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Summary for Week Ending 13th August 2004
With continued bullishness in the Oil market, it is understandable that the markets had trouble maintaining any kind of bullish intent this week. Add to this the continued problems in Iraq and the future scene of the world economy does not look too good at all. Lat week I mentioned that some kind of consolidation was in order after the magnitude of the previous weeks declines and that appears to have occurred this week, with the markets bearing little resemblance to the previous weeks problems.
Looking at the week a little closer, we had an inside day on Monday, and this was not unexpected following on from the sharp decline and wide range day the previous Friday. Tuesday was always a good bet for a rally, when looking at this chart pattern, but Wednesday was the risk day, as truly anything was possible. We received another Inside day with the market equaling the previous days high and simply declining all day but within the Tuesday range. This set the tone for the rest of the week with both Thursday and Friday peeling off from this decline, but without the vigor that was apparent in the previous week.
Looking at this weeks chart we can see that we had a 1-2 day counter trend rally this week but it took 3 days of declines ( if you include Wednesday ) before the market was at new lows. This should have taken 2 days at the most, but since some consolidation was expected this week, the market can be forgiven for being a little slow. Of most interest to me at the moment is if the market will hold up at this level. We have seen before that the S&P likes to finish with a minor false break, and this is what we have now, so the coming weeks may prove interesting. Last Friday marks the 50th day of this decline and and this displays a close correlation to Ganns 49 day time range so we may see some further consolidation this week. Volume is telling us nothing, and the wave count is a little confused for this run downwards. We are beyond range equality so under that we are in new territory so I usually let the common retracement levels come into play to indicate areas of support and resistance. From a time perspective the 31st of August shows up as a date worth watching.
This week I am expecting more of the same with further consolidation of the decline. We have already had a clean, clear cut decline, so Elliotts rule of alternation would lead us to a more complex formation in the future.
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