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Summary for Week Ending 5th December 2003
After last weeks tentative move forwards, is was good to
see that this week we finally saw the 1068 area of the S&P 500 being
tested.
Most of the past week we saw trading above the previous weeks range which
was not entirely unexpected. Wednesday we saw the S&P hit the 1074
area which is above the expected 1068 area of resistance although what
we did witness was a lack of desire to get along with it. If we look at
the previous week we can see that once it started moving forwards it was
generally content to do so. This week we saw the trading in the range
where previously we were expecting price resistance and that is what we
did see. When we are expecting a change in trend, one of the first technical
signals I like to look for is the market running into the area. This is
certainly not something that we have seen in this case, in fact the market
more or less crawled into the point. The resistance encountered can be
said to come from a number of factors, the upper trend line not being
the least. When we apply a Gann Fan to the chart we can see that the market
is hovering in and around the 1x1 line, so we are also seeing uniform
movement over time, again nothing out of the ordinary which lately is
also very slow. This lack of any speedy movement is also reflected in
the Volatility index which is still very low, although you do not need
to look at the VIX to know that things are slow.
If we see a continuation of the downwards movements then we should be
looking at the dimensions of the previous slides as a indicator of what
to expect, the wave 4 decline of 54 points is still the benchmark so it
could be stated that anything less than this is possibly a counter trend
movement and is only a waiting state till the market resumes. Also to
be taken into consideration is the approaching holiday season and the
general malaise that can be cast over the markets. As things have been
considerably dull so far, I can only expect that things will get even
worse. Also we have to look at the sometimes seen 'January effect'. As
this feature has become more widely known, more and more players will
inclined to get set in December, which should in turn lead to more gains
for this month with January having to find it participants elsewhere.
From a time perspective, the High on Wednesday 3rd was a year since the
Dec 2 high in 2002. Again the significance of this (or the lack thereof)
will play out in the coming weeks.
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