Summary for Week Ending 13th December 2002

Not much entertainment this week as all three markets started with a downer and then spent the rest of the week consolidating the declines which began with last weeks outside reversal on Monday 2nd Dec. Of a sideline interest in that the pattern since Dec 2 has been identical for all three markets, with the NASDAQ now coming into line with the shape and pattern that the DJIA and S&P500 have been exhibiting.

Looking at both the DJIA and the S&P , the markets have now come back well into the area of previous congestion and it could be assumed that this area may again throw some confusion into the market and have everyone sitting on their hands looking for a clear directional signal. With Mondays down day banging up against a minor support line, the next three days were spent trying to display some strength. From a simply technical perspective it could have been expected that the markets may have retraced to at least 50% of the recent decline but even this was not possible. The next obvious technical point of resistance to the upside was the Nov 26 higher swing low. To maintain some faith in the upside it was imperative that any upside run this week carved into some of this territory. As it is, all three markets have shown a flagrant disregard for this point and by Thursday ( 3 days later ) neither of the three markets had managed to pull back into this zone. Friday saw the market decline below the minor supporting line and this produced the lower swing high that was mentioned last week and the signal is produced.

As a trading proposition it was a good point to look at some Puts on the DJX as it was possible to get set and keep the stops very close indeed. Unfortunately I am having a long weekend holiday in Canberra and late nights have had me sleeping in well past the market close so I haven't been able to get set. If the market is indeed looking at a South east direction, then there should be another opportunity to enter with an expected counter trend rally around the 13th Nov and/or Oct 29th swing lows.

Looking at the coming week, it is difficult to go past the technical information that is before us. We have a clear cut lower swing high, with a downside gap below the previous swing low. This is not a bullish pattern. As with all these things, we are perhaps still in need of further confirmation and this should become evident this week. Trouble in the Gulf is approaching a climax as the climactic parameters of this event are closing in, and as such the pressure of this over the markets will only increase as time goes by. I'm am still watching for the Christmas COT, however as I have mentioned previously, this is a strange date that has little historical support behind. In summary, a further lower swing high can be viewed as confirmation. Further evidence of congestion is a signal to go fishing.

Charts

DJIA A simple chart this week highlighting the gap between the swings as well as the slight break below the minor support line. I have also overlaid a standard swing chart over the bars.

S&P500 Same as the DJIA

NASDAQ Standard retracement levels as well as highlighting the gap in the swings.

DJIA See Chart

S&P 500 See Chart

NASDAQ See Chart