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

Three weeks ago I indicated the index was going into a sideways pattern of some sort. The trend up was vertical and needed to be consolidated. Last week the index has made an attempt to resume the very fast up trend but Thursday and Friday stalled the move up. This is an important week as the index will either resume the trend or drop back into the sideways and possible test the downside. I have the feeling there are an inordinate amount of buyers looking for weakness to buy. So I wouldn?t believe and move down will get legs. There needs to be some upside follow through to Thursday and Friday?s price action or there could be a small correction. Upside resistance 1213 and 1239 - first real time factor is not until the 17^th of the month.

Seasonally, it would be unusual to see a down December while in a bull trend. Worst case scenario is a continuation of a choppy sideways pattern. The first two week of January will be the critical time window for this advance. 1260 is still the target for this trend.

LET?S LOOK AT THE US DOLLAR INDEX

Last week I pointed out the index had just hit maximum momentum within this exhaustion trend down. This indicated the index was now in a panic move down and would eventually capitulate into a low. Since this is an identifiable mode of trend, we can apply some specific criteria. If this trend can rally more than 4 days, this leg of the downtrend will be complete. But until that time, this index and the US Dollar are in a panic decline. The low day will likely be a wide range day that closes on the low or a huge gap down to create an exhaustion of the trend. Best time I have for a low is 20^th December. Considering this is a panic move down, my price and time calls on this index are not high probability analysis. Historically the index could go as low as 76 or it could stop here. I can tell you when the trend is complete, but panic moves as this are difficult for me to forecast the exact low - but I will be able to tell you the week the low is in place and the downtrend is complete. But now it is a vertical move down.

One thing to keep in mind when looking at charts displayed on computer screens. The bigger and faster the move, the more your computer will work to flatten out the move so it will fit on the computer screen. So as this move has picked up momentum, the computer screen will, visually, show less pitch or momentum.

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ASIA

LET?S LOOK AT THE NIKKI INDEX FIRST

We haven?t focused on this index for months, because it has been doing nothing. While the other markets around the world have been trending upward since August. This index has been moving sideways. This could be viewed in two ways, first, while the other markets have been strong this has been weak so when the other markets turn down this will turn down much harder. Let?s call that conventional wisdom. But this could also be viewed as a struggle to go down. You can see this is now the third test of the low and when that is completed, we should be able to find the next trend. Because the past three months trading is taking place below the April and June highs (horizontal line) and because there are now two more lower highs. If a third lower high gets established it will present a risk of falling out of this pattern to the downside. But it also is struggling to go down - that is obvious - none of the runs down could get legs. So during this month there is a good chance this index could resume a trend. When a market goes sideways for over 6 months - it is poised to start a trend. Either way, we?ll monitor this index for the month to see if we can find the start of that next trend.

LET?S LOOK AT THE AUSTRALIAN ALL ORDINARIES INDEX

This is a classic example of an exhaustion leg of a "blowoff trend". This is a beautiful trend. This does leaves us with some very specific criteria that can be applied to this movement or trend. You can see the three ascending trendlines. This is the footprint of a blowoff trend. When the index corrects back more than 4 days the trend will be complete and the index will likely start a move down to retrace - first ª of the entire bull campaign and eventually 1/3 to 3/8 of the entire move and likely test the March 2002 highs. But for now this index is smokin?. Our price target is still close to 4000 and runs to 4025. But due to the momentum of the trend, a temporary spike up past calculated numbers is possible. Remember, this is exhausting all the buyers and when complete, there will be little support left for this advance.