Summary for Week Ending 16th January 2004

Again this week we have seen more of the same upwards march. After last Fridays slump, we saw some consolidation on Monday, followed by an outside day on Tuesday which was looking more bearish than bullish, but from Wednesday onwards it was simply just keep going forwards.

From a technical perspective there is little to talk about this week that wasn't covered last week, Referring to the S&P chart we can see that we touched the first level of possible resistance and on the weekly chart, we can see that this week was the marker for the 50% time zone. When looking at expiry patterns in bullish runs, they are much harder to spot than capitulation patterns in bear markets. Unless the market has been expanding and accelerating to the upside, do we ever see the 'last gasp' jump, such as a large gap to the upside. It does happen but it is rare. Most commonly a bull run simply falls over under its own weight with a signal being the development of a lower swing high. Another signal is a large break, the magnitude of which is greater that all the corrections of the run forwards. This again is simply a signal, and looking at the S&P chart this is still something which is not evident. On this basis it is impossible to call a top, but we can only look at the technical signals that we have. At present we have the first resistance level touched on a possible time zone. For this to be of any value to us we would look for confirmation, but maintain the bullish attitude ( there is no proof yet available to alter our opinion).

We had a high swing low again this week, and the market has shown it doesn't want to dwell for too long in corrective mode. Until this attitude changes we can simply ride the wave until we get a firm signal that tells us to get off. In the coming week I see no reason to buck the trend but I will be watching the effects of the technical levels we touched in the past week.

Charts


S&P 500 See Chart