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Summary for Week Ending 3rd April 2004
After a fortnight away we can see that the market made a last bid to go down before succumbing to some upwards pressure. In a week marked by oil pricing issues and nastiness in Iraq, everything still appears to have held up quite well. Of primary interest is the solid continuation this week of gains in the S&P index, stretching activity to 7 consecutive days of rises. An event that in itself is quite impressive, and we have to look a long way back before we can see a similar performance.
Looking at the S&P chart, we can see that the market has marched along quite nicely and has taken out the intermediate swing high from 2 weeks ago. Looking at the initial decline we can see that it took 19 ca lender days to unfold and we are now at 9 ca lender days for the reactive advance, or approximately at the 50% time range area. In this time the market has rallied back approximately 75% of the initial decline, and we could expect the market to take a breather at this point. As things are now, its going up, so predicting an end point to this motion is a fruitless exercise, as we are looking for signals, and not trying to pick tops and bottoms.
If look at little closer at the rally, the corresponding volume is less than impressive, and so we have a slight divergence here, although there was a slight blowoff on Friday. If this holds up, then we could expect the falls to resume in the week coming into Easter, but what is unknown at this point, is the degree to which we can expect the falls to take. If the current rally is counter trend then we can expect the decline to continue beyond the March low and its should be a staggered, complex affair, seeing as the initial movement was quite simple in construction ( Elliot rule of alternation). If this decline continues then we are looking at standard levels of support. If we have a minor correction and the rises continue, then we are looking at the last high as the next point of resistance. Whilst the swing charts remain mixed, we can only wait and see how it unfolds.
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