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September 11, 2006

Stock Market: CNBC Report
by Bill McLaren

CNBC EUROPE

LET'S START WITH THE FTSE 100 INDEX-DAILY CHART

Our strategy has been to assume this rally would go at least 90 days from the June low. Tuesday is the 90th day so any indication of a top after that date should be taken seriously. As I previously explained this is a weak trend up. The weakness of this trend is obvious as each new high is immediately reversed. The index has been unable to advance from a new swing high. There are now three marginal new highs, which was necessary to complete the pattern. Because the first 90-day period has expired and there are three marginal new swing highs we can look for evidence of a top in place or a resolution to this pattern of trend to the upside. Notice the April top was followed by a lower high that consisted of a 4-day rally and within 2-days the index was at a new low. You can see the last 30 days of rally into the April high was weak and is simply a smaller version of this current "pattern of trend." This will be resolved in one of two ways. Either a lower high similar to May of this year or price will move above the last high, come back one to four days and rest on top of that high and resume the uptrend. The index now has 4 days to move to a new swing high or a lower high is the probability and that appears quite possible. There are some turning points in "time" that could prove to be very significant. If September 17th is a vibration in time then that will lock in September 29, October 17 and a completion of a move in force on November 4th.

LET'S LOOK AT THE S&P 500 DAILY CHART

We have been studying the difference between the "pattern of trend" in the FTSE and the S&P. Now for the first time since the July low the S&P has pulled back below a previous high, an indication of weakness. Unlike the FTSE where every new high was immediately reversed. We had 1313 as the next resistance and the high 1314. This is now the same circumstances as most stock indexes. The index has 4 days to test that last high or there could be a lower high in place and a reversal in trend.

LET'S LOOK AT THE NASDAQ COMP DAILY CHART

There has been a 45-calendar day vibration since the high and the next time window is October 17th at 180 days from high and should be significant. My forecast called for this index to test the "low before the final high." This is the same point of resistance that has stopped many indexes recently, including the FTSE. If it can hit that higher level the index will correct and not go through it on the first hit. As with the other indexes we can look for a lower high or a possibly marginal new high up to the next "LBH."

CNBC ASIA

LET'S LOOK AT THE TOPIX DAILY CHART

A few weeks ago I laid out the vibrations in "TIME" for remainder of the year based upon the one-year cycle. The last timing date was 240 days on September 6th and that was the last high. The next vibration in that series is October 7th. You can see the high left a 3-day island or the fact that the high was an exhaustion of some sort could have ended the rally. This could indicate the last low (double bottom in uptrend) may not hold. My forecast called for the July high to be broken and a third thrust up to follow this break.

LAST WEEK WE LOOKED AT COPPER-LET'S LOOK AT THE DAILY COPPER CHART AGAIN as it has reached a critical point within the sideways pattern.

Last week a rally was obvious due to the struggling nature of the short term down trend. I indicated the rally was likely to test a previous high and if this were to develop into a bullish move up, the rally needed to exceed 4 days. The fourth day up was the high and the high was also a bit of an exhaustion due to the "3 day island" that has been left behind. In most instances a market will only show three tests of a support or resistance with a high probability the 4th test will go through. So logically the third test is the dangerous one and can fail and change the trend. There are only two tests of the low as the last low was all part of the same move down but this is clearly the third test of resistance. Seeing an exhaustion pattern at the resistance could be an indication of a failure.

LET'S LOOK AT THE ALL ORDINARIES AUSTRALIAN INDEX

The All Ords is also at a third test of resistance. This low started off with a very bullish pattern showing a higher low that developed through July and August. In fact the higher low turned into a base pattern that took 4 weeks to form, an unusually long time. The market move up out of the base but the first correction fell back into the base and was a sign of weakness for the trend. The next rally moved up to test resistance and has fallen below the previous swing high another indication the trend is not strong. The index needs to move to a new high within the next 4 days or a lower high could be in place and would indicate a test of the 4800 level. Let me put this another way. The pattern through August was very bullish but the move up out of that pattern has not been a strong as it should have been considering the size of the higher low and base pattern. So now we look for a lower high to develop this week and 4 days of rally without a test of the high could set up that lower high. Or if it can break away above the last high and show a counter trend low on top of that price it would indicate a new high for the bull campaign. Today the index has tested Friday's low and is a further sign of the weakness of the trend. The metals (as copper) will have an effect on this index and the metals look lower.

Bill McLaren
McLaren Report

Disclaimer: This message is for educational purposes only and does not constitute trading advice nor an invitation to buy or sell securities. The views are the personal views of the author. Before acting on any of the ideas expressed, the reader should seek professional advice to determine the suitability in view of his or her personal circumstances.

Copyright © 2004-2008 Bill McLaren

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