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Summary for Week Ending 3rd July 2004
A poor week for the market as we saw evidence just how weak the
situation is at present. Attempts to go forward in the past few weeks
have been stymied and although the market finished stronger last week,
there was no carryover into this week. Events in Iraq look as far away as
ever from a resolution and US domestic rates may have played a part in
this weeks lack of enthusiasm.
Looking closer at the week, we saw litle action on Monday giving a down
day against the previous Friday and this was followed with an inside day
on Tuesday giving us a 2 bar count on the counter trend movement.
Wednesday saw an up day against the Tuesday inside day leaving
Thursday with the opportunity to put in a consecutive up day. The market
did close stronger on Wednesday but in light of recent events this was
not a strong signal.Thursday we saw the gains of Wednesday evaporate
quickly and be consumed with the market dropping below the low set on
Tuesday and the intent apearing very bearish at this point. The action on Friday did appear to hold up a little but it is still looking fairly weak with very little volume present.
If we look at the past few weeks in a single context we can see that
the market has been struggling to go upwards and atte same time been
struggling to make any inroads to the downside either. Up days, be they
1 or 2 day sequences are being taken out quickly the the current
movement is still upwards (at the moment) although its more like sliding
upwards as opposed to striding forwards. This is an indicator of
compression and like all compression patterns, can break out in either
dorection, although depending on the strength of the underlying trend,
can be exepected to move in the same direction. Looking at our picture at
present , we can see that we dont really have a trend in place, and this
compression behaviour has come at the end of a rally that followed a
threee wave decline pattern. Under Elliott terms we may be looking a
what is termed a double correction pattern. If this is the case then we
know the first corrective pattern was a ZigZig style, and so ( following
the rule of Alternation) we are looking at a Flat style correction to
follow. Generally these patterns are seen in reverse, that is a Flat
correction followed by a ZigZag, so my confidence level on this is not
strong at present. If we do indeed see the flat correction unfold then
it would go towards what I have been saying in the past few weeks, that
perhaps we are in for some sideways movement for a while.
There is nothing striking n the chart at the moment so the coming week
I will be expecting more of the same. If the high of the previous
Thursday is indeed the high for this swing, then I would expect the
market to track back down towards the previous cyclic low wich is 1076
area. I dont expect this to happen next week, but it may start to trend
in this area.
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