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Summary for Week Ending 28th November 2003
A very quiet week this week with the Thanksgiving holiday apparently being far more interesting than
anything that the markets might produce. All activity appeared to be fairly trimmed and the short day on Friday only
appeared to reinforce the general feeling.
Looking at the past two week, I mentioned that I was uncomfortable standing in front of a market and stating that
its all over. Again the markets have showm that this attitude is prudent, although we had some good declines,
the market never really got on with it. Suffice to say that if a market should fall, then its should fall. the
same applies when market are rising, that is, if they are supposed to go up, then they go up. The unfortunate problem
we have been having over the previous 3 to 4 months is that we have been spoilt over the previous couple of years with
large and definitive movements. Recently, as we all know, the market has been very sluggish.
If we look at the S&P since August, we can see that we have 6 clearly defined wave movements and this weeks shortened
run has begun the 7th wave. With a borrowing on Elliot we know that market movements will mostly occur in 5 or 7 wave
movements with the occasional 9 or 11 wave attempts. Should this be watched ? The answer is of course yes. When markets
are sluggish, then we are looking at a greater time frame and specific technical targets take longer to be hit (or missed).
I'm still looking at the 1068 area for the S&P which was first canvassed about a month ago as a likely area of upside
resistance. Since we have come close to this level and peeled away it was originally thought that perhaps this is as
close as we are going to get. With the rise beging in the passing week, showing the potential for a 7th wave advance,
then again this obviously comes back into play. From a trading perspective I have been out for some time. With this
compression been going on for 4 months now, its difficult to get excited about any positions in either the DJI or the S&P
index. Looking at the Volatility index, this is still in decline and a long way from the highs. The primary advantage here
is of course is the options are cheap and once a viable position becomes available, there is the double profit possibility
of securing both directional value as well as an increase in volatility value. Again of course this is dependent upon a good
position becoming available.
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