Summary for Week Ending 24th February 2007
More of the same this week. The market remains in a compressive mood however we are still getting higher swing lows and higher swing highs so the current is still flowing in the upwards direction.
This week was shortened by the holiday, but it didn't make too much difference as there still appears to be no real conviction evident. Its as if everyone is waiting on the sidelines looking for a reason to jump, beit in either direction. On this weeks charts I've highlighted the mini 5 wave advance that we have had since the January low. In itself this may not mean too much however once we get to 5 that usually means that we are running out of time for this compression. These rising wedge patterns are indicative of a break to the upside as they indicate pressure building up and thus skewing the chart to the upside. The flip side of this coin is also read as: the final compression indicates a wasting of energy and the final wave five represents the exhaustion of the upwards pressure and thus a severe break should follow. Go figure !
As you can read from the above, all of the classic chart patterns can be read to advance a scenario for both sides of the house, and because of that, the pattern itself is of little use. Looking less deeply, we know that the market is compressing. and its coming at the end of a run that has been going for a number of years now. The trend says its going up, so that's the way I'd be betting. Saying anything else would be top picking which is almost as bad a practice as bottom picking.
More of the same this week.
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