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Summary for Week Ending 27th November 2004
In a week shortened by the holiday and the mid session breakup party, we didn't see too much happening. After last weeks efforts at declining the market did start to make a move forwards but this was not, as yet, very convincing. Little other news of any real interest to me, or the markets for that matter and this is reflected in the weeks action.
Last week I mentioned I would be looking to see how the Nov 17 high worked itself out. I thought we may have had at least another day down to follow the previous Fridays drive lower but Monday simply touched a new low and then recovered. Following on from that we saw the market make very slow and very painful movements forwards which brings me to my next topic of concern : The number of days in correction. From Nov 17 the market spent 3 trading days into the decline, finishing on Monday. If we ignore the initial Inside day on the 18th then we have only a 2 day decline, but the most significant decline since the 7th Oct. A short run in decline is usually followed by an equally swift recovery and the trend continues. If we do not see the similarly swift recovery then we have the first signal that the trend is in danger. Looking at the chart we have had 3 trading days of recovery but are yet to reclaim the space of the decline, so we have an indication of a trend beginning to struggle. Looking at volume we can also see volume petering out as the market rose, but with the midweek holiday, this may be a confusing and deceptive marker so I will be ignoring that for the moment.
Until this works itself out, we can still go either way, but what we have is Price/Time square working out on Nov 17th and the market duly falling. Since that date the market has failed to recover to a new high, so the signals at present are for more declines in the near term. If the market does make a new high then this would negate the significance of the 17th high and we start looking at what the market may hold from that point.
As highlighted last week, the areas of support, should the market decline, are still valid. These levels are 1163, and 1142. With the the market hovering around 1182, we are still a long way off these levels, if we ever see them at all. Apart from that there isn't too much happening, and we have little option other that to sit back and watch to see which way the wind is really blowing.
In the coming week the primary interest will be if the market fails to a new high and puts in a lower swing high.
Note ! The Australian All Ords has been rocketing lately. Have a look at this weeks chart I have provided showing the Price Squaring off the 1987 low. It have been quite regular and at times, deadly accurate. As you can see from the chart, the next level is 4022.... The Upper trendline cuts through in early December. This should be interesting to see how it works out !
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