Stock Market: CNBC Report

By: Bill McLaren | Mon, Apr 10, 2006
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CNBC EUROPE

LET'S LOOK AT THE FTSE 100 DAILY CHART

Last week I warned this index could be completing this leg up. The index has left itself in a very precarious position. There are two things on this chart that represent a problem for this uptrend. First, notice the overhead trendline and the index is now hitting a higher high but it is away from that trend line. This is how highs to trends tend to come in. When the index hit the overheard trendline it balanced momentum as it was at the same rate of advance as the two previous highs that set up the trendline and that high against the overhead trendline very seldom brings in a high. The market needs to see a new high after having moved away from the trendline. That sets up a momentum divergence. Second, as I've been pointing out for two weeks, this trend is struggling and could be distributing. The struggle can be seen by the fact that there was a two day move down followed by a 4 day (twice the time) move up that couldn't move above the high. Then another two day move down and now it took six days to move marginally above the day that started the two-day move down. Obviously finding it difficult to move up.

LET'S LOOK AT THE RANGE OF THIS LAST LEG UP

All highs and lows are exact proportions of previous movements. Those proportions are 1/8th and 1/3rd and all have specific meaning for the future. If there is follow through to Friday's move down the next stop could be as low as 5853 (1/4). Even if the trend is down there will be a bounce up from that level. If the trend is down the next move will go down to between 5775 to 5736 (3/8 to 1/3). This price vibration would be true in almost all markets. The best time I had to end the trend was the 20th but that "time" is a probability and the pattern of trading is reality and the reality of the trading is leaving the trend quite vulnerable now.

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

If you accept my premise that this index and stocks run in 90-day blocs of time, then we need to consider how stock indexes continue a bull campaign. If you'll recall I forecast a high for January 11th and a low February 10th and then an important high on April 11th at 180 days from low and 90 from high. IF this bull campaign is going to continue, those stocks that hit highs in December and on January 11th and are currently trending down will need to cycle into lows at 90 days from those highs. Some of those stocks are AIG, GM, JNJ, MCD, MO and INTEL. So bull trends exhaust into highs and consolidate the exhaustive move up with a correction or sideways pattern. Those stocks that move into correction modes cause the index to go from trending to consolidating. Eventually those stocks that were correcting resume their uptrends and the index then comes out of the consolidation. This is our current circumstance. Will those stocks that hit high on the last 90 block in time on January 11th find lows this week and support the index or will they continue to trend down and move the index into a down trend?

CNBC ASIA

LET'S LOOK AT THE NIKKEI DAILY CHART

Last week I indicated there would be resistance between 1750 to 1770 and a correction or counter trend of some sort could occur. The index hit that price zone and the correction is starting. The probabilities in "time" still favor a run to April 20th or even May 17th but it is at resistance in price and also at a "time cycle" that also produces resistance. The resistance in time is 180 and 30 calendar days from low and 90 and 60 from highs. This vibration in time is obvious or these time periods wouldn't be setting up on the same day or two. I still believe this trend has more to go but this could bring in a sharp correction. This correction should not exceed 4 trading days down or the trend could be in jeopardy.

LET'S LOOK AT THE ALL ORDS AUSTRALIAN INDEX

My forecast has been for the index to spike up into April 19th for a top. Historically the last rally is 3 to 6 trading days. If the 19th is a top and this is a normal exhaustion trend there should be a small multi-day selloff this week. The low should come in Tuesday through Friday and be followed by a spike up into the following week for top and completion of the trend around the 19th.

LET'S LOOK AT A GOLD WEEKLY CHART

We have seen how the market previously exhausted into the last high with three ascending trendlines on the daily chart and moved into a consolidation. If we view this same pattern of trend on the weekly chart rather than the daily basis you can see the market is now started the third ascending trendline on a longer-term basis due to the perspective of the weekly chart. We can assume since this is the third ascending trendline on the weekly chart this move up is the final leg up and a failure of this leg could end the bull campaign.

Also understanding that all highs and lows are exact proportions of previous moves and those portions are eighths and thirds. You can see the last correction was only a ¼ retracement of the entire move up. This is a small retracement and keeps the trend in a strong position and should allow for at least a ¼ extension of that range up to 628 June contract. Best time for top is May 5th or June 8th and the June date would obviously show higher prices. We don't want to see gold now drop back below the point it just broke out from or the up trend will become at risk.

So when this leg up ends, it should end the entire bull campaign.

 


 

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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