LET'S START OFF WITH THE FTSE WEEKLY CHART TODAY

Ninety percent of the time markets behave in a "normal" manner for the circumstances. The normal correction or retracement of an advance is 1/3 to 3/8 of the advance. The first correction into the July low was exactly 3/8 of the range up and 33 calendar days. The index then extended that first leg up by 100% and is always significant resistance and the index has corrected. But this correction is less in "time" at 25 calendar days and only a ¼ retracement of the entire range although it was also 3/8 of this last leg up since July. So we can say this correction has been less than normal and therefore hold this trend in a strong position for the next advance. This small correction could indicate the correction is not complete and if that is the case it should not rally past 13 trading days and the index is up 9 trading days now. So if there is more to the downside then it needs to find a high within the next 4 days and not much higher in price.

Or it indicates a drive to a ¼ extension of this entire range up to 6125 or 6000 at the last low before the high. A 1/8 extension is 5842 and in rare circumstances that can be the extension or there can just be a marginal break to new highs and fail.

So if the index exceeds 13 trading days on this rally (24th) then the rally is not a counter trend and the index could start the last leg up to one of the three objectives. I believe we find a high within the next four days and the Fed rate hike could be the catalyst.

NOW LET'S LOOK AT THE S&P 500 INDEX

This shows the corrections were even smaller and the last correction at 17 days versus the previous 27 days. We identified a higher low on 22 days last week but that is still less than 27 days. The ¼ extension is up to 1270 and seems unlikely to me but this is what the charts are indicating would be normal if this last 17 day move down did complete the move down. I am still looking for this rally to be a counter trend rally and fail between 7 and 12 trading days and come back for a more solid low the first week in March on the one year cycle from the March 2009 low. That has been my forecast and unless this can trade higher past the 13th day. The one year cycle will be significant around 6 March and am calling it a low now. The discount rate rise will obviously cause a down day in the index and could be the counter trend high on the 9th day.

Please keep in mind 2011 and 2012 will be a bear trend and before this index starts to trend down during 2010 there will need to be at least 4 months of distribution or sideways movement and maybe up to 6 months. So don't get too bearish too soon. See what the move up from March 6th looks like before calling an end to the bull campaign. In both these instances the index should break the Feb low to set in a bottom.