Summary for Week Ending 17th March 2007
This week we got the retest/new low that we were talking about last week. After a weak 4/5 day rally the market succumbed to the weight of selling pressure and made a drive to a new low. Volume was solid and just under the big volume we saw on the panic drive down on 27 Feb that started all this mess in the first place.
Looking again at the volume, its not really a capitulation level but is high enough compared to the average to warrant some attention. From what we have seen so far, we know that the market cannot rally beyond 5 days without slipping so that becomes a benchmark in the short term. From Wednesday low we are now up 2 days, and will need to rally beyond Wednesday this coming week to prove that its more interested in rising than in falling.
The current price benchmark is 107 points and so far we are looking at 98 points, so its fairly close to the target range, but close is not enough. From top to bottom we are looking at 14 trading days which is close to the limit if this is a simple corrective phase. Anything beyond 15 days and I'd say we were in for something more serious and longer term. Remember we MUST be at a new low for the 15 + day rule to matter.
In the coming week the importance may lay in if the market can keep its head above the low and still make a new counter trend high beyond Wednesday. If we do see that, then a true retest of the old low would probably be on the cards. Also note that although the Cash S&P made it to a new low, futures did not !
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