SPI Trading Weekly Report 30th Dec 2007

Above is the Weekly chart of the Australian Index Cash Market.

The Index XJO has been in a sideways pattern for a number of months now, but with the end of this year, the Yearly timeframe will shift major levels in the market. 2007 resistance will disappear and any major advancement in 2008 will be upwards over the next 6-9 months.

The Yearly Balance point @ 6224 is also going to be a very important level for trend direction in 2008:- below and my view is a gradual slide back into major support and a ‘double bottom’ for 2008.

SPI Futures:-

The above chart is the Weekly chart of the SPI Futures. We can see that the price action over the past few months has been guided by the Dilernia Model, as it moves between support and resistance defined by the Monthly timeframe.

With price still trading below January 50% level, then the overall trend remains ‘weak’:- and if it follows a 'Dilernia Principle' then it can easily move down into January lows.

Dilernia Principle:- 2 month wave pattern defined by the monthly 50% level.

Last weekly report I was looking for a 2-day reversal back down from the Weekly 50% level @ 6377….

Weekly Report 22nd Dec:- “ A failure around the Weekly 50% level, will be part of the rotation back down after the change of 3-day cycle… I favour at least a 2-day rotation-stall before any up trend is going to occur”

This occurred with the 3rd day rising from a precise BUY zone of 6295.

If this market is going to continue upwards then it needs to break and close above 6392:- Monthly BP.

The monthly BP allows traders an idea about how ‘Strong or Weak’ the Weekly trend is within the current Month. With January opening below 6392, then the first stage needs to move and close above this early next week, otherwise it’s going to move back down and test the Yearly Balance Point:- 6224.

Regardless of price action in the Australian Market, it is going to be heavily influenced by US markets and how they re-act to their own Yearly BP.

In conclusion:-

Taking a pure technical view of global markets, 2007 stopped rising higher because most markets hit Yearly highs, stalled moving into a ‘consolidation-period’ for a number of months.

The Shift in the yearly timeframe will allow global markets to rise higher because resistance disappears. This rise higher can take 6-9 months to complete.

The trend guide is going to be simply defined by the Yearly balance point, because in nearly 5 years this is the first time that the SPI has come close to this level, and below this level the expectation is that the Australian market is moving into a double-bottom around 5700.

This favours the fundamental view of global economies, as many are predicting the US is moving into recession.

However, if it does move down but follows the higher timeframe Dynamics, it could take a number of months for price to zigzag its way down to this level in 2008.


Please refer to the Daily report....

Note:- Rumour is that SPI futures in 2008 might be dropping down to $10 per contract from 25$. I can understand this with the influx of CFD operators taking a chunk out of their business.

SPI Trading Weekly Report 22nd Dec 2007

This Week’s price action was ‘classic’ text book stuff….

A break of December 50% levels, support disappears, and price heads straight down into the December support.

3-day consolidation pattern, and the break of the 3-day highs, changes the cycle and the market rotates upwards.

Even when we look at the monthly timeframes before, it all fits in nicely with Time and Price analysis using the Dilernia Model:-

October high-reversal, November 50% support-rotation, December 50% break-down, December lows support- rotation.

Next Week:- Trend will be decided by the Weekly 50% level @ 6377..

Above and price is moving back upwards to close the ‘Weekly Gap’, and then be defined by January’s 50% level.

A failure around the Weekly 50% level, will be part of the rotation back down after the change of the 3-day cycle. There is such a large gap to the 3-day lows, that I favour at least a 2-day rotation-stall before any up trend is going to occur.

But that will be determined by price trading either side of the Weekly 50% level


When we look at the trends within the Monthly timeframe, the 3-day cycles clearly define the direction of the markets, along with certain timeframe levels, that act as support and resistance.

Trading is simply about support and resistance, and by looking at this chart, it all looks so damn easy. But in reality it’s not easy, especially if you are a day trader.

For example:- a swing-position trader on stocks would understand that once December 50% levels broke, Buying into the markets was open to RISK, that is until the December lows are reached. Once support is reached, it’s the most logical level to be BUYING into the market. Much more so once the 3-day highs break.

Day-trading futures is different, because there are so many factors that need to be modelled to minimise Risk. And certain factors need to align perfectly for Reward to be maximised.

For Example:- I modelled this entire walk forward scenario in last Week’s report, but Monday didn’t align for me to short the market, but I understood ‘risk’ on that day not to be doing anything once the 5-day lows broke. And every other day was the same.




