March 07 2005 CNBC Report

LET?S LOOK AT THE FTSE 100 INDEX

Last week saw another negative news item that created a large outside day down on the 28^th BUT showed no follow through indicating some sort of downside exhaustion. The index did hold the 1/3^rd to 3/8ths support level and that does keep this index in a strong position for this trend and the next move up. It needs to see a new high this week. There are still 3 dates that, if the index goes up into them, can put this trend at risk of completing. March 9^th , March 18^th and April 23^rd. The later two being more realistic. If price can trade below this support zone it would change the nature of this up trend and my bullish posture towards this market. Next objective is around the 5170 level if we can get a new high˜past the 10th.

NOW LET?S GO TO THE S&P WEEKLY CHART

The weekly chart remains in a bullish trending mode. And just as we have been looking at the FTSE daily chart in range divisions, this weekly chart has the same division. As you can see, when the index went up into the March 2004 high it corrected back only 25% or ª of the entire range. That left the index in a strong position for this rally. This rally has been strong with each corrections showing support coming in at a high level. The last high was a 1/8^th extension of that range and the next objective is a ª extension of that range. Correcting ª almost always brings in a minimum ª extension. In this instance that is a price of 1260 to 1270. That is a lock as far as I?m concerned the only question was how it was going to get there.

LET?S LOOK AT A DAILY CHART OF THE S&P 500 INDEX

The first week in January I made up a forecast that has been spot on so far but it called for the index to stall and correct at this level. The last move up has not been a strong trend on the daily chart, but the bullishness of the weekly and monthly is obvious. This index could drive up to the 1260 to 1270 price level on this drive, contrary to my forecast. Last week produced a volume spike on the weekly chart and highs very seldom come in on stock indexes with volume spikes. If a high does show up, it is usually weeks later. There is an important cycle on the 9^th or 10^th but could be a low and give a further bullish look to the chart.

CNBC ASIA

LET?S LOOK AT THE NIKKEI DAILY CHART

Both the Nikkei and the Hang Seng were in a similar situation last week. Both had weakened their trends, but was due to a reaction to news. So last week was important for these indexes and they needed to show some follow through to hold their trends. The Nikkei continued the rally and showed another one day counter trend that held the index in a strong position for the next advance. That advance was a huge gap up and the index closed on the high for the day. That could be a bit of an exhaustion move, but I still believe it will test the April 2004 highs. On a long term basis it is very important that April high get successfully tested. I see no reason to change my forecast, this looks like a bull campaign.

LET?S GO TO THE HANG SENG INDEX

Last week left an Island reversal behind. An island reversal is a pattern of exhaustion and can be described as a compact trading range (could be one day or several days) and is indicated by a gap into the range and a gap in the opposite direction leaving the small range. It has no significance on its own other than an indication of a short term exhaustion of the short term trend. You can see back in October there was an island reversal that created a "false break" pattern and start the fast trend up. Now there is another Island Reversal and a "false break" pattern and could put this index down to the January lows. This index has been having a problem since the beginning of December, as it cannot develop a clear trend. Last weeks price action - showing a wide range Wednesday, followed by small range day on Thursday and another wide range on Friday is the picture of a market with some selling pressure. It will need to consolidate that move but the January lows look possible.

LET?S LOOK AT THE AUSTRALIAN ASX 200 INDEX

Last week the index had come down to our objective of the January high and we expected to see a strong bounce. Since 12 days is the outside time period of a second degree counter trend, it was possible to resume the fast trend the index has been in for the past 6 months. There is resistance in price the next 90 points, I believe it is extreme and the index will not get through it. I expect to see an exhaustion move up, followed by a volatile distribution pattern and a significant correction to the trend over the next 6 months. There is resistance in time at the end of this week (9^th and 10^th) but I can?t qualify its importance. A move up into the date could produce a high a move down will produce a low.