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Cautious on SPX

Although the equity markets really are not doing much, I feel very uptight right now. Why? Take a look at the enclosed daily chart of the S&P 500. Let's notice that today marks the third session of weakness, and the decline has pressed slightly beneath the rising 20 DMA (now at 1070) AND, more importantly, is testing -- perhaps leaning against -- the Jul-Oct up trendline (1061.80). So why am I so uptight? Well, in such circumstances, given the juxtaposition of the SPX and the above-mentioned important support factors, the market EITHER will ricochet off of the lines with power, or BREAK BELOW THEM, thereby triggering a potentially nasty decline (another 20 S&P points for starters). I really do not know which scenario to expect right now, but the bears have control of near term market direction, so I will go with a BREAKDOWN that violates the Jul-Oct trendline on the way to 1045/40 next. MJP 10/27/09 1:25 PM ET (1062.56)

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