Come Friday, and I had modelled for prices to move higher and break the highs, but firstly I wanted to see ‘gap closure’ @ 6202 or a 44 point reversal in the market for me to trade ‘longs’.

That 44-point reversal didn’t occur until it was above the 3-day highs, and the
44-point reversal aligned with the break. That was my first long on Friday.

44-point spiral points are important risk levels in Daily trend direction; they are extremely robust entry levels because it is closest to your ‘stop’ loss point, but on occasions they fail.

On Thursday, the entry level ‘LONGS’ was around the r87 lows @ 6182.

Once I exited the trade, I wasn’t going to enter another long until there was a 44-point reversal. That did occur @ 6210, but it failed.

When we look at the R22 ranges, the R44 occurred below the R22 3-period cycles, that is why I partial exited just below the R22 break, because follow through had much less probability, and ran breakeven stops and didn’t trade again that day.

Whereas Friday, the R44 occurred above the R22 cycles, this R44 reversal had a much greater probability of follow through.

And the same applies trading short-term 11 point moves within 22 point ranges, probability occurs when trading in the direction of the cycles….

In conclusion:- The Dilernia model clearly defines market dynamics, trends, cycles, support and resistance, and also the likely path price will travel.

But, day-trading the Dilernia model, won’t always align with certain risk filters and probability patterns, whilst on other occasions it will provide the perfect trade.

Patience is the key....because the good trades will always come.

SPI Weekly Report 15th Dec 2007

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Down 5-day pattern, with the Weekly timeframe closing on their lows. This price action was not unexpected, as it was mentioned last week. Around the 3-week cycle highs (6647), it is often the case that price will have a reversal weekly timeframe before the trend resumes from a lower Weekly open.

The big difference now for any up-trend to resume is going to be the December 50% level, because technically everything now is pointing to lower prices.

The market is not trading above any support (50% trend indentification), and could easily make lower lows in December. (below November lows)

Basically the 1 week reversal pattern has moved down to far for any major UP trend to continue in 2007, even though this week is contract expiry which often pushes prices higher by Thursday.

By Analyzing the larger timeframes, the market looks like it’s consolidating for the rest of the 2007, closing out December to set up the major Primary levels for 2008.



The weekly channels are important, not only for trend identification using the 50% levels, but also gives traders a market ‘path’ for price to travel towards and swing back from.

Last week it was modeled for price to move towards 6735 and then reverse back down into the 3-day lows. This week the trend guide is going to be 6523 (weekly 50%) with a rotation down towards 6351 and support.

With a lower Weekly open, there is always an expectation that price will swing back towards the central levels and 3-day highs, before resuming the trend. And I think this will be the case with December contract expiry on Thursday.

In conclusion:- looking for a counter-trend up move next week, it’s a lower Weekly open.

My expectation is that markets are consolidating into the end of 2007, and if that is the case, it wouldn’t surprise me to see rotating UP week (closing higher than open), before having another down week after expiry.

Please refer to the daily updates...

SPI Weekly Report 8th Dec 2007

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Dilernia Principles:- Monthly support (Nov 50%) and moves higher using the December 50% level as Support:- 2-month wave pattern upwards.

The weekly trend has found and verified major support using the monthly 50% level, but the Weekly cycle is still a ‘SELL’, it will only change once Friday closes above the 3-week highs @ 6647.

(previous Weekly Report)



This week has seen the market reverse down 2-days at the start of the weekly timeframe, verify support (Wednesday BUY day) and then continue higher closing above the 3-week cycle highs @ 6647, with the expectation that markets are moving towards the December highs.

A breakout above 6647 this week and the expectation that it will remain above this level for the rest of the week and month as it moves higher.

Below 6647 (3-week cycle high:- resistance) and expectation market is coming back into Daily 'gap' closure before heading higher.

The longer is remains below 6647 next week, the probability that the trading week has the potential to close on it's lows, before rising upwards at the start of the following week:- week of contract expiry and trading longs from near the 5-day lows.

The Weekly Trend was rising this week, but 3 out of those 5 days, day-traders were shorting the market (higher opens) using 'Spiral-Points' and high probability RISK levels:- Monday, Thursday and Friday.



Above is the Daily SPI chart:- rotating down from October highs into November 50% levels and moving higher from the next monthly 50% level, December.

The expectation is that the market is moving higher in December.

What you notice in the chart is how the trend is clearly defined by the 3-day cycles.

What you also notice is the trend of the Weekly timeframe range being defined by the weekly channels. (green)

Around the extremes of the channels and expectation market will rotate back towards the 3-day cycle, and around the middle of the range price follows the market path once again.

