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October 09, 2006

Stock Market: CNBC Report
by Bill McLaren

CNBC EUROPE

LET'S LOOK AT THE FTSE DAILY CHART

The FTSE is continuing to lag the other bull campaigns around the world. Last week the index was up to the "obvious" resistance after a small weak trend down. I reported the index should only move down two or three days and resume the uptrend. As you can see the index fell two days as forecast but was stopped by the old "obvious" high again. This index needs to move above this "obvious" resistance this week or better said "NOW" or there could be a big problem for this advance.

LET'S LOOK AT THE S&P 500 INDEX

This chart is taking on the picture of an exhaustion move up. Notice how each correction has become smaller in both price and time-4 days at 31 points, then 4 days at 24 points, then 2 days at 18 and 2 days at 13. Or how each counter trend has found support at a higher and higher level in relation to the previous counter trend down. This is clearly a pattern of trend that is indicating an exhaustion move up is in progress. I've forecast this leg will end around the 16th of October. After this exhaustion is complete the index will go sideways and find a low either on 30 or 45 days from the high and resume the trend for another 90 calendar days to either November 30 or January 14. OR, if the index goes up into 135 calendar days from low and is still below the high, then the up trend will be complete, a secondary or lower high will be established and a significant move down will follow.

I can rank this as a very high confidence forecast. A high around the 16th followed by a sideways pattern, then either a secondary or lower high (November 30) and big run down or if a low in that time window then another 90 day leg up followed by an even bigger run down. This is definitely an exhaustion style of trend NOW and will be over by the 16th or sooner.

CNBC ASIA

LET'S LOOK AT THE HANG SENG

Last week I pointed out how the index was in the same position now that is was back in March and could accelerate up out of the current congestion. If it was going to do so it needed to do it last week. The acceleration did start but with a big gap up. If bullish we don't want to see a big gap down into the previous range of trading, as that would leave an island reversal. I can't tell if there is going to be a counter trend after the gap up do to the North Korean news, if there is it shouldn't be more than two days and should not do any damage technically. The index now needs to show its ability to trend upward. The previous March/April drive was 60 days. If that repeats it gives a date of November 10th. Best dates for top are October 26, November 8th through 10th and December 10th. I need to see the "Pattern of Trend" before I can feel confident as to which date will be terminal for this leg.

LET'S LOOK AT THE ALL ORDINARIES AUSTRALIAN INDEX

Last week we discussed how the index was up to the "obvious" resistance of the previous highs. All markets react to the "obvious" in their own particular way. With this index I was able to say if the index is going to test the all time high the correction at this price level should only be a counter trend of one maybe two days. You can see the index showed one day down that closed on the low for the day indicating a capitulation of the move down if it moved higher the next day. If this is trending upward it should not correct more than four days at any time until the trend is complete. Because of the huge move the 27th through the 2nd it may need to consolidate a few days. There is some resistance in "time" on Thursday but I doubt anything significant. Best time for this leg up to end is 27 October, 5 November or 11 December.

GOLD

Gold is at a critical point within its downtrend. The last thrust down came from a second descending trendline and failed to hit the last series of lows before starting this move down. Both are indications this could be an exhaustion or panic style of move down. It is now down to "obvious" support and should not rally move than a few days if at all. My forecast called for a low either on the 12th October or 7th November. If the index rallies up into the 12th 593 is key resistance in the December contract it could be a high. I assume there are lots of stops below this level of support. And I have been assuming they needed to be washed out to find a solid low.The North Korean News will have a short term effect. If it is one day and resume the trend, then the run down will likley take place.

The US Stock market is in an exhaustion trend and will be complete by the 16th at the latest. This will be followed by a 30-day sideways pattern. We'll look at my forecast next week.

There was a rumor this afternoon concerning North Korea conducting a nuclear test. Both Iran and North Korea will have nuclear bombs in the future. Iran may take 7 more years but it is going to happen. This should be viewed in a much different way than the political spin of fear. For decades we lived with the Soviet Union pointing nukes at everyone and the US doing the same. The huge deterrent of mutual annihilation keep the situation stable. Why is turning a country into a cinder not acceptable anymore as a deterrent? I can't see any other acceptable resolution. Yes, we don't want to see an arms race in the region but facing the facts seems to be the start of a solution.

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.

Copyright © 2004-2008 Bill McLaren

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