Stock Market: CNBC Report

By: Bill McLaren | Mon, Nov 8, 2004
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CNBC EUROPE

LET'S LOOK AT A WEEKLY CHART OF THE S&P INDEX

We put this chart up a few weeks ago. The index retraced ¼ of the previous range and did so with a weak move down as described here last week. The normal price vibration would be to extend that range by ¼. That gives an objective of 1260 for this drive with some resistance as 1212. And this drive could run until the end of January. The exhaustive nature of this trend leaves lots of probabilities. I had previously indicated this could be a high by cycles, but this time period is no longer significant considering the larger picture of a weak trend down now being complete.

LET'S LOOK AT THE DIALY CRUDE OIL CHART WE PUT UP AT THE BEGINNING OF OCTOBER.

I indicated there were three places in "time" for a high. A small window in time - that appears to have brought in a high. This is followed by the 19th and 29th of November. In order to confirm the trend was complete it had to correct for that 4 days which it has done. In order to confirm the whole bull campaign is complete, while in an exhaustive style blowoff trend, can be done by comparing previous corrections in both price and time. When the previous correction is exceeded in price and time (this technique only applies in a fast moving and accelerating markets) you can assume the next rally will fail. The previous correction was 7 days and this has fallen 8 days and a retest on the 10th day. They could both be seen as 7 or 8 days, not enough days to consider an overbalance in time. The previous decline was 7.05 and this is 7.15. Considering "time" can't be viewed as "overbalanced" yet, I can't view price as "overbalanced" either as it is too close with a mere 10 cents difference. Another new swing low would be a confirmation the bull campaign is over. But for now it looks like a rally of some sort. It could be a lower high or resume the trend.

CNBC ASIA

LET'S LOOK AT THE HANG SENG DAILY CHART

Last week we discussed how the index had shown an island reversal at the last low. Island reversal represent exhaustion movements. And this movement appeared to exhaust the sellers. This is always apparent if there is no follow through to the panic move down and that was the case here. The index also showed a "false break" pattern which can act as a springboard to a new high as has occurred. Over eighty percent of all important highs and lows are "False Break" patterns.

My forecast back in August called for a trend up into the 12th (+ 2 days) for a high. There is now a broadening pattern present, which is also a distribution pattern and can represent a pattern for a high.

The time period of 90 days is a cycle that repeats in all markets. If you will recall the high in February was a 90 day blowoff trend. This was followed by a 90 day move down and since the trend was up at the time, this 90 day block in time had the probability of being a counter trend in an on going bull campaign. That circumstance would then indicate a move up that would exceed 90 days and when the index went 90 days low to low it gave the strong probability of putting on a 90 day move up and hence my forecast the index would rise into the date of Nov. 12th. The index should be able to exceed the 14,000 level on this drive. At this time I can't tell you the significance of the high that should appear in the next two weeks. Maybe next week I will be able to qualify the significance of the cycle expiration and the pattern of this trend.

LET'S LOOK AT THE AUSTRALIAN ALL ORDINARIES INDEX

This is the strongest market in the world. Last week I said the index was in an exhaustive style of trend and would move vertically into the date of November 14th. It then becomes at risk of a reversal. Due to the magnitude of this move I'm not to sure if a distribution pattern will follow or just a fast reversal. The normal pattern and my forecast calls for a fast reversal but also a retest within 30 days and possible the start of a larger topping pattern. This scenario will depend upon how the index terminates this drive into the 14th. of November.


 

Bill McLaren

Author: Bill McLaren

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.

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