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Outlook for Selected Markets. S&P 500


Summary for Week Ending 2nd July 2005

In the previous week we saw the market drop like a stone, and there was an expectation that in the week just passed, that perhaps the market was due for some consolidation. Well this did come in as expected, and we saw very little movemnt on the Oil front as well. It was interesting reading this weeks financial news, going on and on about the dire consequences of the rising Oil price and what it would mean for the world economy. Just briefly on this point, the world economy is being driven by China at present as they are sucking resources from all points of the globe as they play catch-up with the rest of the world. If you belive that this pace of growth is sustainable over the near-medium term, then the place to be watching is the commodities that are aligned with the raw materials that China is consuming at such a rapid pace. Oil, steel and concrete just for starters.

Back to the Markets. This week we saw the market open with a drop and then recovered relatively strongly for the next 2 days and this is in keeping with a basic counter trend movement and the finish on Wednesday was a marker to the recovery running out of steam. If we are in fact seeing a basic counter trend rally then after two days I would be looking for the market to be at a new low on the second day. This was looking good on Thursday but we didnt see any follow through on Friday which gave us an inside day so its basically a nil day.

Looking ahead to the coming week we are at the crossroads to a continuing decline and the possibility of a higher swing low coming in. The worst case scenario here would be a decline to a new low and then a rally giving us a false break to the downside. If this does occurr there is nothing that can be done about it except take it on the chin as just something that happens. So far the year is not running as a typical 5th year, that is an 'Up Year' but we'll discuss this in later reports.

The All Ords this week pretty much followed the NY lead and the pattern is almost as identical as the S&P 500 pattern. This has to work itself out and I would expect that the high that was generated with the recent false break will be challenged once again.


Charts

S&P 500 See Chart

All Ords See Chart



 

 

 



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