Summary for Week Ending 27th February 2004

The past week we saw the market continue with its downside movements with both Monday and Tuesday sliding slowly. Tuesday saw a late recovery and it managed to close a short distance above the open, giving a weak Change of trend indication. All in, the markets have been sliding for 5 days, which is the longest continuous downside movement we have seen the Nov 2003 low. This is in itself one of Gann's indicators to watch for a change of trend, this is also better supported with a lower swing high. Looking Wednesday through to Friday saw the market rally back against the slide, and it raises the question, 'Is It Counter Trend?' As a way to looking ahead, we can see that we have had 5 days down and we have now seen 3 days upwards and we as yet do not have a higher swing high. If by Tuesday ( 5 days up equaling the decline) the market has failed to rally to a new high, then I would classify the market as very weak and start looking for short side opportunities in individual stocks.

Looking at the charts from a broad perspective, we can still see that the resistance levels are having an impact on the markets. Since approaching these levels, the market has essentially gone sideways and there is no indication that the market is about to burst out of this malaise, in fact, it is starting to accumulate bearish indicators. On the downside we traveled 24 points on the S&P prior to Wednesdays rally, and this figure is short of the 33 point level we were looking for, bearing ion mind that the real figure we are watching for is a decline beyond 55 points, this being the largest decline in the rally.

Looking at the S&P 100 chart we can see that the pattern is definitely bearish, but there has been no movement to really confirm that the market is about to slide heavily. If the market has raced to far too fast, then an orderly decline should suffice until price and time realign to oversold for the cycle. This is of course pure theory, and we wont know until the market begins to play its hand a little further.

Looking at the DJIA, again there is nothing too much to talk about, except that the Fibonacci level has held so far. If this rally is to correct in an orderly fashion then the most common levels are the initial targets to find support.. IF it does decline.

Charts
DJIA See Chart

S&P 500 See Chart