Summary for Week Ending 3rd June 2006
More volatility this week as the market struggled to get it together after last weeks thumping. Looking from a global perspective, everything appears to have could the NY malaise and there is no shortage of articles extolling why the market is still bullish as well as why the market has had it ! As always its best to plan for what you know and avoid speculation about what you don't.
Last week...
In last weeks report I said I expected the support lien to hold and it appears so far that this is the case. We are currently in the third move of a 3 wave upswing and it will be interesting to see how this unfolds as far as dimension is concerned. basically I would like to see this corrective phase to last a little longer and as such this 3 wave correction may be the first part of a correction phase of the next higher dimension. If this is the case then we may see a little more upside followed by a 3 wave decline, that holds above the 1246 level and then finish with e 5 wave advance that should evaporate before reaching the old high. This would then give a a solid higher low pattern and then a retreat back to the 1246 level. The question that is most important, and almost impossible to answer this far out, is if the market will retest the 1246 low or will it go crashing through it to a new low. A re-test would be very bullish and I1d expect the market to go for a strong gallop if this unfolds, however if the bearishness is strong enough the we should see further declines perhaps even some acceleration in this direction.
Where to ?
As I mentioned above, its should still be more consolidation and wave movements as this corrective phase unfolds. I'm confident that the correction will not be short lived however any external influences such as Oil etc could still force this lower, so nothing is written in stone ( it never is !) ...wait and see.
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