Summary for Week Ending 22nd March 2003

It is difficult to mention the market behavior this week without due reference to the military activities in Iraq. All this week the action has been up. There is no too much that can be added to this. All three markets have managed to work through the various 'obvious' levels of support in the seemingly unstoppable marching forward with the DJIA rising an amazing 1154 points.

How far can it go before stopping to take a breather... the answer is in recent history...
From the Oct 2002 low the DJIA flew 1265 points forward in the initial run. From the July 2002 low it ran 1317 points. We are close to the possible point of resistance.

Last week I mentioned that the March 21st ( equinox) was worthwhile considering, however that was before we starting dropping bombs. It may still prove to be worthwhile since the March 12/13th call has certainly proved to be significant. When looking at the run from the JUly 2002 low it retraced almost 61% ( ~800 points). When looking st the Oct 2002 low the retracement was only about 26% ( ~360 point). There was a high risk trade possibility on the 21st by trading against this run upwards, and whilst a 61% retracement would be profitable, it is all conceptually very risky.

Whilst all this war business is happening I am not willing to make any real forecasts as there are now innumerable factors that can bring pressure to bear on both sides of the market. Whilst technical indicators can still be viewed as valid, the added mystery of war is simply too much of a variant to factor in. hence, unless I get a signal with a flashing red light on it...I will not be trading.

Of far more importance is the underlying strength that can be attached to this rally. It appears that the markets are playing the history game by looking at the last Gulf war in 91 and getting set early to participate in what is hoped will be a repeat performance. From a simply fundamental perspective this is a bad bet and from a technical perspective it looks even worse. When this run completes, I would be looking for a lower high formation and then a high speed route back to the previous lows. Personally I DO NOT believe that this is the end to the bear market.

No Charts this week..... Straight Up looks the same no matter how you look at it.