Summary for Week Ending 21st June 2003

The markets showed little enthusiasm to do much at all this week except to strike a new swing high for the cycle. Once hit the markets decided that a strong pull back was in order, however this too failed to produce any follow through and the markets basically finished the week marginally above where they started.

Looking at the week a little closer, Monday saw the markets fly off into new highs following from the previous Fridays decline. This was followed again on Tuesday and again on Wednesday for the DJIA. The S&P by this stage had had enough. Thursday saw a solid decline, and there was an opportunity to make more of this, however the markets held their ground well. Looking at the volume figures there is nothing that stands out against the June 6th spurt, so we are receiving no real help in this area as yet.

Last week we were looking at a possible lower top formation on the S&P, however I said that the behavior was not optimal. This conjecture proved valid this week as the markets continued their forward movement, thus confirming my assertion that when dealing with the random effects of financial markets, it is always best to wait for confirmation of a possible setup than it is to dive right in. The latter may provide more action, but the former is the safer approach.

Last week I said that that conflicting signals should resolve themselves and they did this on Monday. There is little to point the way forwards except to say that the trend is in place, and without a truly valid reason to assume the opposite, it is difficult to bet against it. The curiosity is presented in this weeks S&P chart which highlights the 3 waves forward. If the pattern is valid then it would indicate an end to the run under Elliot terms, but as always this is fraught with danger. I still expect consolidation of the recent rise in the S&P simply because I believe the run to be unsustainable in the short term. the depth or severity of any correction should be reflected in how soon it appears.

Looking at the coming week, again it can go either way, and I'm loathe to take a stand. I'll be watching from a purely technical perspective this week.