Stock Market: CNBC Report

By: Bill McLaren | Mon, May 8, 2006
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CNBC EUROPE

LET'S LOOK AT THE US DOLLAR INDEX DAILY CHART

A few weeks ago I indicated the US Dollar was going to resolve the weak move down with an even faster or panic move down. Since then the Dollar index has only managed a two-day rally and a one-day rally and is obviously in a capitulation style of move down. It is currently at 85 I believe it is going back to the previous low at 78. The reverse of this situation could be setting up in stock indexes as they have weak moves up that could be resolved to the upside.

LET'S LOOK AT THE S&P DAILY CHART

The stock indexes are in a similar technical position only in the other direction. The US Stock indexes have been struggling upward with a weak up trend the entire year of 2006. My January forecast for the year calls for this weak up trend to be resolved to the upside with a fast move up to exhaust this bull campaign with the same basic pattern of trend as 1946 or a repeat of the 60-year cycle. The only thing standing in the way of that occurring now is another block of 90 days that offers resistance to the move up as it did in January. The first three days of this week represent that resistance. If the index can move up past this resistance in "time" by moving higher the end of the week-then I will assume the last leg up, which will also be a fast trend or exhaustion leg up, is in progress and could run until July. If the index can show a counter trend low above the 1317 price level it will also indicate that final exhaustion leg could be starting. This is a critical week for this index. A failure here could give 30 or 45 calendar days down.

LET'S LOOK AT THE FTSE DAILY CHART

The FTSE is in a similar circumstance to the S&P although the European markets have been much stronger the entire year. The weakness in the trend hasn't show up until April. But since then the index has been struggling upward. You can see that support has been coming in a very high levels as indicated by the "space" created between the previous high and the last few lows. Remember, we had cycles for high at the last high so I can't rule out a failure of this rally. But if the US stock indexes go into an exhaustion leg up I would assume this index would reflect that bullishness with a new high. The index should not show a lower high. A lower high while in a weak trend up would be bearish. In fact many of the world stock indexes are in the same position. A position where they could explode upward if the US indexes could develop some legs the later part of this week. We need to pay particularly close attention to the US Stock Indexes this week.

CNBC ASIA

LET'S LOOK AT THE TOPIX INDEX DAILY CHART

The two previous weeks I've been indicating the US Dollar was in a capitulation or panic move down. There was a risk the Japanese Stock Indexes could react downward to the move in the Dollar. But going into last week the moves down in the NIKKEI and the TOPIX have been weak moves down which is obvious because each new low to the move down is immediately retraced. So a weak move down against a strong trend up should be followed by further strong trend up. The previous exhaustion high, marked with a horizontal line has also held and I have reported that is a very important support level and keeps the trend in a strong position for the next rally. Even considering the downward move in the US Dollar, this week should start up and resume the up trend.

LET'S LOOK AT THE US STOCK INDEX NAMELY THE S&P 500 INDEX

This is a CRITCAL week for this index. My forecast made back in January calls for the index to show an exhaustion leg up to complete this bull campaign and possibly starting now. The move up on Friday either started this final leg up or it dies by Wednesday and corrects 22, 30 or even 45 calendar days before starting another attempt at a final leg up. If we can see support on top of a previous resistance (THAT PRICE IS 1317) it would indicate this is the final leg up and much higher prices will be seen over the next three months into at least July. If the index can move up the last half of this week it will have broken the resistance from the 90 block of time and would indicate the last leg up is starting. This should be clear by the end of the week and will likely drive other world stock indexes.

LET'S LOOK AT THE ALL ORDINARIES AUSTRALIAN INDEX

There are a number of cycles expiring this month that should be viewed as resistance in "time" and could end the trend. The first was 180 days on the 19th of April. I indicted that was significant BUT after seeing the position of the index going into the time window I determined it would bring in a consolidation or counter trend rather than a change in trend. Once that correction was complete (as it appears to be now) the index should go up into the next time increment on the 17th of May and if the "Pattern of Trend," wave structure, price and volume confirms, it could be a significant top. So now the index is up into 17 May and resistance around 5360.

 


 

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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