Outlook for Selected Markets. DJIA - S&P 500 March 12/05

by Bill Voeten
March 12/05

Summary for Week Ending 12th March 2005

This week we saw the market react to the new high in a fairly predictable fashion, as outlined last week, although I would have to say that I didn't expect the reaction to be so hard.

On Monday we saw the market crawl to a new high after the previous Fridays strong close, however this appears to have been a last gasp effort as we saw the market tumble for the rest on the week... but still put in an attempt to rally on Friday, only to close near its lows, giving us a wide range outside day. Looking at the S&P chart from a distance and its easy to see the pattern that was forecast on the 5th Feb report. Since we now have that over and done with, what comes next is of the most interest.

Unfortunately, the market is in a point of flux at present, offering a number of scenarios, of which two show the most promise. In keeping with the idea of the market heading southwards, then we would expect this current decline to fall beyond the Feb low before rallying once again. Should this play out then we would be expecting a lower high rally and then a fairly long collapse of prices at least down to the Jan low. The other option is the market holding its position and rallying once more but putting in a lower high but instead of a decline, I would be looking for a fairly complex drift sideways. If this should happen, then we would be entering a period of high volatility, and very low predictability, with swings crossing over one another without a discernable trend.

Until the market tries and sorts itself out, there is little more to do than watch at the moment. Hopefully by the end of the coming week, we'll have a better idea of what to expect, and be able to design a game plan around it.

Charts

S&P 500 See Chart

Bill Voeten

The forecast was done with Gann analysis software which is available at:
gannalyst.com