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LET'S GO DIRECTLY TO THE DAILY S&P CHART

Over the past two weeks I changed my mind. Remember, in this business "He who doesn't change his mind will have not change to mind." Although this is the first time I've changed my forecast this year.

The past few week I said we'd see a distribution pattern and a resumption of the move down if the index could stay below 1112. Two weeks ago the consolidation occurred and looked right except the price zone of the consolidation was too high for a counter trend rally. So last week I said the consolidation was bullish and the index was going to move higher and likely to a new high above the 1163 high before this move was complete. I explained the pattern of trend down since the March high was too weak to conclude any other scenario. And once it consolidated above the 1112 level, it was too strong to consider the move up as a counter trend move. There is important resistance at the 1133-34 level and could present a problem. But until that is proven the index is trending down, it is just a resistance number. If you look closely at the drive up there was a large first thrust up, followed by a smaller second thrust up and now a third thrust up that was smaller than the previous. Many times this will be a completion pattern of trend and bring in a correction. But against this strong momentum, the odds are not with that scenario and any correction should be short lived and not much in points. I am viewing any move down as a counter trend of first degree and should not exceed 4 days.

LET'S LOOK AT THE WEEKLY CHART OF THE S&P

This chart is showing the entire range of the bull campaign broken into 1/8ths and 1/3rds. You can see the index has only corrected ¼ of the entire range up in 6 months of trying to trend down. That hold the index in a strong position for this rally and gives an objective of a ¼ extension upward. The only resistance I see offering a problem is not listed here but is around 1134. Please understand this is the most bullish scenario available and we still need a bit more evidence to feel confident. How the index goes into the 27th is a key time window.

The oil complex could dampen this party. This would only be a short term problem for the indexes. I thought the last high in oil was significant. But the subsequent move down did not damage the up trend as it held the previous high and held a strong retracement level. And bottomed before hitting the last trendline. There are cycles for high that are the same as the next timing increment for stocks and that is the last two days of the month -or the 30^th +- one day. Please understand I don't know what oil is going to do, but the move down (so far) has not damaged the up trend. And cycles say next possible high is the 30^th.

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LET'S LOOK AT THE HANG SENG INDEX - DAILY CHART

Two weeks ago I said the index was going to show a three day counter trend and resume the trend. That is precisely what has occurred. If you look at the left hand side of the chart, you'll see a lot of volatility before the high was established. That pattern of trend was defined as a "broadening pattern" and is the definition of a volatile movement. Now look at the current circumstance. Not much volatility as compared to that previous circumstance. Volatility is associated with tops, so I'm not too worried about a top here. Although we could see a congestion or correction. The next time period for resistance is September 30^th at 135 days from low which is also 45 days from low. There is a 3 year anniversary Monday and should bring in a high of some sort. But I can't view it as significant, as this still looks like a 90 day move up and not terminating until mid November. The midpoint of that 90 day cycle is the next important "time" which is the end of September. How the index goes into that time window will help to confirm the probability of the index being in a 90 day move up as I believe is a probability here...

LET'S LOOK AT THE ALL ORDINARIES INDEX

Last week I indicated the index was either going to show a small correction and an acceleration up or just an acceleration up. This looks very much like a 90 day blowoff trend that has two key timing points left to the move. Forty five days from low on September 30^th and sixty days from low on October 15^th and a completion of the cycle around November 14^th. Unlike the Hang Seng Index, I do have long term cycles that verify the 90 day probability. The Monthly chart below is our road map for price in this index. You can see that 90% of all highs and lows where exact on the angles, which are a form of moving average. The next major resistance level is 3750 to 3760 for this month and moves higher each month. Those price levels do appear to be reasonable targets for this drive up. I still believe we have two more months of up trend.

One of the problems for these markets is the oil complex. I thought that last high was significant and it still could be. But the move down since the last exhaustion has not broken nor damaged the up trend. The market is either consolidating the move down and getting ready for another upward run or the market is distributing now and will resume the down trend. But because the decline stayed on top of the last high. Because it did not damage the trend -- Resuming the up trend is not out of the question. So another spike up could cool the stock indexes the next two weeks. The closest timing I have for oil as a possible high is at the end of the month also. A high in oil and a low in the indexes are a possibility.