Stock Market: CNBC Report

By: Bill McLaren | Tue, Nov 21, 2006
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CNBC EUROPE

LET'S LOOK AT THE FTSE 100 INDEX

Three weeks ago I had some cycles that could stop the uptrend and put it into a sideways consolidation. Last week I saw no reason to change the forecast that this index is in a sideways movement. Friday was a nasty looking day with a wide range down day after testing the high. If we view the move up as a trend from the October 31st low it is faltering. There was a test of the high and a 5-day move down, a retest and a wide range down day on Friday. All this is occurring at the "obvious" place for resistance. And no damage has been done to the trend, just a consolidation. If there is follow through to the downside from Friday's move down then we should the November low tested. If the rally from that test of the November low is four days or less and runs through that low it will indicate trending down a move down to the September high. IF it can hold then it is consolidating the move up and holding the uptrend. The date of 10 December still looks like an important vibration in time.

LET'S LOOK AT THE S&P 500 INDEX

Last week I was looking for the index to come back to the 1360 previous low and show us a sideways pattern of consolidation. That did not occur and the index ran to new highs and has now moved down one day. If it can put on another new high and follow through without going lower it could spike up to the next resistance level of 1426. There is still an outside chance the November low could be tested and still show the sideways consolidation I forecast for this time period but that would take a drop below the 1388 level as the first indication. If it can start another run without dropping below that level, then my forecast about consolidating the last leg up was wrong. If it does continue up then December 10 has a high probability for a top. If we're going to see the bull trend continue it needs to consolidate this move up now.

LET'S LOOK AT COPPER

This is a circumstance similar to Crude oil last month. The setup I laid out for crude never materialized although it did run down but the daily pattern didn't set up and that may be the same situation now. But here is what the "Pattern of Trend" indicates is a possibility. If the index cannot rally and that upward reversal day on Friday reverses back down the market should be in a panic move down for 5 to 10 days. If this is a panic move down and it cannot rally up from this level the next two-day, it could see a new low quickly. If that occurs we could see a panic move or capitulation down. If it can show a strong rally then the move down could have exhausted and could be complete. But watch this market over the next few days it could be in a vertical move down.

CNBC ASIA

LET'S LOOK AT THE TOPIX DAILY CHART FIRST

On October 30th I told you the index had hit a top and would go down to test the September low. The trend down since the high has shown a one-day counter trend followed by an exhaustion low and now a two-day rally that also looks like a counter trend. If it can hold and not go below that little exhaustion low in the next two days then support could be forming above the September low, I doubt that circumstance. Remember the "pattern of trend" that is showing a weak three wave structure up below a high can be a significant topping pattern. There is no evidence of that yet but a drop below the September low would start to look like it was trending down. November 28 and December 5th still appear as significant vibrations in "time."

WE HAVEN'T LOOKED AT THE AUSTRALIAN STOCK INDEX FOR A WHILE.

The daily chart clearly shows an exhaustion to end the leg up and has been followed by a 7 or 8-day move down. IF the up trend were to resume this is the point it could occur. The index just bounced up from the previous all time high an "obvious" place for support and must be doubted until proven. IF it cannot follow through to the upside in the next two days we need to be alert to this index developing a distribution pattern. If there is a risk of reversing the trend to down or a much more significant correction there would very likely be a further sideways pattern form with one more test of the highs. In other words there would need to be further distribution. There is an exhaustion in place and it could be trending down with today's price action. But a trend reversal needs more evidence but is looking possible. The December 11th time period still appear important and we need to be aware of the "pattern of trend" when the index moves into that date as that is a time period that has historically brought in significant highs and a even a lower high in that time window could prove important.

 


 

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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