Summary for Week Ending 25th June 2005
In last weeks report I mentioned that the Oil price was just appearing back on the radar again, but up to that point, it had as yet not been reflected in the direction of the market. Well this week we saw just how skittish the market can be when all eyes are focused on this very important commodity.
The week started fairly neutral with a slight down day followed by an inside day. Nothing special here. Wednesday was an Up day but it finished near it's lows. If we look at the counter trend patterns, after a 1 day decline then we are expecting the market to be at new highs within 1 day as well, ignoring the inside day. If we look at the the last 1 day decline we can see that the market jumped out of the box and kept on going. This is in keeping with the psychology of the pattern. This time however we had a warning that things may not have been as they should be and this was borne out on Thursday when the market took a savage slide south, and this was again followed up on Friday with yet another decline. Looking at what has transpired in the past week, then the discussions that were made last week regarding the island movement and the volume spike have played themselves out, however the severity of the decline in the latter part of the week certainly surprised me.
Looking ahead, we have had 2 very wide range days and this will have to be consolidated. The problem with declines is that they are driven by fear not greed, so there is little impetus for punters to to stop catch their breathe whilst their running for the door ! As it stands we are now at the previous area of congestion so the market can be expected to find some support here.
In the All Ords we have had a slight break to new highs on the upside (1 Day) before the declines set in for the rest of the week. Seeing the importance of this high, it is understandable that there is some profit taking. Added to this was the bearishness of the NY market, and we are yet to see the impact of the NY Friday finish. If Monday is a down day then that would make 5 straight days of declines, and its a while back since we last saw that. Things are cloudy at present with a strongly rising market colliding with the rising Oil price. Its certainly making things interesting.
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