Summary for Week Ending 19th October 2002

A week of exceptionally jittery strength as all three markets continued the move that started on the 10th Oct. Last week I mentioned that we were looking for a strong open to the week to take us past the Oct 2nd swing high and this came through on Tuesday. The rest of the week appeared to be running on the latest news headline, which supplied the jittery side of the movements. If in fact the market is following the latest piece of news, then that implies that there is very little valid steam underpinning this run upwards.

I had expected a selloff period this week to balance the rises but this has yet to materialise, and it is the form and structure of this decline that is most important. So far we have had 7 days without a lower swing low in place (NASDAQ excluded) and the market has rocketed some 15-16%. Action on Thursday Friday hints that there is upside energy leaving the system, with Fridays zigzag action indicating that Upside pressure and Downside pressures are in equilibrium. Barring any news to reinvigorate the upside energy, it can be expected that some declines will commence this week.

Looking at the possible scenarios, the best case is that we get a countertrend selloff lasting 3-7 days and then a continuation of the upside movement. Volume will be a key indicator once the selling begins in earnest. The worst case scenario is that this rally has simply been countertrend and that we can expect the downtrend to continue. Personally I'm against this at present as technically I think the market will be able to hold its ground.

Swing Charts
DJIA, S&P500, NASDAQ
The Higher swing High is in - now we await the Higher Swing Low.
Charts

DJIA and S&P
Nothing special with the charts this week, simply highlighting the price entrancement level.


NASDAQ
The NASDAQ has broken to the upside of the longer term parallel channel and there is now a slower moving channel in place.

DJIA See Chart

S&P 500 See Chart

NASDAQ See Chart