Summary for Week Ending 18th June 2005
This week we again saw the market manage to continue its drive upwards. Over the past couple of weeks we have seen a slowdown in the advance, at first giving us a sliding rising pattern and then last week giving us a curling over shape indicatingthat things were slowing down and perhaps we were going to see some declines or some sideways movement. Obviously this has not occurred and the market was simply catching its breath breifly before continuing on. There are reports this weekend of a new high in Oil prices, so whilst this has left the radar as far as news is concerned, it may be back on the agenda in the coming week, if the prices continue to increase. Its worth remembering that the price of oil is the key factor in economic growth as it impacts across all areas of industrial production and distribution.
Last week i said the market was worth watching as it was giving us a curling over or rolling over pattern last week. We finished the previous Friday with an up day so if the correction was to be over then the week should have started with an up day and preferably made it to a new swing high within the 2-3 day window, seeing as we had a 2 day decline going into June 9th. As it transpired, the market did make a rise on Monday and Tuesday but it was not until Thursday until we saw a new swing high come in, and then the market gapped on the open, showing that there was considerable buying pressure coming in at the end of the week. Its also worth mentioning that volume was the highest we have seen for some time.
Looking forward, I'll be watching to see the aftermath of the volume spike. If we have a gap then I expect it to be filled sooner than later. All swing patterns are long so I'm not looking at the moment for a short side play. We are not too far from the March high and I see nothing to say that its out of the picture.
The All Ords, made it to a new high this week, showing that just because something looks to be too good to be true, doesn't mean its not. This is a problem of induction. My belief was that the previous run upwards was as steep as the market would go in this run. This of course implies that the market could not run steeper, however as we have seen in the past 6 weeks, the market can indeed do that. Where we should be using deduction to make a decision, sometimes induction comes in and clouds the issue and we get it wrong. Thankfully I'm not loaded on puts here.... yet !
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