Summary for Week Ending 9th July 2005
Whilst earlier in the week, we saw Oil again raise its spectre over the markets, it was he appalling attacks in London that really dominated news and the markets in the later part of the week. Yet again we are forced to witness the callow actions of small group of individuals who are at best described as devoid of character and any concept of honour and exist within a feculent and ultimately futile moral vacuum.
Enough venting...
In a week shortened by the holiday on Monday and then thrown into disarray by the London attacks we are left with a very confusing pattern at present. Looking at the behavior of the markets following the attacks, there was a preponderance to sell, in that bad news means get out. This may be a follow on effect from the Sept 11 attacks which saw markets sink savagely,although it has to be remembered that the markets were already heading south and were already psychologically compromised. As far as the FTSE and the S&P is concerned, this is not the case this time around and the panic selling that appeared immediately following the breaking news was recovered by the next day. The rule of thumb here ( if there is one ) is that you have to assess the state of the market when events like this occur and then decide if its prudent to exit. A mad rush to the door and work it out later may not the best way of managing these kind of situations.
Being dispassionate for just a moment, following on from the above discussion, it then leads to the obvious question : What would the psychological state of the market be, if the attacks were followed up again later in the day or on the following day ? I believe its this idea that initially drives people to the door in the first place.
Looking at the coming week, its difficult to say what will happen. We have had a sharp emotion driven decline followed by an equally impressive emotional drive forwards on Friday, so its kind of in balance. With the weekend to mull things over I think cooler heads will return next week, but I think the volatility of Thursday and Friday will need to be consolidated, so I'm expecting a quiet week.
With the All Ords I mentioned last week the the false break should be challenged again, and that was what we were seeing until we had a wide range outside reversal day which was followed with a solid sinking on Thursday ( prior to news in the UK ) and sunk a little more on Friday to a new swing low. I think the recovery in NY on Friday will have some bearing to Mondays performance but as it stands we have a confirmed lower swing high off a false break, so its looking weak at present.
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