a high of 37.67. They made a marginal new high this morning at 37.70, but basically you have a pullback into the 37.40 and 37.30 support areas. The 37.40 area is the neckline of an inverted two-week head-and-shoulders base pattern, give or take a few points, where the Qs have to hold to preserve the near-term bullish pattern.

Secondly, 37.25 or so represents the trendline off the early February lows, under 36.50. So the window of important support near-term for the Qs is 37.40-.25, and if that is taken out, then I would have to say we're going for a little ride down to 37.02 again, which was the low right before Greenspan released his testimony yesterday.

In the event that 37.40-.25 holds, we need a rally back above 37.50 to trigger what I think will be a surge to 37.80 and then even perhaps 38.20.

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