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Market Movement  

25 February 2008

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During times of prolonged market volatility there seems to be a sense that it will never end. Markets do of course run the full gamut, from times of high volatility to times of very low volatility where the markets are very pedestrian in their activity, to times which are considered "normal".

We have in recent times seen high volatility in the world markets for a sustained period with only short periods of less volatile activity.

Over the past week (date of writing Feb 22) we have seen the markets move into a diminished range of trading where the charts have been forming a Flag pattern, sometimes referred to as a triangle or a wedge pattern. This indicates that the market movements are diminishing on a progressive basis and nearing a point where the market will either move in the direction it was moving prior to the flag forming - or - reverse and begin to move in the opposing direction.

When this occurs the market tends to find its own level reasonably quickly and then settle in to what is considered "Normal" trading movement.

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