Stock Market: CNBC Report

By: Bill McLaren | Tue, Nov 29, 2005
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Last week I indicated the index would continue to struggle upward for another week or two. It is not unusual for a market to temporarily exhaust with spike up. But if the trend is to remain strong there needed to be no downside follow through and there wasn't any. But once there is an exhaustion the index will usually consolidate that spike with a struggle upward. You can see the rally was three days and is still at the high of the spike from the week before. There is some resistance marginally above 5700 but the resistance to end the trend appears to be 5860 to 6000. That is a rather large window of 140 points but until I can get a better grip on the "TIME" for this move or see another wiggle or two that is the best I can do. A move up into the end of January ( 24 th +-3 days) could end this bull campaign and if not then it could go another 90 days into April.

You can see the exhaustion on Nov 24 th and moving above that level would be helpful to the trend. I still believe the odds favor further congestion or struggle upward until this last move up is consolidated. Volume last week was very light and is a problem for the trend and does give bit of risk until a large volume up day shows some buying interest. If it cannot move up Monday or Tuesday the consolidation will continue for another week. If it can get a two day move up the up trend will resume.


I have been saying the index was going up to 1270 and the only question was will the index continue and move above the 1320 level as suggested by the 20 and 60-year cycles. The index hit a high on Wednesday at 1270. The index got to that price with a bit of an exhaustive move up. That exhaustion is easily seen by the 5 days vertical move that pulled away from the trend line and barely moved back into the previous days range. After this exhaustion is consolidated there should be another run. If the index forms a top below 1277 it can be serious. I don' know if that will occur. At this point I'll stay with the trend.

I have also been saying I though the trend could go until January 11 th (+-3 days) and the midpoint between January 11 and the low or 45 calendar days is now and could bring in some consolidation or corrective action. The midpoints of trends tend to have a congestion at that point in time. So if this is a 90-day movement, as I believe, it should start a congestion this week. The form of this congestion will tell us how strong the next 6 months is going to be.

Concerning some of the other markets I have been following.

Crude needs a down day today or my forecast for a further fast move down will be wrong. In fact it shouldn't rally at all, just go down.

Gold has some resistance in time this week at 180, 135 and 90 calendar days from low and 45 days from high. When momentum is as strong as it is in gold, resistance levels in both price and time can be breached. But it is a week to be cautious if it can move past this resistance next week it would be bullish. Nikkei looks on track for 152 to 154.



Last week the pattern of trend was quite clear. The index had either shown a weak rally up which would be very bearish. Or base pattern, which would indicate a new high was going to occur. All it had to do was hold the "OBVIOUS" support line early in the week. Or create another higher low, which would then eliminate the weak 5-wave rally as a possibility and create the third higher low base pattern and a run to the old high. You can see the forecast of a 3rd higher low materialized and the index moved up quickly. It needs to stay above Tuesday's low. Any move down should not exceed 4 trading days or there is a problem with the up trend. In fact, I would prefer to see any move down not break below the high of the 18 th or it could also suggests a problem with the trend. The index just broke out of a 5-wave rally and should keep going up and test the old high.


Our forecast has been for the index to test the "obvious" and show a congestion or counter trend or some sort. That has occurred as the index hit the "obvious" and has fallen two days. It has subsequently rallied two days and remains below the high. If this is a run to the next resistance level that is above 4800 the index should continue up to a new high and congest for 5 to 7 trading days and resume the trend after the 5 th of December. If it cannot get to a new high and shows a lower high by breaking the low of the two day counter trend, it would need to immediately (the next day) recover that break. If that occurs it will produce a "false break" pattern for low. Those are the two bullish ways to resolve this current circumstance and anything else will put the up trend at risk. This was calculated resistance and significant. If it can move or trend above this price level the next objective is approximately 240 points higher.

Oil needs a big down day today or tomorrow or this downtrend is going to start to look questionable. The Nikkei is still in an exhaustion mode heading towards the 152 to 154 objectives. Gold has some risk this week of a top from time cycles but due to the momentum I would look for a lower high or some evidence of an exhaustion. I would not recommend selling short a vertical movement, but I'd recommend caution for this week.


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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