Summary for Week Ending 23rd July 2005
Again this week we saw turmoil occurring in London with scumbags still on the loose. There was some minor impact in the UK market but this was short lived and there was little or no effect in NY with the news of copy cat style bombing attempts. This kind of behavior does tend to make people a little more nervous and perhaps even more watchful for startling news items that may impact on securities, however the more that we see of this kind of behavior ( appalling as it is ) the more we become accustomed to it and its impact upon the group psyche diminishes with each event. As a simple example of this what has been happening in the Middle East this past 5 years.
This week we opened with a small downside movement on Monday which gave us a 2 day retracement off the previous weeks run. This was followed with a up day on Wednesday and again on Thursday which saw the market to new highs, covering the previous 2 day correction, which is normally good news. Following on from this we saw the market compress on Thursday and Friday with 2 consecutive inside days showing us that the market is unsure which way to run at present. The events in London may have some impact on this with no one too sure which way to jump. As it stands, we are at a new high for the cycle so things are still going according to plan with the market still heading towards the initial target area of 1250-1260.
Of Interest to me is the market stopping on the 91 day mark. This in itself means nothing except that we should always be on the lookout when the market has been running for about 90 days, and this one has. If it was going to be a sudden collapse I would have expected it to do so, and not dilly-dally as it has done. This corrective/congestive pattern should work itself out this week and we should see the resumption of the trend.
Following on from last week, the All Ords was struggling to get somewhere. We had a 1 day rest on Tuesday and that appears to have been all it needed to get the energy back into the system and to burst forth to new highs this week, with Thursday being notable for the dimension of the range ( by All Ords standards.) Looking at the chart we have had a flat corrective pattern which in Elliot terms usually signifies a wave 4 correction. If this is the case then we could be in Wave 5 ( depending on how you count them !) which in the correct circumstance should be a blow off style final run.
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