Stock Market: CNBC Report

By: Bill McLaren | Tue, Feb 8, 2005
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CNBC EUROPE

LET'S TAKE A LOOK AT THE S&P DAILY CHART

Last week it was up to the price action to indicate the next direction as the index had come down to calculated support. I indicated if the index did not go to a new low with in two days "we could assume a higher low in place and it would be in a position to rally." Moving above the three day rally would give a bullish picture by eliminating any indication of trending down. As I explained last week, the normal counter trend when this index is trending is one to four days. so if the index could move up above the three day rally, it would do two things.

First, it would eliminate the probability of trending down by showing a rally in excess of 4 days and second, it would also (in this case) leave a one day counter trend down behind in its dust. Remember, one day counter trends can indicate fast trends in progress.

So the index came off the low with a one day counter trend and last week it ran up to the "obvious" resistance of a previous high and showed another one day counter trend. Notice the space between the low of the last one day counter trend and the previous high. That spacing represents the fact that support came in at a very high level.

Now the question becomes, will the index stop at the old high and sell off back into this 1217 to 1180 level as my forecast indicates or will it go directly to the 1260 to 1270 price objective. I have some cycles that could be referred to as resistance in "time" and could be viewed as one would view resistance in "price." Those cycle are Wednesday through Friday, so if the index can move up past this week - then I'll be forced to reconsider my forecast. But for now it looks like the index should test the previous high at 1217. The multi day price action at that "obvious" resistance will predict the future for the next month.

LET'S TAKE A QUICK LOOK AT THE FTSE 100

The FTSE looks like this could be a powerful move up. If you look at the moves down in November and in January, they were both weak trends down and significantly fewer points down. That leads me to believe this move up can get legs and possibly run to the 5300 level. I'll have a full report next week on this index.

CNBC ASIA

LET'S LOOK AT THE HANG SENG INDEX

This index continues to consolidate the move down. There was a small, possible, false break pattern for a low - but the rally stopped at the previous low - a very important resistance level that could indicate the trend is still down. but keep in mind the price level of the low is well up into this trend and from the larger picture this is still a strong up trend. The rally was 5 days and the move down has been 4 days, so far and is trying to establish a higher low and that would be bullish. In fact, it must move up now or a retest of the highs will start to look unlikely. There are some cycles that expire on the 14th or 15th of this month that need to be monitored.

NOW LET'S LOOK AT THE TOPIX

This index has a very similar pattern to the NIKKEI, just a bit less volatility and therefore a bit easier to analyze. As you can see the index came up to test the previous highs and fell back 8 days. It has now rallied back up to that high in 9 days and done so in a weak manner of trend. It can still trend upwards but the odds have dropped due the nature of this 9 day rally that has been weak. That was not the pattern of trend I was wanting to see. If Friday's low doesn't hold, then I would need to give up on my forecast the index was going to trend upward.

NOW LET'S LOOK AT THE AUSTRALIAN ASX 200 INDEX.

This is one of the strongest markets in the world and I so much love living in this wonderful country I find it difficult to view anything here from a negative perspective. But, ignoring my bias, this does look like an exhaustion leg of this bull campaign. The price level that is a good objective for the ALL ORDINARIES INDEX is between 4190 and 4280. For a technician like myself that is a very large window in price. But that is the best I can do for now. As the indexes moves up into that zone of resistance, any indication of trending down, as a lower high, should be viewed with great caution. I am not, under any circumstances, recommending anyone short a high momentum trend as this has been. That type of trading is reserved for novices. Just be aware of your long positions as the index enters that price zone and we'll see if the price action gives cause for further concern.


 

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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