Summary for Week Ending 19th February 2005
Following on from last weeks discussion of the energy dissipating from the market, we saw this again this week, with a rally to a new high although it was less that spectacular and although we did see a run to a new high it didn't take too much to see it decline over the last two days of the week. Looking at it from a swing perspective, we can again see that the downwards swing has cut into the range of the previous upswing showing that there is not enough energy in the system to produce an 'air gap' pattern. Looking at how the week finished, we did get a down day but the market did finish off its lows, as well as being the 2nd day of the counter trend, the same as the previous decline, we can make an assumption that the market is in a position to rally from this point. From an Elliot perspective we could be looking at a running correction which would indicate an explosive move to the upside is due, or we can look from a swing perspective and see that the market is struggling at present to go forwards. The two are inter-linked by virtue of the fact that both concepts imply that energy is building up in the system, and is not being expended at present.
Last week I highlighted the time range square possibility, although I didn't hold much hope of it coming off. Interestingly though if we select the 25th Jan as the low we get 22 days which if applied forwards gives us Wednesday the 16th Feb Swing high.
If we do see a new high, then its going to come from a struggling run, which would put the false break scenario in a strong position. As it stands, the market doesn't want to go down too much and there is indecision on going up. The counter trends are holding to we can assume that the trend is still in place, although we have to watch early next week to see if we an addition to the current 2 days of counter trend movement.
The All Ords hit the Time mark on Monday and we saw nothing. What is interesting however is that we have a couple of lower swing highs off the Feb 7 high, something we have only seen once since the market started its final run from the Aug 2004 low.
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