Summary for Week Ending 16th July 2005
Despite the events of the previous week, the market showed considerable resilience and made it to new highs on Thursday. Oil is still mucking about a little around the $60 level and the market has apparently become inured to this information.
I was expecting the market to be a little quieter this week and after the previous Thursdays and Fridays wide range movements. Apparently there was still plenty of energy left in the system and we saw the market rally all week and put in a down day on Friday. As we were at a new High on Thursday the possibility of a correction on this point is high. What will be interesting will be to see how big this correction will be and if the market can break through quickly and resume its trend.
As we have hit a new high and we are also at the fourth attempt, I would expect this to be followed through. There is always the possibility of a a strong pullback and then a fifth attempt to break through, but this would be a rare scenario. The scenario I'm playing with at the moment is for the market to pull back for a couple of days and then resume. We still have the problem with Oil on the horizon, but it appears that the market is quite happy to play friendly with Oil hovering around $60. If we expect that Oil will be a primary deciding factor in the future of this rally then we will need to see prices around $70 or $80 before it will have a deeper impact.
In the coming week, we will see how the corrective phase plays out, I'm expecting a short movement and then a resumption of the rally.
The All Ords was in crawl mode this week, for no apparent reason. There have been some news reports that the higher Oil price is starting to impact on Transportation costs of some foodstuffs, but its not really enough to have a deep impact as yet. Looking at the chart we had 2 days down followed by 5 up days that have yet to clear the previous swing high, so its an indicator of the energy in the system.
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