Summary for Week Ending 9th December 2006
Last week...
Last week we were looking for follow-thru to the downside to confirm the lower top, elsewise the market was supposed to rally into a new high. As we all now know, the market took off on Monday, and left us with the 1 day counter trend. This was followed with a small up day on Tuesday and then again on Wednesday and then an outside reversal day on Thursday as the market hit the upper channel on the parallel channel that's been in play for over a year now.
I mentioned a few weeks back that upper support lines like parallel channels are not all that reliable, in that they cater to the negative side of our emotions, rather that a lower support line which is aligned with the more positive emotion of a rising market. The behavior on Friday has me a little perplexed since if we were at a top on Thursday I would have expected the decline to be far more sudden and insistent, and not the 'wet towel' we saw on Friday, hence I'm not all that confident that we actually have a top right yet.
I've marked up on this weeks chart a simply curiosity. If we take 56 points from Thursday high we are back at a nice technical support level.
Next Week...
As it stands at present the largest decline for this run has been 56 points and we've seen 2 repeats of the 28-30 point range. the market did peek its head above the old high and then reversed fairly quickly below the first level of support ( although this one isn't technically strong). The temptation is of course to call a false break, but the business of Top and Bottom picking is always fraught with danger. technically we should see a reversal, however the trend is still up, and there is no solid technical evidence to signify that this has altered.
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