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Summary for Week Ending 5th September 2003
Finally we have both the the S&P and the DJIA marching
to the same drum. In a week shortened by the Monday holiday, the markets
managed to take the cue from the previous Fridays close and decided to
explode out of the boxes.
For the past few weeks/months I have been looking at the S&P from
both the Gann and the Elliott perspective, mostly from Elliott as the
Gann approach wasn't giving up to much. Last week I posed the conundrum
of both a bullish and bearish scenario, the Bear based upon an ill favored
Elliott wave pattern and the Bull based upon the simpler approach of basic
Swing pattern analysis. As we all now know, the swing pattern was correct,
which only goes to further my dislike of extended Elliott corrective patterns.
The move on Tuesday saw the market breech the previous swing high ( 22nd
Aug) and the high for the cycle (14th Jun) in the same day and showing
little regard for these previous highs. The interesting point for mine
is the problem the market experienced all week with the 1029 level. On
Wednesday and Thursday we saw the market trade in a thin range off an
intra day high of 1029 and Friday say a slide off this level to a lower
low (intra day). The worst case scenario here is of course a false break
and a slide back into the sideways range. These can never be predicted
in advance and is why we always use stops. Should the current upwards
movement continue then I would like to see the corrective behavior we
saw late in the week, drop no further than the Aug 22 high. A better result
would be a bounce off the 14th Jul high.
The DJIA on the other hand has been creeping slowly forward for some months
now. Although it still can't get out of its own way, the trend has been
maintained. Looking at the weekly chart we can see the rising 'flag' pattern
and what appears to be the subsequent breakout to the upside.
What will be weighing heavily on the markets this week is of course the
2nd anniversary of the Sept 11 attacks. Whilst no one wants to see a repeat
of that behavior, it goes without saying that a major event would have
negative consequences. If the market slides into Thursday, then should
nothing happen, it may be a pointer for a rally to follow. ( Its the opposite
of what happened last year). Looking at this weeks S&P chart we can
see that this coming week has a number of possible days contained within,
so a close watch will be required.
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