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I did not expect I would be revisiting this topic so quickly.
You may recall Naresh’s email published two weeks ago:
…from India and had been following your mails regularly.
I did attend the Safety in The Market course 5 day trading congress with Mr. David Bowden.
Considering your recent article , don’t you think that we are at a very strong resistance level of 50 % retracement of the total fall and the current up move is about to finish as we are very near to the time by degrees date as well
Shall appreciate your reply for better understanding.
Regards
Naresh
When I replied to Naresh’s email then I said I was inclined to the view that the markets could well sail pass the 50% retracement level.
Let’s revisit the chart:
click to enlarge
As you can see that as at Wednesday April 8, the All Ords is at the 50% retracement level – touching for the second time in almost three months. The last time it hit that level was in January and this was when global markets got the wobbles. You may recall at that time there were fears the Greek economy may collapse, that Congress may not renew Bernanke’s term in office etc., etc., and all news was bad news.
Could the market find reason to get the jitters again at this crucial level?
In recent times all news has been good news and so I am inclined to think that whilst we may see some ill ease at what could be a double top I believe the market will eventually sail through.
A 61.8% retracement has a lesser probability but nevertheless they do happen.
As I write the DOW has fallen .7% which is little in the context of the overall move in the last year. It could be the beginning of a small easing and our market could follow but I doubt it will be a serious rout.
So we are at an interesting point and thus this is a topic I will have to revisit yet again when we have a clearer outcome.
Enjoy the ride
Tom Scollon
Chief Analyst |