CNBC EUROPE

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LET?S LOOK AT THE DAILY CHART OF THE FTSE 100 FIRST

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The previous week we were able to identify what was taking place in the market.˜ It was down to 12 trading days, which is the last day to hold the trend intact.˜ It was also down to the first and most powerful of the support levels at 5235 or a ª retracement of the entire move up.˜ If this held then there was a chance of testing the high or resuming the trend.˜ The level held and the index is now up three days. If this rally can exceed 4 days the trend is probably intact for a test of the high or resumption of the trend.˜˜˜

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LET?S LOOK AT THE S&P 500 DAILY CHART

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Three or four weeks ago I said the index would go down to 1204 and if that support held there was a chance of resuming the up trend in a big way.˜ Then the hurricane was approaching and I thought the index could break that level.˜ It did break it but by only a few points and has managed to rally two days.˜ Considering the news from the hurricane and the price of oil, it was a strong move.˜ I need to see a few more trading days, remember the normal counter trend is 3 or 4 days.˜ I had been predicting a fast move up from the next low, one that could run for 90 days.˜ But I need to see some more trading before I?ll be willing to commit to that forecast again.˜˜˜˜˜˜

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LET?S TAKE A QUICK LOOK AT THE OIL CHARTS STARTING WITH THE MONTHLY

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This Monthly chart is illustrating a classic blow off style of trend.˜ There are usually three and possibly 4 ascending trend lines.˜ That is what we are now witnessing.˜ We could view this last move up as a 4^th ascending trend lines.˜ You can see the move up in 20004 had three ascending trend lines.˜ Once this structure is complete there will be a fast retracement as occurs when all blow offs terminate.˜

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NOW LETS GO TO THE DAILY CHART.

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Historically the last leg up is either 90 days, around 120 days and 180 days.˜ Best probability is between 110 and 135 days.˜ But 120 can be exact.˜ Those are the time periods for last legs up +- a few days.˜ The index is now up 105 days depending upon which contract.˜

Notice how the last drive up is showing one day counter trends and appears to be struggling.˜ If the trend ends with a last move up as a struggle, the move down will be vertical.˜ If it exhausts with a wide range day and big gap up, it will be fast down but we?ll see some counter trends.˜

My first solid date for a high is the 15^th through the 17^th but it all depends on how the market moves into that time window. That is only 8 or 9 trading days away.˜ I know I?ve been saying this for a few months now, but this will exhaust and correct a large amount.˜ That amount being 20 points if it is from close to this price level.˜

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CNBC ASIA

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LET?S LOOK AT THE HANG SENG INDEX DAILY CHART

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I had previously identified this trend as one that would exhaust or move vertically into a top.˜ Two weeks ago I said the top was here and a correction was going to occur.˜ Last week I said that the price of 14625 would not be broken and the history of this index is to re-test exhaustion highs.˜ So last week I said to ?anticipate a low at or above that price level and to look for an attempt to re-test the high.˜ The decline in the index was 8 trading days and as long as it didn?t exceed 12 days we could still assume a new high was not eliminated as a probability.˜ The index is now up 4 days up and if this is a top in place and a lower high is going to occur it would be on the 4^th or 5^th day.˜ So it is important for this index to eliminate the possibility of trending down by moving up just a few more days. The resistance is the horizontal line to a price marginally above the high for this move up.˜ It is important that we see no sign of trending down, considering this was an exhaustion style trend it is important the exhaustion is followed by a consolidation and not a reversal in trend, which is still a probability for this week.˜ So it needs to extend this rally and to not exceed 4 days down.

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NOW LET?S TAKE A LOOK AT THE AUSTRALIAN ASX 200 INDEX-DAILY CHART˜

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Last week I indicated I thought the index was going into a consolidation pattern of some sort but was not going to trend down at this point.˜ As you can see the index showed one more wide range day down that held 3/8^th of the range up and held the previous high. Thus holding the trend intact. The index went 4 days down which is a first-degree counter trend that held the trend intact. This was followed by a marginal new high and a reversal back below the high that also closed on the low for the day on Friday.

This index is in almost the same position as the Hang Seng. They have both completed an exhaustion of the current leg up and this index did go into a consolidation as forecast.˜ The question is now what is going to follow. The pattern in the ASX 200 could be a ?False Break Top? or it could be consolidating the move up for another leg up. But the follow through today would indicate a top of some sort with a broadening pattern now in place.˜ I assume the index will marginally break that last low.˜ As I indicated I believe this is going into a larger sideways pattern with a deeper price for the low and when a new high is hit it will be the end of the bull trend and possibly produce a 7-point broadening pattern. All of this is going to take months to form.˜˜˜˜˜˜˜˜˜˜˜˜˜

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