Summary for Week Ending 20th May 2006
It wasn't too hard to work out what the big story was this week. the market sunk, and it made headlines around the world and managed to trigger a wave of selling in almost all major global equity markets. What is interesting is that the reasons given for the decline are based upon purely US domestic issues and do not relate to factors that may have a more global impact... or may the reasons they chose for explaining the decline are simply wrong !
Last week...
last week I mentioned that the April 17 low was the next level of support and a run below that should point to danger. As it unfolded over the week, we actually got the signal early on Wednesday before the break below 1281 when Tuesday proved to be an Up Day and wednesday started sliding from the open. Once the market had fallen below the low on Tuesday we had a Swing down signal where the High on Tuesday was below the previous swing low (Air Gap) and the fact that we had a one day counter trend rally against the previous weeks decline, and signal of further bearishness, something that was evident for the remainder of the week.
Where to ?
the next real level of support is the 1246 level and I'd expect a bounce around here. If we aren't going to see anymore bullishness for a while then this is a good place to see a rally that fails below of the old high and then a decline that may take us into the Xmas period. Also the decline is at 70 points and only 7 points shy of the previous high water mark of 77 for this run, so a greater dimension swing should be enough to convince me that we are going to be bearish for a while. As it stands the bullish sentiment has taken a battering however there are still a few markers that need to be collected for we can say that its completely dead. watching and waiting.....
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