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Summary for Week Ending 10th April 2004
Coming into the Easter break the shortened week was evidenced by the drop in volume. The market managed to make it one more push forwards on Monday and after that there was little happening. Looking at the S&P chart we had 8 consecutive trading days of rises which is quite a strong performance. Given a chance to peel off just as strongly, the market has at this point held up well, although Thursday saw some turbulence so we can look forward to the next trading session to see what unfolds.
Looking at the S&P chart, we can see how at present the market is playing around with differing levels of support. From a swing perspective, we can see that the current decline is above the previous swing high, and if it holds then we can perhaps look forward to some more periods of bullishness. Going along with this idea, we know that the market took 19 days to decline, and looking forwards, the 19th day is the 12th April. Keeping time in balance, we would expect that the market would have eclipsed the previous swing high, and if it hasn't, then it represents a signal of weakness and that we should be looking for a capitulation in the upside run and a continuation with the bearishness. This is of course not written in stone, but it will certainly be worth watching to see how it all unfolds.
Looking at the DJIA weekly, it is possible to see the makings of a wave 4 in a 5 wave sequence. If this is the pattern to expect then the expectation is that we will get a flat corrective pattern before the final bullish movement forwards. The time frame for this is shaky but we had 5 weeks down, so a retracement back up and then another 5 week sequence down to complete the pattern. This is of course pure conjecture at this point, but it does represent a valid scenario. The next month or two should give a greater idea of the outcome of this musing.
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