Summary for Week Ending 8th July 2006
Nothing too newsworthy this week except that Oil is again showing some signs of life. Its will pay to keep an eye on this.
Last week...
We had a topsy turvy experience this week that was shortened by the July 4 holiday. After all the energy expended in the previous week the market did well to mark time awaiting further direction. We did get a sneak of a new high on Monday, and this was good to see as it may be an indicator of what to expect in the coming weeks, however I do expect there to be some more correction. Looking at this weeks chart I have drawn a minor support line at the 1260 area which was the high of the first impulse wave out of the decline. At present the market is resting above this region however this may be tested if the rest of my favored scenario unfolds.
Where to ?
Referring to this weeks chart I have drawn the main ranges 39 and 43 points that we have to work with. Currently we have seen 3 waves up and currently in the 4th wave down. Under elliot most corrective waves are threes however its always difficulty to correctly count this so I try to look for 5 waves, which is how the chart is set up at present. IF ( and its a big if) the market is to make a double top then we require one more impulse wave to the 1290 area. using wave equality we can the calculate backwards from this point to where the current correction may head to before that market mounts its final assault. From the chart we are looking at the 1248-1251 area. This of course is pure speculation however should the market continue to slide, then this is what I'll be looking for. Countering this, the correction of the first impulse was complex so I am expecting the correction for wave 4, the one we are currently in to be simple using Elliot's rule of alternation. Lets see how it goes.
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