CNBC ASIA

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LET?S LOOK AT THE NIKKEI DAILY CHART

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Last week we looked at how the move down was marginally less than a ª retracement of the entire bull campaign.˜ The chart today shows the correction was also only 3/8ths of the last leg up.˜ The 3/8^th and ª correction keep the trend intact and leaves a projected movement to the 1785 price level as a minimum.˜ And since this is a qualified blowoff trend as you can see by the ascending trendlines. And since this is a recognizable ?Pattern of Trend.? I can see only two probabilities for the future of this trend.˜ If this is now starting another leg up it will be, as fast or faster than the previous leg up but due to the strength of the past two weeks the index will need to consolidate that strength. You can see by the distance the daily bars have moved above a hypothetical trend line I?ve drawn is far to large to be maintained and ?time? will need to catch up to the current fast move up with some consolidation action. But the arrows indicate what the next leg would look like if there were another 4^th ascending trend line. That is unusual but not impossible.

Or the second scenario will see the index will advance after some sort of consolidation but will go into an upward tilting sideways pattern exactly as I have drawn on the chart and will go on for the next three months and produce a top.˜ Since this correction was only 8 days down and a new high was 4 days latter there is an obvious sign of strength on the chart but since two days were a majority of the move the index will need to consolidate that movement with some congestion this week.˜

As far as I can see those are the only two alternatives for the future of this trend.˜ If there is another leg up it will exceed the 1785 price level and go to Mid-April for a top at an even faster pace than the last leg up.˜ We also need to be aware of March 4^th through 13^th as a possible high of some importance.

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THE NEXT CHART IS MY 2006 FORECAST FOR THE US MARKET THAT WAS PUBLISHED IN THE FIRST WEEK IN JANUARY

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This is now at the critical part of this forecast.˜ As you can see I got the last high exact and called for a small correction and a double bottom before the trend resumes from a low on either the 3^rd or 10^th.˜ This forecast is based upon the 20 and 60-year cycles. ˜I expect to see a top this year and a bear trend in 2007 setting up 2008 as a bull year.˜ But we need to see this correction remain shallow for this scenario to be valid.˜˜˜

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