Outlook for Selected Markets. DJIA - S&P 500 April 10/05
by Bill Voeten
April 10/05
Summary for Week Ending 9th April 2005
More news this week, primarily about Oil and what we can expect if it keeps going up. There has also been some interesting commentary on constant dollar comparisons with the Oil Shock of the early 70's (for those who are old enough to remember this event)
Last week I was discussing concept of how a false break can lead to another false break. With the way the market finished the previous Friday it was difficult to be optimistic for the coming week, but the market has an endless capacity for providing a surprise. On monday we say the market continue with the downwards action, but we then saw the market attempting to climb out of its malaise for the following 3 days, until it finally broke the previous Fridays high on Thursday. This seemed to be the signal for a bit of selling on Friday and we saw the market close within the previous weeks range.
When we look at this weeks performance, we can see that the market took 3 days to recover the magnitude of the slide that occurred the previous Friday. This is not a particularly good signal for the future, even though we do have a higher swing low in place in comparison to the March low. The slow and pathetic climb upwards does not appear to signal the the declines are over ( not in my mind anyway ) and I think the danger here is the possibility of a sucker rally in what may prove to be a larger bearish time. From an Elliot perspective the small 3 wave rally is a possibility, however as with most things elliot it doesn't tell us much more than that at the moment. If we take this structure on the whole from the March Low then we would be looking at 7 days of counter trend movement ( based upon the assumption that the primary trend in this case is bearish) which is also well within the confines of this concept.
With the markets at the crossroads at the moment it is difficult to make any statements with any real conviction. Taking the bearish position we have pattern supporting our cause and from a time perspective, we cannot ignore the time range equality that brought in the March low. We have a higher swing low at present against a very impressive bearish movement, and we are yet to see any form of capitulation volume blowout which also signifies an end to a bearish run. As we can see from the above, the signals are certainly mixed and all that can be done take a position with a tight stop, or ride it out until things become clearer.
Charts
S&P 500 no charts this week
All Ords
Bill Voeten
The forecast was done with Gann analysis software which is available
at:
gannalyst.com