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Summary for Week Ending 7th November 2003
A bit of a nothing week this time around with the market
going up, then down then up but generally not making too much impact on
proceedings.
There isnt too much that is new this week. As Expected the market continued
on its way up and also as expected it went slowly. We managed a rise
on Monday followed by two very quiet days of counter trend movement, not
totally unexpected. Thursday and Friday saw the market run up again to
mark a new high and Friday saw this sold off. The target is still for
the 1068 range in the S&P and there is nothing too serious to deflect
me from this opinion. From a visual standpoint, the rising triangle or
wedge pattern is clearly visible and certainly appears to be in its last
days. From a technical standpoint, once the wedge has compressed to its
maximum, the market can be expected to shoot out of it... in either direction.
This is where Technical analysis has a bet each way. Identifying pattern
that says the market can go up or down is of little use, so we need to
make a stand in either direction. Setting up a scenario for the market
to decline is not too difficult as we have seen the market rise considerably
without too much correction. The previous few months have seen the pace decline
rapidly which can be taken as an indicator that there is less energy in
the system to the upside. Since we have been in Bull mode for such a long
time ( comparably to previous 3 years ) it is also madness to stand in
front of it without a clear indication that the mood has altered. Looking
at the succession of minor higher swings, or false breaks, a final run
that is also a false break would be a fitting end. Looking at the local
media there are continued reports of the masses getting back into equities
and in this stage of the cycle, I would consider that Doctors, Lawyers,
Widows and Orphans jumping back in as an ominous signal, but that maybe
just the cynic in me talking.
Looking at the time cycles, the 12-14 Nov still looks good, but price
action will be a key indicator. Also sudden weakness around the 1068 level
will also be a telling signal. If the Market blasts through the 1068 level
then we can safely assume that this area is of little consequence and
we should be looking at resistance levels higher up.
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