Waves, Patterns & Projections (2003)

Well chaps, once again the Dow, NASDAQ 100, and S&P 500 indexes moved higher yesterday as they responded to supportive volume from over the past couple of days. It was quite a nice rally , by the end of the day the NASDAQ 100 had advanced by 1.84% and the S&P 500 moved up by 1.24%. The Dow to, rewarded any one long in the market. Bloody sorry for anyone short in these markets of late, still, swings and roundabouts, there day will surely come.

For me it was what I still think of as a “short-squeeze day. ie, many short investors stop-loss orders were executed, which basically means they are buying the shares they initially sold. This causes something of a feedback loop where the act of covering a short causes the market to move higher, which in turn causes more short players’ stop-loss orders to be executed again.

It works the same in reverse of course, with a large dip in the market giving bulls some grief.

Yesterday was the first day back for many investors after the holidays, which is probably why the volume was a bit higher than seen in the last few days of last week. However many of the major players have yet to return, probably on some exotic trips somewhere.

I believe that the market could see a short-term pullback, although I still expect to see the market move higher in the mid-term.

So basically for me there is a likelihood that the markets will move lower in the short-term, but mid-term I'm still quite bullish.

Interesting to note that, despite so many crying lower, the S&P 500, NASDAQ 100, Doe Jones Industrials, all closed at their 52-week highs.

I have to wonder at the sanity of it all, however one can only play the cards as they fall.