Summary for Week Ending 15th July 2006
The biggest news event for the week is the escalation of hostilities around Lebanon. If this event had anything to do with the rise in the price of Oil, is unknown, but whilst events are out of control in this region, then I would have to say that Oil will be under pressure and we already have very expensive fuel prices as it is.
Last week...
The wee continued with the weakness we had seen the previous week and it simply accelerated as Oil started to impress its influence. Last week I was still playing with a scenario that we might see the market go a little higher before the decline, however the record prices in Oil put paid to that idea as the market slunk below all of the standard support levels and this was also with increasing volume. It appears that everyone is trying to head to the door as the lower top was not a lower double top as I'd hoped for and instead we now have the market heading towards the 1219 low that was touched in June.
Where to ?
Seeing that my Double Top scenarios have incinerated before my eyes I cannot help but listen to what the market has to say. As always the path of least resistance is the one that is taken and in this case it appears that downwards is the preferred direction. We haven't had a blowout in volume just yet so whilst we are above the June low, then the 1st scenario is that of a retest of the previous low. After that we are looking a something more cyclic and perhaps an extended period of bearishness. Range equality has the termination of the current movement below the June low, however I'd be expecting a rest of a day or two before a resumption.
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