Summary for Week Ending 6th March 2004

We started the week strongly, and it looked like we were going to see the market break into new highs by my target day of Tuesday, but this was not to be. We had a good upwards wide range day on Monday, so the inside day on Tuesday was not unexpected. The question of new movement versus counter trend was partially solved and we saw a small down day on Wednesday. This was counter trend as we say this decline taken out within two days, with the market on Friday making it to new highs and slightly peeping above the 50% retracement level. Looking at the movement on Friday, we saw a steep drop at the open followed by a strong rally to new ground and then a collapse to approximately the mid point and then the market did nothing for the rest of the day, so it should be noted that the run to a new high was not a solid move, but more like a knee-jerk reaction.

Looking at the S&P charts we can see that we have a new swing high, following a period a mixed performances. We have been looking at downside potential, be the higher swing low on Wednesday pretty much put that out for a while. Can the market go higher without a significant correction? Sure why not. It is always best to look at what the market is actually doing, than try to assert your own opinion of what you believe it should be doing and at the moment the market appears to be more than happy to continue moving ahead.

Looking at the S&P 100 chart we haven't made it to new highs just yet but the lower swing high pattern that came about has since failed to deliver. We would have need to see a decline below the 557 level and do it quickly and this is certainly something we haven't seen at all. In fact, similar to the S&P 500 we have seen a higher swing low, mixing up the pattern, but certainly indicative of some level of underlying strength.

The NASDAQ has had some more impressive declines and bottomed out last Tuesday at the 61.8% retracement level and rallied in the past week. On a technical point, the previous rally was 47 days up to the Jan high and the market then declined 29 days down to the Feb low. The decline was 61% in both time and price. Also, interestingly the NASDAQ squeaked below the psychological 2000 point level however failed to close below it.

Looking ahead, since we have managed to see new highs, I would expect this direction to be consolidated.

Charts
NASDAQ See Chart

S&P 500 See Chart