Summary for Week Ending 3rd November 2007
Two weeks ago I intimated that perhaps the BIG decline was a little overdone, but that the majority of the players in the market would have very little tolerance for pain. This effect was perhaps borne out this week as we are currently in the 2nd decline of a possible 3 wave pattern. I say its possible 3 wave in that it implies that the bull market is not over as yet and we are simply witnessing a corrective phase in a bigger Bull phase. Maybe ?!
The bigger news for the past two weeks has been the big rises in OIL, all of which are yet to really translate across into higher petrol prices, as this is what will have a big knock on effect on the economy. In real terms US Petrol prices were higher earlier in the year than they are now, even though Oil is that much higher. The answer is s little complex as it has to do with refinery productions and stockpiles and various other factors and I leave it to the reader to look deeper into this question on their own. As it stands, its the price of petrol, not the price of Oil that will be the killer for any consumer based economy. If the costs of Transport were to rise by 40% then this must be handed over to someone- that someone being you, the consumer. We are yet to really see this in hard terms, however the price of grains rising worldwide will have an immediate effect on the staples of life. ( There's no comfort in a wall sized plasma TV if you can afford to eat !).
Our 90 day range expires mid November so it will be interesting see what transpires around then. As it appears on the chart we've has successive false breaks but we would need a drive below August lows to put a cat truly amongst the pigeons. I think we are in for a sideways congestive period, unless of course we get some news to really knock the socks of things. Expect Oil breaking 100 to be especially bearish! I don't know when that will happen, but this side of Xmas is looking good.
|
