Summary for Week Ending 22nd November 2002

There IS life in the old bull yet, with the DJIA and the S&P displaying some definitive signs of life after what has been a very weak period of congestion, and just when your set for a decline, the market always manages to surprise.

The NASDAQ, this week took its lead from last week, and after a slight hiccup on Wednesday, managed to soldier on past the Aug highs, which gave the first point of resistance. The next levels of interest are the 7th May low and the standard retracement levels..

A fair proportion of last weeks report was spent outlining the reasons for a speculative short was on the cards. In hindsight, all of the reasons proposed where valid, but this week the market provided a valuable lesson in how quickly a valid assumption can vaporize. The downside movement that I was looking for did appear (however briefly) and up until midmorning on Wednesday this scenario was still in place. When the DOW hit 8548, one point above Tuesdays high, all this analysis was instantly trashed, and hence it was time to leave. That's what Stops are for.

Following on from this in more detail, I was looking for a reason to take a short side position. This was dealt up on Monday with a weak performance. the short side showed some promise on Tuesday with a down day, although I felt that it was less than convincing. For it to be serious, Wednesday had to be a down day as well, so my stop was Tuesdays high, which was hit and I was taken out with a minor flesh wound. In hindsight, there was an opportunity on the upside with Wednesdays movement, but hindsight is never available when you really need it. Since I was unsure as to where the market was placed...when in doubt..stay out..so I put some iodine on the wound, and watched the rest of the week unfold from the cheap seats. Looking at Fridays close, which could be considered damp, I suspect that Monday may produce a down day. Since we have a new high, with consecutive Higher Highs and Higher lows...and that un-imagined running correction has come to fruition, then once again the Aug Highs are the target. A standard correction this week may give rise to an opportunity on the upside, but the current lack of intention to trend clearly makes this an ever increasingly difficult proposition.

Looking ahead to the coming week, we know at least one thing.. and that is that the movement down from Nov 6th was countertrend. We had 5 days down followed by an upward push to new highs, As the downside punt was a cheap exercise in picking the wrong direction, then I will be looking to take an upside position in a decline, assuming of course that the decline also gives the appearance of being countertrend in nature.

Charts

DJIA The Chart this week highlights the running correction to the upside which was evidenced this week. Standard trend lines are also marked up, as well as the looming time zone of 49 days which takes us to 28th Nov. the next time zone is 78 days which terminates on 27th Dec. There are a number of time factors which work out for around the Christmas period, with the strongest appearing on Christmas eve (???). There is also the Summer/Winter Solstice on the 21st December.

S&P500 The Chart this week principally highlights the retracement levels for the entire run down as well as the upper trend line indicating the point of standard technical resistance. Also of note is the Sept 2001 low which can also be expected to also provide an element of resistance.

NASDAQ The chart this week highlights the current parallel channel, as well as the standard retracement levels There is a Time zone which takes us to the 18th Dec ( close to the possible DJIA levels ) and the principal upper trend line for standard technical resistance.

DJIA See Chart

S&P 500 See Chart

NASDAQ See Chart