Summary for Week Ending 24th November 2005
Again, there isn't too much to talk about this week. There are only so many ways of saying the market has gone up !
Last week I mentioned that I was looking at how the market performed as it approached the old high. Well it didn't stop to take a breathe and just kept on going strong, something which was hinted at by the twin air-gap swing patterns leading up to this burst forwards. Now we have broken through, what happens now? At some point this run has to take a stop and let some profit taking come in. As highlighted on the chart, the old high now becomes the level of support (one of Gann's rules) and should we see some corrective behavior and if it does stop at the old high then this would give us yet another air-gap swing pattern. With this kind of pattern emerging then we should still see major gains coming into Xmas and perhaps a little beyond.
Another point to watch will be a rally in December. This may arise from the now well known January effect and the 'smart' punters getting set to take advantage of the so-called January rally. Since this is now so well known, the rally may actually happen in December and peel off in January as all the buying pressure is absorbed pre-xmas as opposed to post-xmas. No guarantees on this one, but as a rule it should be pointed out that at any time that an advantage becomes well known, it is flattened by everyone trying to get set to take advantage..in other words its success leads to its eventual demise. There are no rock solid edges in financial markets, just transient ones.
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