Summary for Week Ending 24th March 2007
Last week I pointed out that it was important that the market managed to keep going beyond Wednesday, and it dutifully complied. A strong 3% week was what the doctored ordered and all the bears appear to have retreated back to their caves. Loud pronounced warning of the end of the world, certainly make for great headlines, but when the end doesn't happen, then its business as usual.
From the low on 14th March, we are now up 7 days, which may be the limit for this movement. The previous benchmark was 5 days which we have now surpassed, so the next issue will be if we do get a proper retest of the 14th Mar low, or do we get a kindly retracement back to the 19th Mar high. I've highlighted that on this weeks chart and as you can see its an obvious place to expect some support to come in. Its also about 40-50% in retracement so the 1405-1410 area has a bit going for it. If we were at the bottom of a major decline I would be more inclined to go with the full retest theory, however we have really only gone down for 14 days, which in the scheme of things is barely a blip on the radar.
In the coming week I would be expecting the rally to compress and see some retracement come in. When this retracement does occur, that is when all the bulls will be holding their collective breathes to see if they picked it right and the market continues with its bullish persona. I thinks its unlikely that we would see new lows this week, as its a long way to travel, and it would take a fairly serious event to push things to that kind of extreme.
Things are looking good, so I'm prepared to go with the flow.
A 3 day retracement would indicate strength. A 1 day retracement would be a warning that things are going too fast!
|