Next week the market path is mapped out to move towards 6735.

Ideally, the best and most profitable trading set-up would once again follow the market down into support and then rise higher as it chases the next level.

The best set-up for this to happen is a 2-day reversal into the trailing 3-day lows and then follow the exact same set-up next week, as last week.

A rise upwards on Monday would be towards 6735, over a couple of days before the most probable reversal back into the 3-day lows.

In Conclusion:- Market is rising higher, expectation market is moving towards the Weekly channels highs, with the best possible trade from lower prices:- ideally around higher timeframe support or 5-day lows.

6647:- Weekly trend guide for next week


For Daily analysis please read the daily report 'the trader trading'

SPI Weekly Report 1st December 2007

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There are two major support levels:- 2007 Yearly high breakout, confirmed with the November 50% level. The current price action at this stage confirms major support around November 50% levels, and often this provides the next 2-month Upward wave pattern.

The trend remains intact, and the expectation is that the SPI will move upwards next week, and the December 50% level is going to be the overall guide for the rest of 2007

Short-term:- Expectation is upward next week:- lower weekly closed followed by price rising from a lower weekly open using higher timeframe support. (Weekly report 24th November)





Dilernia Principles:-

Monthly support (Nov 50%) and moves higher using the December 50% level as Support:- confirmed with the start of the next month.

Monthly contract expiry:- the closer it gets to contract expiry the probability is that it the market will rise upwards because the future contract runs at a premium to the Spot contract.

The weekly trend has found and verified major support using the monthly 50% level, but the Weekly cycle is still a ‘SELL’, it will only change once Friday closes above the 3-week highs @ 6647. This will confirm the major cycles in the market, just as the 3-day cycles confirmed the change of trend this week in global index markets with the break and closure above them.

At this stage longer term forecasting favours the Australian Market rising in December because that is how things are currently playing out when looking at the bigger picture. It’s the only conclusion I can make at this stage. It is also supported above the 2007 highs defined by the Model.




In last weeks report I also mentioned that the December level (6594) would be a critical level for December, because it’s this level that is going to provide the potential for any 2nd monthly ‘sell-off’ pattern at the start of December.

“Just like the sell-off at the start of November, any UP swing into December 50% level and trader’s have to look for any sign of weakness for the next wave down.

This is a classic bear pattern that can provide traders with an ideal swing ‘short’, but that is going to be confirmed with a higher open” (SPI Weekly report 24th)


Dilernia Principles:-

1. Short-term:- higher weekly open has a much greater potential to reverse back down at the start of the new week.

2. Change of 3-day cycles:- probability of a reversal back down into the ‘gap’ re-test (3-day breakout) or continue much further down re-testing the 3-day lows. Look at the gap to the 3-day lows. The market won't normally move higher until the 3-day lows catch up with current price action, hence the 2-day stall-reversal.

Even though I’m bullish long-term using the Dilernia Model, the short-term probability patterns can suggest otherwise, and it’s all going to depend how far the 2-day reversal is going to move. Because any down move next week has to be verifed with the break of both the Monthly and Weekly 50% level next week.

3-day high and Weekly 50% level match @ 6512-16:- trend identification for next week (support)

Below this level and expectation the market is going to make a lower low into December lows if US market follow the same ‘sell’ pattern


Fundamentally: - The Australian market looks like it wants to go up, what’s going to drag it lower will be US markets, because technically they are much weaker based on Market dynamics using the Dilernia Model and Methodology

Weekly Report 24th Nov 2007 Part 3

This market rotation back into support happens throughout the year, and often sends the market upwards for another 2-month wave pattern once the new month begins.

There are two major support levels:- 2007 Yearly high breakout, confirmed with the November 50% level. The current price action at this stage confirms major support around November 50% levels, and often this provides the next 2-month Upward wave pattern. (Weekly report 24th)

29th November 2007...

The Australian Market has been supported around the November 50% level for the past 7 days and the next trend Direction will be defined by the December 50% level.

The direction for the rest of the year is going to be defined by the December 50% level next week. Because what is occurring at the moment is the 2-month wave pattern towards the December highs, with the first rotation the 3-week highs @ 6743.

We can all see that Price is already trading around the 50% level in the forward month, so the trend is going to be defined early, and it’s going to be heavily influenced by US markets reaction to the same levels next week.




The rest of the week is simply going to be defined by the 3-day high @ 6512.

It has defined the trend on the way down each week, and just like US markets, it will confirm the change of trend on the Way UP.

