After hitting new reaction lows this morning at $48.05, oil prices have reversed to the upside into the $49.40 area, which we can see is the coordinate of the nearest resistance line off of the May 10 high. My near-erm work argues for an upside penetration of the trendline, and continuation that tests the May 18 high at $50.98.

05/23/05 Noon ET $49.28.

Meanwhile, the e-SPM hit a new recovery high this morning at 1195.25, before declining into the 1190.50 area, which my work argues is the start of a two-way "trade" that corrects the near-term overbought condition that has developed since the May 13 low at 1146.75. At this juncture, a decline below 1190 is needed to trigger initial sell signals, while a break below 1185.25 is needed to trigger downside acceleration towards 1175/70.

05/23/05 Noon ET 1193.50

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