Sand Spring Advisors LLC
Nasty "Outside Week Down"
January 30, 2004
by, Barclay T. Leib
The chart above highlights the only six times since 1997 that the S&P has made a new high compared to its prior week, and then closed below the prior week's low. This is commonly referred to as an "outside week down" key reversal pattern.
In the other recent instances of this pattern, weaker prices immediately followed in the subsequent trading week five out of five times, albeit it took multiple such reversals to transpire before the entire 2000 topping formation was complete.
In the current instance, 1109 and then 1081 (38.2% of Aug'03-Jan'03 advance) are the next minor target zones to the downside where temporary support may reside. If the latter level is severely abrogated, 1155.38 may end up standing as an isolated 2004 Yearly high. More likely, if 1081 holds, then more backing and filling, and possible marginal new highs are possible into early April.
But overall, this is a nasty pattern that occurs infrequently and is not to be trifled with. The way that the market turned on a dime from our previously espoused "natural attractor" Fibonacci level of 1155 (see Jan. 15th Chart du Jour adds to this pattern's overall significance.
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