|
Summary for Week Ending 6th November 2004
Another rocketing week that has seen the S&P reach a new high for the upswing cycle and in good time as well but more about that later. The election is now well and truly over and the markets now know who will be in control for the next 4 years be it good or bad news is irrelevant just so long as there is no uncertainty. The Oil price action this week was also a little softer so perhaps we may see some relief there.
Looking closely at the week we can see that the markets shrugged off any idea of taking a breath and continued with the bullishness that started the previous week. We saw the market touch a new high, eclipsing the previous mark of 1163 set on the 5th March, so we can see that the market has been in a crappy mood for most of this year, and has only just burst from its slumber. Since the rally that started on 25th Oct the market has taken 11 calender days to traverse the same distance as it took 54 days previously (see chart). Last week I offered that if the market was to take out the highs it would happen quickly, but I never expected the market to fly so far so fast. Since we are yet to see a correction in this current movement it is difficult to correctly gauge the true speed of this run upwards, but it does at present maintain the appearance of a blow off type scenario. If this speed of accumulation is consistent, then we should see only minor corrections, taking 1-5 days. The faster the move is maintained, the tighter will be the counter trend rally's and this will only hasten the inevitable collapse.
Until then though we are in an upside play and there is no looking backwards at the moment. If the market does correct early next week, it will be on the back of an obvious point of resistance, that being the March 5 high, but being 'obvious' it should also be short lived if the current momentum is maintained. We are also looking at the point of resistance going back to Jan 2002, so its obvious we are looking at the market trading around prices that we have not seen for some time.
Looking at this weeks chart we can see that a price range equality from the initial swing upwards 186 points comes in very close to a fibonacci level of the price square from Oct 2002. There are a few others that also get in around this level but I'll leave that to the users to discover these for themselves. Another curiosity is the price time square forwards from the Oct 10 low of 769 points finishes at Nov 17, just two weeks away, so that may be a date worth watching.
|
