Last week I mentioned that the All Ords and the S&P both appeared to be running on their own, that is, without any apparent correlation. This is borne out again this week, with both markets appearing to be negatively correlated this week, with the All Ords managing to rise for the week, whilst the S&P managed to go down all week. When markets are like this, including the fact that we are seeing wide range days, then we know that volatility is on the increase. This week we saw the S&P drop from the starting bell on Monday and then manage a rally to a new high. This was obviously all it had in it as we saw the market drop off from this high for the rest of the week, with Friday showing a clean drop into new ground on the downside. If we are counting the numbers of days, then we can see that the markets Rally that finished on Monday was 6 trading days. Since then we have see 4 trading days in reverse, and coming very close to absorbing all the effort made in the gain of the previous week. One more day down would see us very close to the April 29 low and from the its spitting distance from the 20th April low. The big question of course is will the previous lows hold or will the market succumb to al this downwards pressure.

In an attempt to answer this we have to look closely at what the market is doing at present. Reviewing the past few weeks, we had a strong low on April 20 which was tested on April 29, from which we saw the market rally. Since the market has come down strongly, towards the retest area. If we see this breeched so quickly then I would say that there is no real need to wait to see if the @0th low will be breeched also, and the re-test level should be the one to hold, .. if it doesn't I wouldn't expect anything else to either. As it stand s things are weak, and its difficult to be bullish in the face of such a pathetically weak response this week. If the market is to recover from this point, it must find some heart from somewhere.

Looking at the All Ords, we have a 45 day count from the High on Mar 21 to 5th May low. If this low holds, then the next time frame to watch will be the 60 day mark and after that the 90 day mark. These are 20th May and 19th June respectively. Looking closer at this week we had 3 days up, one day down, one day up and then one day down again. Although its a rally of sorts its not all that impressive is it ! Lets see what happens on the upcoming dates.. either way, things don't look good for the Australian market.

Charts

S&P 500 See Chart

All Ords See Chart