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Summary for Week Ending 31st October 2003
The market this week could have been said to be pushed along
by the fantastic growth number reported, showing the economy is thundering
along. The cynics amongst us would simply say that the market went up
this week simply because it did. I prefer not to infer too much into news
reports but I always keep a watchful eye on events and numbers that may
be induced to have short term effects. The economic numbers this week
did not seen to have much impact, so it may be interest rates that may
be the next ones to watch to see what really is the flavor of the moment.
Last week I mentioned that the market was in a difficult position with
the technical indicators showing a confused outlook. The market, as always,
led the way out and showed that there is still life abounding in the old
bull. Over 4 days the S&P and the DJIA managed to crawl back all the
losses over the previous week, and decided to take a rest on Friday. This
put the S&P and the DJIA at an almost 'Double Top' position, but the
previous swing high is always a good spot to look for natural or obvious
resistance. I also mentioned last week that I was expecting this swing
upwards to be of lesser extent that the previous two, giving us to an
ascending triangle. This scenario is still in play and is displayed in
this weeks S&P chart. I have highlighted the previous 2 swings forwards
as well as a possible extent to the third, being the 1068 range mentioned
a couple of weeks ago. If we extend the trend line ( blue) forwards we
can see it cuts the 38.2% retracement level on or around the 13th November,
or almost 2 weeks away. For this to play out we will need to see some
congestion in the coming week to fill out some time, as the market is
very close to this price target at present. Also looking from a time perspective
the initial run from March to June was 98 days. A 98 day run from the
August low comes out at 12 Nov, so there are some factors pointing to
this so its just a matter of wait and see. Looking at the DJIA we can
see that the Price Square up from the Oct 2002 low shows 37.5% comes in
at 9897, with the Thursday high in at 9902. At this point, whether this
hold or not is purely academic.
The coming week may unfold as I mentioned above with continued congestion
as the market consumes up some time. There is no expectation that the
run is over as double tops are a poor way to end a run so I will be holding
out for further gains in the near future.
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