Summary for Week Ending 23rd January 2004

This week was shortened by the holiday on Monday but this did not appear to faze any of the market participants. Looking at the S&P and the DJIA you can see that the market has been engaged in a very steady advance for at least for the past 60+ days. There is nothing outrageous or spectacular in any of the movements they have simply been steady and consistent. With this in mind it is difficult to foresee any change in this behavior and we would normally expect an expiry type pattern to signal an end to this bullish exuberance ( note... it is not irrational).

Thursday the 22nd Jan marked 62 days from the 21st Nov low and 90 days from the 24th Oct low. Perhaps in response to this we saw a slide on Friday but we are yet to see any significant moves on the downside that would warrant any attention..as yet. With this in mind, I am still watching the upside potential. On this weeks S&P chart I still have the upside targets highl;ighted, these being the 50% retracement level and the Price Square forwards from the October 2002 low. the range Square forwards to the 1140 mark lasted all of 1 day so it has been removed as being insignificant. This leaves us with the 1153 and the 1160 levels to be watched. From a time perspective the 50% time level has proved to be nothing so we can only keep looking forwards. Looking at the most recent correction which was 32 points in Nov 2003. the first signal we are looking for is a decline beyond the level. After that we are looking at 55 points.

If we look at the run forwards from November we can see that the market does not appear to spend too much time in corrective mode. We had a 5 day decline in December and we have had a 3 day decline in Jan this year. In normal terms this is quite amazing and is of course is reflected in the weekly chart which has displayed a constant weekly rise for the past 8-9 weeks. This leads to conjecture of 'this is not sustainable', which is of course the constant refrain when bull markets run away wildly. This isn't a wild bull market as I previously mentioned but a very disciplined and ordered affair and will probably require a considerable external shock to move it back to a high volatility pattern

In the coming week, I can only expect more of the same and I'll be watching the resistance levels and associated volume.

Charts
DJIA See Chart

S&P 500 See Chart