Outlook for Selected Markets. DJIA - S&P 500 June 11/05
by Bill Voeten
June 11/05
Summary for Week Ending 11th June 2005
Last week I mentioned that we were approaching the 90 day mark since the
high. This fell on Sunday, so there was an expectation on Monday. Also
marked up on this weeks chart is the time range leading to the high that
occurred on Tuesday showing 48 days. When dealing with time, this is where
things can become confusing so I thought I would expand on this a little
more than usual. Firstly, time is ALWAYS about the likelihood of an event,
such as a change of trend occurring. When we apply time zones to a chart
what we are actually doing is saying, should the market behave in 'such
& such a way' then we have a high probability that a change in trend
is imminent. When we don't have the desired behavior in the days leading
up to the potential change day, then this probability declines.
If you have read any of Gann's books the you would know that they are awash with possible time zones, to the point that if applied to any market, then any day of the year could conceivable be forecasted. To make some use of all of this, I tend to stick with just a couple of numbers to watch. These are 30, 45, 90 and multiples thereof as well as 49. This was Gann's death number which equates to 7 weeks. Essentially, what was said was that a new trend is at risk, when it approaches the 7 week mark. As you can see from the numbers, this is also very close to the 45 day time zone as well. Coming out of this is a simple rule of thumb, and that is, keep a close watch on things in the 7th week of a run. Its as simple as that.
If we look at the S&P this week we can se that the market made a mini spike on Tuesday, before declining for 2 days followed by a small advance on Friday. If we a lower high at this point then we are a short term risk to the downside, although I don't expect anything major at the moment since this run upwards has been so orderly.
Looking forward, see what transpires as far as a lower swing high pattern is concerned. The market 'shape' appears to be curling over so we'll see which was that path of least resistance takes us.
Looking at the All Ords, we have been having a helluva run upwards. This
weeks chart simply highlights the line traveled by each run. Its easy
to see that the current rally is considerably steeper that the previous
run, which was abnormally steep itself historically, so I would say its
a safe bet that this pace is not sustainable
Charts
S&P 500 See
Chart
All Ords See Chart
Bill Voeten
The forecast was done with Gann analysis software which is available
at:
gannalyst.com