Stock Market: CNBC Report

By: Bill McLaren | Mon, Nov 13, 2006
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CNBC EUROPE

LET'S LOOK AT THE DAILY FTSE 100 CHART

Last week the index was coming into cycles for high and was at a possible lower high but needed a down day on Monday to confirm a lower high. Monday pushed up and eliminated the lower high but I still believe the index exhausted into last week and within the time window for a high point. It still looks like the index is going to continue in this congestion and do further downside testing. The first indication of that would be to close below the daily high of the first November. I've drawn a horizontal line at that point. If there is a move up out of the recent three-day congestion it should stop at 6285 to 6297 and turn down. A move above that level could push it to 6370 or even up to 6474. I don't believe that is the case. It still looks like the index is in a congestion that is consolidating the previous fast move up and will see some further downside testing for the rest of the month.

LET'S LOOK AT THE S&P 500 INDEX

Last week I indicated the pattern in the index would likely bring in a low on Monday but I didn't believe the index had the strength to push to a new high but would show a three or four day rally that stopped below the high. The index has made it to within a point of the old high so a weak counter trend didn't occur but the index is now 5 days up from the low and still below the high. I stated we'd see this correction go 31 points down rally and then possibly 56 points down to 1333. I believe there is a high in place and the move down to test the last low should occur and it will be a test of the "obvious." By now we all know how to view a test of the "obvious." A counter trend up of 1 to 3 days will indicate a move down to 1333 followed by a resumption of the uptrend. A successful test of the last low with a move down of approximately 30 points could resume the uptrend. Again, my forecast was for the index to start a sideways pattern and stay in that pattern until at least 30-calendar days. I still believe the index is currently consolidating the big move up and has some more downside testing before it can resume the uptrend.

CNBC ASIA

LET'S LOOK AT THE TOPIX DAILY CHART

Three week ago I showed you the cycle that was bringing in the last high and indicated it was going down to test the September low. Whenever a market does a three-thrust wave structure below a high it can be very bearish. Look at that trend closely. It was a weak trend and can be defined as a weak trend because each time the index made a new high it immediately fell back below that high. In the vernacular of the street the index couldn't "get legs" when it broke to new highs. Weak trends only have three thrusts and can be followed by a fast trend in the opposite direction and change in trend. A weak trend, as this is, can be resolved to the upside as occurred with the European Stock indexes in October. If it isn't resolved to the upside then there is a bear trend starting. I have no reason to believe a bear trend is starting but the key is holding the September low or higher and no evidence of that yet. Breaking the trendline is meaningless; in fact today could be a low at 150 days and 150 points up from low. I believe the September low will hold but if it doesn't the index could be headed to 1370 or even 1250. Since weak trends only have three thrusts a move back above that last high will indicate a strong up trend and move to the April high.

LET'S LOOK AT THE HANG SENG DAILY CHART

I indicated this "pattern of trend" would need an exhaustion to complete the trend. There were cycles expiring last Sunday that indicated a top possible so we could look for something indicating an exhaustion the first part of last week and that did occur. AS I explained last week, the next date to end the trend is December 10th and if this cycle doesn't stop the trend the index will move into that December date with the same strong momentum that is present now and would produce much higher objectives. There was an exhaustion within the "time" window but no follow through to the downside as of yet. An exhaustion needs to be confirmed immediately and today needs to be a down day or the exhaustion could be very temporary. If there is a further move down it would leave a one-day rally behind and could be the first counter trend in a trend down. Support is 18,500.

 


 

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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