Summary for Week Ending 10th December 2005
More corrective behavior this week although slightly out of line from what I was expecting.
In typical fashion, the market performed the scenario that I least expected. Last week I said that I was expecting a 3 wave decline but I did not expect that we would see a false break pattern. So what happens, we get a 3 wave pattern with a false break. The break we saw on Tuesday saw the market open and close near the lows for the day, hinting that a new high is too early to be maintained at this point in time, and the rest of the week was marked by weak behavior. In a typical false break, what we are looking for is fairly vicious behavior as the pattern signifies exhaustion in the direction of the current trend, in this case upwards. If it is true exhaustion then all the buying pressure should evaporate on the false break leaving only sellers, and it follows that the market should then display a swift decline. What we haven't seen yet is any indication that the buyers have given up completely as it has held up fairly well. Remember not all false breaks lead to big reversals, they are simply a marker for that specific behavior. Its up to the analyst to seek confirmation.
Looking ahead, the 90 day pattern is still looking better that the 365 day cycle period. If we work backwards 30 days from the 90 day termination date (Jan 11 2006) we get Monday 12th Dec. This idea is based on the final movement of a 90 day move taking 30 days, so for this to work out (nicely) then we would be looking for the final move downwards on Monday followed by strong rallying behavior for the next 30 days. This is the primary scenario I'll be looking for, whilst keeping an eye on any big bearish markers such as a lower swing high coming off the false break.
Nothing added to this weeks chart as the primary upwards scenario is still in play.
NOTE. Next weekend will be the final report for 2005.
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