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LET'S LOOK AT THE FTSE DAILY CHART

Last message I said I didn't believe this index could start another new leg up from the last low. For the CAC 40 a new high was likely but also presented a possible broadening top pattern. The next probable "time" for highs in the FTSE are Jan 14, 24 and Feb 7th. The same criteria applies if the index can move down more than 4 days it is an indication the trend may be down. It is definitely struggling here.

LET'S LOOK AT THE S&P 500 INDEX

Last message on the 18 December I thought the index could have exhausted into a top of some sort. The reasons were the price target was hit (5 points through), the high was only one day past the target date, there was a small 5 wave structure to complete the move and on an intermediate term basis consensus is at extremes (the number of bulls vs bears) and I see no hedging going on so most everyone is far to complacent about this market and that almost always causes a problem. So far the index has moved sideways in a tight pattern the past 12 trading days and that leaves a bullish picture but that can change with a move down. Wednesday there was a big outside day and Thursday rallied but remained inside Wednesday and Friday moved down to a marginal new low leaving only a one-day rally. If today is down it could signal the start of a larger move down.

LET'S LOOK AT A WEEKLY S&P CHART

Remember markets exhaust into highs. You can see this bull campaign started with a vertical exhaustion style of trend and consolidated that exhaustion with a bullish tight sideways pattern. This was followed by a weak up trend that resolved into another exhaustion. The correction from that exhaustion was a weak downtrend. This was followed by a weak up trend August 2004 to May 2006 with three little exhaustions inside that trend. Now you can see a vertical move up the past 6 months and when this occurs late in a trend it can exhaust the bull campaign. So when this leg is complete there is a strong probability it can complete the entire bull campaign. All we have so far is a tight little sideways pattern that is either very bullish, which I doubt, or is a pattern of distribution. Dates for further highs are Jan 15th and 1st of February.

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LET'S LOOK AT THE HANG SENG DAILY CHART

Last message was on the 18th of last month and I indicated the consolidation was showing bullish characteristics and all it needed was another up day or two and it would indicate another fast leg up. The minimum move would be the width of the sideways pattern and that has been accomplished. This is an exhaustion leg to this trend so when it completes the correction will be substantial. Last week did exhaust but whether it was temporary or completed the leg I cannot tell but the sharp move down makes it appear as a completed move up. I would get very defensive at a new high since this 3-day move down is quite large for the criteria of a fast trend. Best time for next high or top is January 15, 27 then all the way out to March 14.

LET'S LOOK AT THE ALL ORDS AUSTRALIAN STOCK INDEX

The last message was December 18 and I indicated the index could hit a significant top at a price between 5670 and 5680. I also indicated if the index moved down more than 4 days there was a probability an important top could be in place. The high was 5671 and the index has moved down 3 trading days. There is a complete wave structure and at price targets, it looks like it needs to test the previous highs at 5460 to 5475. Last message I indicated I thought the decline in this index would be sparked by a weakness in the metals and that is now the case. It looks like the index could test the 5470 level and bounce. The time and characteristics of that bounce should tell us if this high represents a completion of this trend.

LET'S LOOK AT TOPIX INDEX DAILY CHART

I use the Topix Index rather than the NIKKIE because the Topix is less volatile and easier to analyze. These two markets move in exact tandem to each other.

Many months ago I pointed out the 67.25 calendar day cycle that would be the dominant cycle for some time. Since the last low on the midpoint of the cycle I indicated the index would run up to January 2nd and test the October high and would not move down more than 4 days the entire move up. If it did exceed a 4-day move down the trend would have reversed to down. One to four days is what I refer to as a first-degree counter trend. If this last 67-day increment in "time" was a completion of some sort as the three previous expirations have been, this move down should exceed 4 days. If the index can break the 67.25 calendar day cycle then it would be quite bullish. But for now we can assume a high of some sort and the next timing is Feb 04 at the half cycle. The criteria are quite simple, if this short-term trend has changed the move down should exceed 4 trading days and if that occurs we can look for a low on the 4th of Feb. You can see the exhaustion day at the high day as occurred at the previous three highs.