Summary for Week Ending 11th March 2006
Mixed results on the Oil front this week provided even more mixed results in the markets. This is certainly getting harder not easier.
Last week...
Last week I said that the market was a bit of a mystery at the moment and this week hasn't really changed things for me. We had a fairly impressive drop off early in the week which was rescued on Wednesday with an outside reversal. Ordinarily I would then expect a strong rally from this point however all we got was continued compression. Looking at the chart we can see that we went down in three days and after 2 days are nowhere near the previous high. If we take the high from 27th Feb then we've been down 7 days so that would give more grace for a rally to a new high. What's in the back of my mind however is the fact that the market has been chopping a lot lately...10 points up then 10 points down. It seems to have a lot of trouble stringing a run together which makes me think that the money currently swishing around is scared money and if this is true then we arent going to see a rally until the money gets confident.
So what's happening ?
As I said last week, I'm still uncertain as to what is going on. We've had a false break which reduces confidence in taking a side and we've got a declining swing pattern but no 'air-gap' in the swing pattern just yet so there's no evidence of acceleration, just more evidence of continuing compression. I'm still waiting.
So where to...
If we're heading south then I'd be looking for evidence of acceleration. If the money is, as I suspect, just scared then we should see more of this sideways volatility. I'll give it another week and see if it sorts itself out any clearer.
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