Thus far during the PM session, the rally in the e-SPU from 1204.75 to 1211.75 exhibits countertrend form, and as such, merely represents another feeble oversold rally prior to another plunge to new lows into the 1202-1200 next target zone. However, the ability of the index to hold above 1208, followed by a thrust above the intraday recovery at 1212, will be a constructive sign that a meaningful micro low in fact did occur at 1204.75, and that more recovery action should be expected to test and hurdle the nearest resistance line at 1213.25 on the way to probe yesterday's recovery high at 1215.25. A climb above 1215.25 will be considered a micro breakout signal that points the index to 1220/22. For the time being, the index must prove itself by remaining above 1208, and then by recovering above 1213.25.

MJP 08/26/05

Mike Paulenoff is a 25-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his E-mini S&P and QQQQ technical analysis and trading alerts. For more of Mike Paulenoff, sign up for a FREE 30-Day Trial to his E-Mini/Index Futures diary, or try his QQQ Trading Diary.