With all the focus on NAMA, the rally in the
Irish Stock Market has largely gone un-noticed.
Its first inkling of a reversal was in February 2009 when the 35-,40-,45-, and 50-day weighted moving average ribbon tightened in response to a slowing intermediate trend. It was mid-April when the faster 5-, 10-, 15- and 20-day WMA ribbon cut through the slower ribbon on its way higher - kicking off a new bull rally. July saw a bear trap as the faster WMA ribbon cut through the flat-lined slower ribbon, only for the market to rally and re-instate the rally by the start of August.
However, even in the context of six month rally there is no inclination the rate of advance is set to slow. Channel resistance won't become an issue until the ISEQ makes it into the 3,500s. The widening of the slower ribbon band points to increased trend strength, which also suggests a sideways consolidation - rather than a hard move down - will be the preferred corrective phase when it comes.
Compared to global exchanges the ISEQ has not enjoyed the stellar returns (thanks to its heavy financial weighting), but if you are looking for stumbling blocks there isn't a whole lot of trouble until the ISEQ gets to 4,100 or the last congestion area from tightening ribbon bands at 4,450.
Maybe there will be something to cheer for 2009?
