Summary for Week Ending 26th February 2005
This week we saw the market display some high level fluctuations, starting with a steep decline and ending the week with two days of strong gains.
Last week I highlighted that the market was not particularly keen on going either down or up, however after Tuesday, it did look like the market was very interested in going down. After the long weekend, obviously everyone woke feeling pretty depressed, as the selling was considerably strong. Wednesday saw the market take a break, after the previous days wide range, and this is not uncommon, however it was happened on Thursday that was important, as we needed to see the market make another low, to convince me that the market had indeed changed trend, and the selling into a 1-3 day rally would have been a valid approach. As always, just when you think that you have a short-term scenario that might fit your observation, the market does something else, which just magnifies in your mind the need to maintain a high level of metal agility. If we ignore the Wednesday inside trade the we has 3 days of decline, and if we look at the chart we can see that the market has rallied to consume these gains in just two days, which would highlight to everyone just where the path of least resistance lies.
If this movement is maintained then we should see the market hit the area of the last major high (Jan 3) shortly, and we should see the market stop there briefly as it is the point of obvious resistance. Should we see this rally unfold, then it should be the final movement before an extended period of sideways and decline, but I do not expect at this point in time, anything too serious as far as the decline is concerned. Just as a point of interest, its may be worthwhile having a look at the chart published on in the Feb 5th report. That pattern is similar, although I used a different method for constructing the scenario ( since future information was unavailable at the time !)
The All Ords had ample opportunity to slide this week, but failed to do so. Since the high on Feb 7th, we have been in decline for 17 days and has declined 102 points, which makes it the longest period of decline and the largest decline in points since mid last year. Is it running out of steam ? Perhaps as the markers for a fracturing run are now apparent, but hands up who wants to step in front of a moving train...
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