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Summary for Week Ending 18th May 2002
Finally a week
where some positive, and perhaps encouraging events have occurred. Last
weeks countertrend rally, managed to hold and form the platform for a
possible end to the previous 60 days of bearish intent. Strong
performances early in the week were consolidated and held, without showing
the previous swift evaporation that has been the trademark of progressive
steps of the previous decline. The forecast COT did not appear, and it
would appear that the May 7th bottom of the previous week may have been
the COT date after all (see this weeks chart for a full discussion of
this). There was also an absence of any outstanding volume participation
in the DOW and S&P as well, which does give mixed signals, when
looking at Price and Pattern. The NASDAQ however has been giving good
volume signals coupled with Pattern, however it is difficult to see the
NASDAQ leading the charge ahead of the majors.
Swing
Charts
DJIA A Higher swing High and Higher Swing low this week,
has finally swung the DOW for Bear-neutral to Bull-Cautious. This pattern
has not been evident since the Jan 30 low, and as such gives for a strong
possibility for further gains, with a lesser probability for new lows
below 9750. The previous 3 upswings are as follows : 416, 454 and
currently 510. There is some expansion to note, and confirmation will
appear with a successive Higher High/Higher Low swing pattern. Should this
occur, then a Swing Low above the previous 10204 swing High would be an
indicator of strength.
S&P500 Similar to the DOW we have a Higher Swing High/Higher
Swing Low pattern giving a strong indication of bullish intent. Also
similar to the DOW, we have had no exception volume participation in
either the previous decline, or this current run up, which leaves us only
with price and pattern and the time element to play with. (See this weeks
chart regarding these issues). We are now looking for confirmation, coming
in with a successive higher high/higher low formation, with a higher low
above the 1089 high indicating strength.
NASDAQ Swing movements this week, have the formations looking
strong from this perspective. Should Tuesdays 'Gap' up be filled, this
will negate a strong swing movement in the short term, as we are looking
for the next swing low to be above the 1696 high. As with the other
markets, failure to clear this high should initially be viewed with some
caution, as it is a indicator that the market is not as enthusiastic as it
appears.
Charts
DOW This weeks chart has the 8x1
line running from the Sept low ( courtesy of H.G. in NY ) as well as the
Time Frames for the 7th May COT . I wrote in the original forecast that
early May has produced some significant results. There were always two
possibilities ( 7th and 14th ) the 12-14th date was selected as this had
more time zones zeroing in on the date. This forecast date produced
nothing, except went towards the confirmation of the May 7th low. This
just shows what happens when you pick the wrong one! From the 7th May low,
all three markets have formed the Higher High Higher low formation which
can be read as a strong platform from which to launch further gains,
leaving us with a simple technical level (lower low) to watch for a
reversal.
S&P The chart this week, has the Price ranges
of the recent decline, which can be broken into a simple Elliott 5 wave
decline, with two waves of equal length ( 42 ) and the 3rd ( 110 ),
usually the longest but never the shortest, being a direct relationship to
the shortest ( 110/42 = 2.618). This is all hindsight stuff, but may be of
interest to the less experienced. Assuming the decline is over, then we
have had an essentially flat correction, with the terminus of the recent
decline extending no further than 25% of the initial downward push, which
is highlighted by the range square tool.
NASDAQ This weeks
NASDAQ is based upon the assumption that we can expect some gains in the
coming months. Looking for possible upside resistance clusters there are
two that are obvious : 2811-2818 and 2267-2272. The NASDAQ has a long way
to go to prove itself, and the previous two highs (1946 and 2099) will
need to be breached confidently.
DJIA See Chart
S&P
500 See Chart
NASDAQ
See
Chart
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