| Summary for Week Ending 26th October 2002
After the near vertical run upwards, we finally saw the DOW and S&P
take a bit of a rest this week with both markets oscillating between up
and down days giving us a sideways wave form. The NASDAQ did something
a little different, which is not uncommon lately and managed to push higher
towards the Sept 11 reversal day Highs.
Looking closer at the action for the week, it still appears that the markets
are reacting to whatever the news is for the day. This implies that the
underlying sentiment is neither bullish or bearish...just scared. The
natural tendency is to buy based upon the fear of getting in too late
and missing the opportunity to recoup the losses incurred in the recent
decline. This mindset is directly opposed to the fear of buying in at
the top only to see the declines resume and getting killed once again.
When the markets are in this mood it gets extremely difficult to gauge
what will happen next as you have to predict what the news is going to
be, and then predict what the reaction to that news will be.
The best way to avoid the above problems is by ignoring this impact and
simply focus at the pattern. We have had a very strong move forward which
needs to be corrected. The run upwards was 11 days (8 trading days) and
assuming the run ended on Mondays high we have had 4 days of corrections.
So we now have a Higher Swing Low in place. Simply following the swing
charts enables the analyst to ignore all the outside influences for a
while and simply concentrate on what the market is actually doing.
Should Monday be down then I would expect the rest of the week to be up
but certainly without the same vigor that we have seen since Oct 10th.
Looking from a contrarian perspective, if a deep corrective pattern is
expected...you wont get one.
Swing Charts
DJIA, S&P500, NASDAQ
The Higher swing High / Higher Swing Low pattern is in ( But not Yet for
the NASDAQ ).
Charts
DJIA and S&P
This week charts highlight the slight clustering of Solar Degree intervals
that occurred this week. For both markets, looking at the corrective pattern
that occurred off the July 24 run we can see that they corrected deeply.
Since this is the most recent rally from a decline the Elliot rule of
alternation ( or contrarianism) states that something different should
happen this time, hence a shallow correction is called for.
NASDAQ
The NASDAQ appears to be again making a run on its own, with little
or no heed to the other two markets. Again we are looking at the new parallel
channel to see if it offers upside resistance.
DJIA See
Chart
S&P 500 See
Chart
NASDAQ See
Chart
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