Summary for Week Ending 20th January 2007
A new year has begun, and not too much has happened in the past 4 weeks. The so-called January effect is now a mirage as too many people have heard of it and any effect that may have occurred is flattened out. This should serve notice to all of those who believe that it is possible to consistently make accurate forecasts into market behaviour. If everyone knows the same thing then it stops working..simple as that.
Looking at the chart over the last week, the market managed to sneak to a new high and then started to peel back again this time below the high we set mid December. Although this rally has been in place since June 2006, it really hasn't made a clean break and managed to get out of its own way. This does not deny that all is bullish, its just that its been very messy, with lots of 'false' bearish signals. Its these bearish signals that had me in knots last year, and a New Years resolution for this year is about being more objective in the analysis, that being, working with what I can see, and not what I'd like to see.
Are things still bullish? The answer is of course they are. Even if its rising weakly, its still not going down. All this mucking about simply creates more pent up energy in the system, and as long as its rising we may see a clean break to the upside. For the short term, the 56 point decline level is still the benchmark for adding to the definition that a change in trend is imminent. And we havent seen that yet !
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