Summary for Week Ending 12th February 2005
The market continued on its merry way again this week, after faltering early , the recovery on Friday was spectacular. This was in keeping with the current trend, and now its just a matter of time to see if and when we manage to make it to new highs
For the past few months I have been pressing that its important to watch how the market behaves following on from a counter trend movement. This week we saw the market creep its way to higher highs on Monday and Tuesday although nothing compared to the action of the previous Friday. The market then put in a 2 day decline on Wednesday and Thursday which can be considered a normal reaction and then recovered all of the decline and more in 1 day on Friday. What is noticeable about this movement is the fact that the decline on Tuesday and Wednesday cut into the space of the previous swing high, meaning that there is no 'air gap' with this pattern, which would indicate that the level of energy behind it may be dissipating.
Looking at this weeks chart the swing levels are highlighted as well as the time ranges for the last major decline at 21 days. Monday the 14th Feb marks the 21st day of the rally, so it should be interesting to see if it can meet at the level of the previous high. If it does the we would have a price and time square as well as a double top. The first point is important however the second is less so. It is very rare indeed for a double top to end a run upwards, and a false break is always a far more likely event to watch for. Saying this I don't hold much expectation for the market to 'Square out' on Monday but I do expect the run to continue.
Looking ahead there is not too much to say, except that last weeks scenario is still in play.
Looking at the All Ords, we are coming up to the requisite time zone on Monday. Again I would have been looking for the market to rally strongly into the event, something that isn't really apparent. I have included a chart of the 50 Leaders as its worth a look.
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