This move back towards the 3-day high is what I was looking for to happen yesterday. I’ve been bullish this week because of the expectation that the closer it gets to December, the more likely the market will move back towards the 50% level.

The next 3-days are going to be very important:- because a robust reversal will see a trending week move higher into a higher Friday close and begin a swing back towards the 3-week highs. (6681)

A pattern that would favor a down move next week would be two more days of rotation below the 3-day highs. Even though Thursday can breakout and move higher, normally the next two days will rotate back into the 3-day lows before the next trend develops.

I can’t see any weakness in US markets until November 50% levels are reached once again(expected resistance), and the next month begins:-

In Conclusion:- Major support in November has been found, expectation of a rotation upwards next week and into the end of the Month before December provides a 2nd wave down into December lows.

Support is only valid for the current timeframe, once November ends and December begins there will be a new path for price to follow and the same support won't be valid. (US Weekly Report 24th)

Please read the Daily SPI Report for Thursday's Trading...

Weekly Report 24th Nov 2007 Part 2

November 28th:- This week has seen the UP move from higher timeframe support zones following the Weekend Report. SPI remains supported around the November 50% level @ 6362.

Major support around the November 50% levels, however the intermediate timeframes are still in a downtrend ( below 3-day highs and weekly 50% level). This was confirmed with the UP move on Monday, but the failure to close above those levels, and then the rotation back down on Wednesday.

13:45pm

Yesterday played that role of filling the gaps on the way upwards on Tuesday, and today it’s playing the role of following the market trend defined by the 3-day cycles and Weekly Trend:- DOWN

Price is now back into Major support at the November 50% levels.

Ideally I would still like to see consolidation into the end of the trading week, providing the better opportunity for short-trading down into the lower levels from December 50% levels.

US markets still consolidating around major November low support zones.

If November 50% level @ 6363 continues to hold for this month, this same level won't be valid for support in December.

Support disappears as Time moves forward.

Trend Direction defined by December 50% next week

SPI Weekly Report 24th November 2007

SPI completes rotation into major support around November 50% level @ 6363, and this is also the 2007 Yearly high. Whilst price remains above the higher timeframe 50% levels, then the expectation is that the Australian market will move higher in 2008 towards the upper levels using Yearly timeframe dynamics.


Australian Index

It would actually be ideal to see a rotation back all the way towards the monthly and Quarterly 50% levels again before the next up move. (6363) (30th September 2007)

The expectation is that the market is now heading down into the November 50% level @ 6363. Expectation of 1-2 day upward moves before Weekly 50% levels and 5-day 50% levels will be resistance and follow the timeframe dynamics lower. (10th November)


This week and the SPI completes the rotation down into the November 50% level (6363) and finds support.

Compare the Australian Market to US markets, and Market Dynamics are completely different.

US markets are in downtrends and also medium-term bear trends (below quarterly 50% levels), whilst the SPI is in a downtrend but has found support around market ‘fair-value’.

This market rotation back into support happens throughout the year, and often sends the market upwards for another 2-month wave pattern once the new month begins, which is just a few days away.

The trend remains intact, and the expectation is that the SPI will move upwards next week, and the December 50% level is going to be the overall guide for the rest of 2007


However is this the beginning of a new wave upward, (Dilernia Principle) or a classic ‘sell’ pattern that often occurs???? (High probability pattern using the Dilernia model into December lows)

And I have seen ‘secondary sell pattern’ many times before.

....................................................SPI Daily chart

Just like the sell-off at the start of November, any UP swing into December 50% level and trader’s have to look for any sign of weakness for the next wave down.

This is a classic bear pattern that can provide traders with an ideal swing ‘short’, but that is going to be confirmed with a higher open, and ‘spiral tops’ to minimize any Risk.

There are two major support levels:- 2007 Yearly high breakout, confirmed with the November 50% level. The current price action at this stage confirms major support around November 50% levels, and often this provides the next 2-month Upward wave pattern.

Short-term:- Expectation is upward next week:- lower weekly closed followed by price rising from a lower weekly open using higher timeframe support.

However, price action in December needs to be verified using the forward monthly 50% levels for trend identification.

The only thing that suggest more weakness is US markets (Dilernia Principle)

For Day trading analysis read the Daily report: the trader trading.

SPI Weekly Report 17th November 2007

For many these October levels might seem support, especially if there is a 2-3 day counter-trend move in the markets next week, but probability patterns often suggest that the price normally follows the model, so the expectation is that November lows are the target before any major rally or support is verified…

Therefore the Weekly 50% levels next week are resistance zones for a continuation move down after any 2-3 day counter-trend UP move. (previous Weekly Report (11th November US report)

What occured in the US was mirrored in the SPI this week. A counter-trend move upwards from Weekly lows back toward the 3-day highs before another Wave down into Friday as it follows the Weekly timeframe pattern and overall target the November 50% levels.

