LET’S LOOK AS THE S&P DAILY CHART

I like the date of the 9^th of January to start a directional move.  I was hoping it would rally into that date so there could be a bit of an exhaustion for a top.  When we look at the current chart there are now two days of rally.  In this style of trend the normal counter trend is one to four days.  So if this rally can exceed four days the odds favor the short term trend is not down and the index can then rally into the first week in January.  If the index does little and hangs around this level or goes marginally lower into this date it will look like a successful test of the November low and a meaningful rally should occur. 

The major reason I am looking for a correction in this time window is the long term cycles call for 2008 to be a positive year and produce a rally into 2009 for a very significant top.  In order for that to occur we need a correction of some magnitude to set up 2008 for a bull year.  A rally into January 9^th plus minus a few day could set that up.

The European indexes are in the same basic trending pattern and the length of the next rally will determine the significance of any downtrend. 

LET’S LOOK AT THE US DOLLAR INDEX

Last report I indicated there was a low in place and indicated the index could rally up into the price of the September 28^th low.  The index has reached that level with a fast trend up.  There are a number of technical aspects we have discussed on numerous occasions on this show and are very valuable knowledge for a technical understanding of trends.  All of this plus much more can be found in the E-Book sold on this web sight.   First, you can see the three descending trendlines.  That circumstance always indicates a blowoff style of trending that will need an exhaustion of some sort to end the trend.  That occurred three weeks ago as I pointed out then and confirmed the change in trend.  The best method to find support and resistance for a market is to take the last leg of movement or last trend and divide it into 1/8^th and 1/3^rd because each of those levels has significance.  A ¼ division is a resistance or support that keeps the fast trend intact (78.44).  The 1/3 to 3/8 is the “NORMAL” corrections in bull and bear trends (79.7 to 80.35).  That correction still keeps the trend intact.  So it could rally that far up and still be in a fast trend down.  Remember how the normal counter trend (counter trend of first degree) in a fast trend doesn’t exceed 4 trading day and the index rally exceeded four days thus indicating the exhaustion phase of the blowoff trend was complete.  This rally has been very strong almost exhaustive in its style of trend but when ending a blow off trend that is normal.  I don’t have a good “time” for this rally to end yet.  I will need to see another week or two to get more trending action on the chart to make a judgment.  But on an intermediate term basis a move to 78.40 is not out of the question nor is a  move up of 45 calendar or even out to 90 calendar days from this exhaustion low.  Monday is 30 days from low and could be some resistance.  But there appears to be more time left to the rally.