Summary for Week Ending 13th May 2006
The big news for the week was the Fed continuing to increase rates and to confirm that the previously reported intention of ceasing this behavior was indeed and incorrect report. To add to the woes, indications are that the Fed is quite prepared to keep up this behavior in the foreseeable future. Oil keep jiggling around and gold is seeking ever more blue sky.
Last week...
In the previous report I said that I was concerned as to if the market was going to maintain its recent habit of 'prairie dogging', that is, sticking its head up and then dropping just as quickly. Well it appears that my greatest fear was confirmed on Thursday and Friday with all indexes taking a solid hit. I would have liked to have seen Monday open up strongly and continue with it and Tuesday as this may have [provided an indicator that we are getting into a trend, but instead we got some very sloppy trading on Monday and Tuesday and then Wednesday set the scene for a bit of a slide which (as we all know now) was magnified in the later half of the week.
Where to ?
Looking at this week chart I have added a '5?' signifying that now we have seen the top and then the decline are we going to see it consolidate above the April low and begin yet another struggling attempt to go forwards. the first danger point is the April 17 low and if we do see a break below this then we are in new territory as far as a break downwards is concerned. So far in this compression run the greatest decline has been 41 points, and a decline to April 17 is 46 points that would ( Using Ganns analogy) be the greatest decline and thus a market for a change in trend. After that we are looking at 77 points and this would be a significant signal if this dimension was covered. Looking ahead I have to say that the bullishness display has been comprehensively eaten, however it still fits with my scenario of a few weeks back of a sudden decline to clear out the weak hands and then a final bullish run. So far the trend is up albeit a crappy one, but its still up so I'm disinclined to start picking tops or bottoms...
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