Summary for Week Ending 15th February 2003

A topsy-turvy week with all the indices bouncing around with two rallies and three declines, The worlds media also seem to have agreed on an expression for the Iraq issue, using the phrase 'geopolitical situation'. Well this week the 'geopolitical situation' did not improve and as such the markets still appear to be easily spooked by anything that resembles a war footing. The heightened terrorist alert is adding to the cauldron as is the increased surveillance for the Presidents Day long weekend.

Looking at the week in review... Monday was down, however slightly and this was followed with another hollow rally on Tuesday. Wednesday and Thursday were down solidly, however a rally appeared out of nowhere on Thursday, with deep declines captured and the markets closing with a slight loss for the day. Friday was an up day although there was some large intraday swings before finishing ahead well for the day. At issue for me is the Thursday rally that was carried over into Friday. It did come from left field, and looking at the chart, there is some technical support for the declines ceasing where it did,


Looking ahead for the coming week, as I said last week, this decline should be turbulent. The decline thus far has seen just 1 day countertrend rallies, an we had ours on Tuesday and Friday. A significant bottom on Thursday would be better supported with a volume blowout but this was not evident. Since it is a long weekend, on the news front truly anything is possible, but should the pattern continue, then I would expect a down day on Tuesday and at least Wednesday, keeping in with the pattern of 2-3 days down between rallies. Also, the Thursday Low should be taken out by the second day of declines or something is wrong. Should the rally continue then we are looking for a break above the previous swing high (Tuesday) and then break above the 3rd Feb high to put pressure on (or negate) the current downwards assumption. From the TIME perspective, late Feb and the first week of March is still showing the best time frames.

Just a note to the side.....The deep declines this week presented an opportunity to cash out 50% of my DJX March 79 puts, which at the time of purchase,indicated that at 76 that they would be worth approx 50-60% more than the initial purchase price. Price action on Thursday would have provided an excellent opportunity to cash up half the trade and let the rest ride. Unfortunately, the turnaround on Thursday happened at about 2.30 pm NY time. Thats about 5.00 am Australian time and I was fast ,fast asleep, so I missed the opportunity. It did however provide some motivation to investigate how this can be avoided in the future.

DJIA See Chart

S&P 500 See Chart

NASDAQ See Chart