CNBC PowerLunch Europe
LET’S LOOK AT THE INDEX NASDAQ
There are a number of indexes that appear to be setup for a low being in place or the next
new low will be THE low. It would actually be a “perfect setup” from the analysis of this pattern of trend if there was one more new low to the move down. Just one more day up and two days down to a new low would set in the low we have been forecasting to occur this week. But sometimes the perfect doesn’t appear so there is a good chance this could be a solid low for an intermediate term counter trend rally of 60 or more likely 90 calendar days. The very significant factor has been the ability of the index to move above the low of the 16th. The NASDAQ 100 and the MIDCAP 400 have this same pattern of trend.
NOW LET’S LOOK AT THE S&P 500 INDEX
I am very disappointed this index did not go to a new low yesterday as that would have really set this low up well. But I’ve been saying this week was going to bring in a low and I haven’t changed my mind. There are only two options now it either moves to a marginal new low and then runs to 1060/1070 and corrects or continues up from yesterday to the same price level and corrects. Either way the index will likely run out 90 days of rally before the downtrend will resume. So by next week we’ll know for sure which of the two scenarios will have played out and the index will be trending up. I don’t believe this is the end of the bear campaign but it the end of playing the short side for a while. There will be a lot of traders selling into this rally as that has been the successful strategy for some time. If there is one more two or three day move down it would be a good opportunity for the long side but either way the risk is now on the short side.
LET’S LOOK AT THE FTSE 100
It doesn’t matter which index the FTSE, DAX or CAC 40 all have the same pattern of trending and the same exact probability. There was the exhaustion low followed by a marginal new low. This was followed by a second new low and this rally has moved above that second new low. Thus indicating this trend is struggling down. It presents the same circumstance either a solid low is in place or there may be one more marginal new low for the very high probability of sitting in a low and the start of an intermediate term counter trend rally. If this rally can exceed three days the low is in place.
There are a few commodities that are also starting to look like a bounce is possible.
Disclaimer: All the reports and content in the entire McLaren Report web site (including this report) are for educational purposes only and do not constitute trading advice nor an invitation to buy or sell securities. The views are the personal views of the author. Before acting on any of the ideas expressed, the reader should seek professional advice to determine the suitability in view of his or her personal circumstances.