CNBC EUROPE

LET?S LOOK AT THE FTSE 100 INDEX

Last week I indicated the index was at temporary support at ª of the range down.  I said the index would rally no more than 4 days the rally was three days.  After the first-degree counter trend was complete I said the index would match the previous move down at 285 points and stop at the August low, which was also 3/8^th of the major range up.  All that has occurred and the index is now down to ?obvious? support of the August low.  Since this is ?obvious? support the rally up from this level will be very helpful in determining the extent of this move down if there is more to come.  Next support around 5155 then the old high around 5060. The last support level was 3/8 of the last range up and does hold this up trend intact.  Also matching the previous move down in points keeps the up trend intact technically.  I believe there could be more downside but I need to see the next few days of this pending rally to see if it can be qualified as a counter trend rally.  If the trend is to remain down, the index should not move above the double horizontal lines.

S&P 500 INDEX

Last week we looked at the ?Pattern of Trend? on a weekly chart and determined there was a lot of risk at this point in the Index.  There was a probability present that could end this bull campaign due to the weakness of the last trend up.  The move down on the daily chart has come down to a momentum line and bounced.  The dash line that represents the March 2005 high is very important support.  If that is broken it will be a significant sign of weakness.  The momentum of this move down is very strong as you can see by the angle of descent.  Moving below the spike of the 6^th of October was unusual for a bull trend.  This rally should not exceed 4 days and will likely be two to three days if the trend is going to remain down at this fast pace.  The 50% mark could also be resistance for the rally if the trend is down hard.  If the rally can exceed 4 days, then there is a chance the low of some significance is in place.  But for now this is a very strong move down after a complete wave structure.  Until it can show me something different, I am assuming there is now a probability the up trend may have reversed.

CRUDE OIL

Last week the market showed a small exhaustion of the move down.  Our job was to determine if that exhaustion was significant and if the up trend could resume.  The importance of the ?Island? low would be confirmed if the market could exceed 4 days of rally and move above the previous lows illustrated with a horizontal like.  Since this correction down was less in both price and time than the previous move down the probability exists the up trend could resume.  So far the move up has only been two days and stopped at the previous lows.  A new low from here would be bearish as it would indicate all the rally it could muster after an exhaustive move down was two days and that indicates weakness.  A move back above the 2-day rally early this week would put the index back into a positive mode. Oil is up in early trading due to another tropical storm in the Caribbean.  It is important the market move above that two day high within the next two days in order to hold that advance in a strong technical position. Remember, if this goes to a new low within a few more days and it does so without hitting the trendline it is a sign of weakness. 

CNBC ASIA

LET?S LOOK AT THE HANG SENG INDEX DAILY CHART

Last week I indicated the index was not a pretty picture and had the probability of testing the December high.  The index had come down to the ?obvious? support and if the trend were down there would be a weak rally not to exceed 4 days.  We have previously discussed the probabilities for moves that come from the ?Obvious? support or resistance.  That rally was only one day and a new low the next day indicated a very strong trend down.  If the trend is going to remain strongly up the December high should hold or at least the May high of this year should hold this decline.  If the index starts to trade below that level it puts a lot of doubt into the up trend continuing.  The price level below those previous highs is 13,900 to 13,700 and would be the next stop if those previous highs don?t hold.  That price level is the last level that keeps the up trend intact.  I would anticipate support being found this week and the subsequent rally will tell us if there is further downside.  

LET?S LOOK AT THE AUSTRALIAN ALL ORDINARIES INDEX

Last week I indicated we could look for a rally due to the ?obvious? support zone.  The magnitude of the rally would be very helpful in determining the future.  If it was three days or less it would indicate the trend was still in a fast mode down.  The rally was exceptionally weak.  Or maybe better said the very weak rally indicated the downtrend was very strong.  That appears to be the current situation; the only bullish thing on the chart is the index looks so weak it may not be real.  It should go down to the previous high or that nearest 50% mark at 4256.  It should rally very little if at all if the trend is still down hard.  It definitely shouldn?t see the high of the last weak rally (counter trend) if the trend is to remain down. There is still an outside chance of a 7-day rally from this level, but that circumstance is the less likely of the two. There is some support at 4348, but I believe that will prove to be temporary if it is tested.  If it can rally past today (Monday) that rally will put my forecast at risk.   

LET?S TAKE A LOOK AT GOLD

On a short-term basis the move up in Gold has hit a pattern of trending that can present a problem for the up trend.  I refer to this pattern of congestion as a three-thrust pattern and many times this will end a trend.  The first indication if that is possible is if the move down can exceed 4 days.  It is now down three days.  There is nothing to say a market can?t move through this resistance, which is being illustrated with the three-thrust pattern.  But until that can occur we can assume this could be building a top of some sort.                    

NIKKEI

Last week I indicate the exhaustion we were anticipating had occurred and the index would likely consolidate the exhaustion with a sideways pattern.  I see no reason to change that scenario

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.