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Summary for Week Ending 13th February 2004
Again this week we saw the market jump out of the blocks with intent and we were at new highs by Wednesday. Looking at the chart the market (S&P500) hit the area between the two resistance levels we have been following before faltering and having a decent decline on Friday. At present the action on Friday is simply counter trend until we saw more. If we do get more then the 33/34 point range is the primary expected limit
From the low on Feb 5th the market traded upwards to new highs in 6 days and a 3 day counter trend would be 50% of time, but a 3 day decline would be outside of what we have seen recently where the market has only really been able to manage 2 day declines prior to a recovering rally. Of most interest to me at present is if the resistance levels will hold. A bullish expiry pattern usually sees the market run up to a high, whereas we has seen a more creeping movement for the past month. This is itself a valid pattern, but is much harder to predict since we have no psychological extreme to play with. When markets are like this they are more prone to an external shock, unlike a running expiry, where the sentiment has participants more likely to shrug off any negative external shocks ( depending on the size of the shock of course)
So where does this leave us? At present we have a market that is creeping along, managing to rally to new highs prior to an immediate correction. The high on 2nd Feb may provide some downside resistance but this is less than significant at the moment. A higher swing low above the Feb 2nd swing high would have us with an 'air gap' swing pattern to the upside, usually in itself a strong bullish indicator and worth looking out for. Also worth looking at its 90 days from the last major pivot point : 21st Nov 2003.
Looking at the DJIA, again it is less impressive again, and we have similar swing patterns to go by. The level of resistance around the 75% level has been breeched but still there is very little to report.
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