Summary for Week Ending 27th January 2007
This week I thought it may be a nice idea to look at the chart from a different perspective. I've drawn 2 boxes on the chart 1 red the other blue, highlighting different patterns of behavior. If we look at the area covered by the Red box we can see that the market was progressing in a very orderly fashion. the market was rising cleanly and the declines, or counter trend movements, never exceeded 3 days. Looking at the blue box we can immediately see that the market started to exhibit a different personality. The market movements forwards remained clean, but the counter trend movements become far more complex. It really only becomes apparent when you look at the market in this way. Interestingly of course both are around 55 days long.
So what does all this mean? On the whole not too much, as the current movement is still underway, so the duplicate time frames will only mean something IF the market stops rallying at this point. In this way, time analysis is only useful in hindsight, creating a curiosity that cannot be used, no matter how interesting it may be. I find this sort of visualization useful in that it tells me that indeed the personality is different. I know not to expect a clean rally in much the same way that Elliot's rule of alternation works. Never expect the same to happen.
As it stands the market is yet to gouge out a decline greater that 56 points and until we see that, the trend is still intact, although it may be safe to say that its weakening. A sideways period may be on the cards. At least for now.
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