Summary for Week Ending 18th December 2004

Although we had a better start to the week, the market is only just managing to make new highs before succumbing to selling pressure. This may be due to more seasonal factors than anything else with Santa only one week away. The way the market is shaping up it looks like we will have a good January, but that may be it and 2005 could unfold as a very less than spectacular year for the markets.

The S&P has not done anything as yet that would cancel the scenario that was laid out last week and as such I will be carrying it into the new year. I have not updated last weeks charts. The price of oil is still a factor with the markets, although its now well off its highs, there should be a rally to test the old highs and that may put the frighteners back into the punters. At present we are about 60 points away from the forecast 1263 area, and as we have seen, the market can manage this distance in short order, so what is important is to watch how time is absorbed by the market. If we get there before the proposed Jan 23 time zone, then we have to take the price information before we consider the time information.

A great danger when producing forecasts is that they can take on a life of their own, when in actuallity, you should be prepared to dump a forecast the moment the market does something unexpected ( which is surprisingly often) and have a scenario ready that encopmpasses the new information. A failure to accept this posture leaves the analyst watching the market and saying things like ' the market is wrong' . How many times have you watched a stock crumble before your eyes, when everything you knew about the stock indicated that it should have been going up, not down ! Much better to be wrong and accept it, than be convinced you're right and look foolish.

And that brings me to end of my ramblings for 2004. I hope that 2004 has been good for all, and that 2005 is a rewarding and profitable year.

The next report will be 15th january 2005

A very Merry and safe Christmas to all.

Bill Voeten

Charts

S&P 500 See Chart

Australian All Ords See Chart