The overall technical pattern is bearish, and this is also confirmed with price trading below the 3-day cycle and Weekly 50% level.

Price target is for 6363.

This level on the SPI is major support in November 2007.

SPI Weekly Report 10th November 2007

The price action on the SPI was the same as in US markets:- Trading below the Weekly 50% level and in a 3-day ‘sell’ cycle on Monday and heading down, but the major moves in the SPI were occurring overnight because of US weakness so day-traders were missing most of the major moves in the market.

The expectation is that the market is now heading down into the November 50% level @ 6363

Expectation of 1-2 day upward moves before Weekly 50% levels and 5-day 50% levels will be resistance and follow the timeframe dynamics lower.

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Day-trading:-

Monday: I was bullish and I used the highs of the previous 44 point range @ 6728 as support and went long. It moved my way for a short time but reversed down and headed down 44 points and much more. I didn’t trade shorts. (stopped out)

Tuesday: Exact same set-up on Tuesday used the previous R44 high as support @ 6617, and move 44 points.. (exit profits)

Wednesday: looking for a downside ‘gap’ to close, so the only thing was to trade ‘shorts’ or not trade all. The Upper pivot of 6721 along with the weekly 50% level 6716 was resistance, but the follow through downside didn’t eventuate to capture a full 44 points. (Exit profits)

Thursday: lower R87 spiral point and expectation that the gaps on the upside would fill, and then the higher Spiral point provided a 2nd trade down. (exit profits)

Friday: Expectation of the lower gaps to fill. It was either trade shorts or not trade at all above 6601. But when the R44 completed upside then a rotation back down into 6601 was expected and hopefully a continuation down confirmed with the break of the 5-day 50% levels, as was with the case in US markets. (exit profits)

And once again Monday will open much lower because of US weakness. For those 3rd lot traders, exiting end of day and not holding overnight we are all missing major moves.

All Day-trading can be found in the Day trading Report

SPI Weekly Report 3rd November 2007

US markets tumbled down this week and found support around their higher timeframe monthly 50% levels.

This move down was forewarned by Weekly timeframe levels showing 'drops' , and support has been verified. Therefore expectation is that early next week the SPI will try and close the upside ‘gaps’, before any weak pattern downisde is goign to happen.

I'm still bullish on the SPI, but technically the market in the short-term is weak.

Friday closed below the 3-day lows, and also the Weekly 50% level.

Monday will open below those levels, and it would need to move back above 6737, otherwise price will move down with a Random length and follow market dynamics lower

November 50% 6363

SPI Weekly Report 27th October 2007

Australian Market supported around the 3-week lows and has moved upwards and towards the October highs once again.

Support was verified around the 3-week lows @ and the market is showing a lower Weekly open moving into a higher weekly close.

At this stage the SPI is still trading below the Weekly 50% level and 3-day cycles, but the Market will open up much higher on Monday due to the US markets moving higher.

The market remains supported, but it will open around October highs once again.

Short-term:- Expectation that the 3-day cycle will change on Monday, but the expectation that the SPI will move in a 2-day stalling pattern with a down bias and retesting the Weekly 50% level again....

Weekly view:- Consolidating pattern but watching US markets if there is a break of the Weekly 50% levels next week, because this will be the first sign that markets could come under and rotating pattern back towards the October and November 50% levels.

US markets are showing 'Dilernia Drops' which is forecasting reverals in the market next week.

SPI Weekly Report 20th October 2007

This week:- Higher weekly open on the SPI and expectation of a 2-day stall rotation down.

2nd day of the rotation breaks the 3-day lows (6744) and heads
into the weekly 50% level @ 6690. This is the first time is a
number of weeks that the 3-day cycle trend has broken. (first
sign of confirmed weakness)

Whenever there is a break of the 3-day lows, the expectation is
that the next day will swing upwards and move into a 2-day
counter-trend move.

Note: 2-day counter-trend move has a random length, it
can consolidate around these lows, or it can easily make it's
way back towards the recent 3-day highs...

The Weekly 50% level
is still verifiying support, and this pattern sends the market back
towards the 3-day highs on Thursday after 2-day 'stalling' pattern


Tomorrow is my ‘sell’ day.

That sell can be from a higher open tomorrow if US markets
move higher, or from a lower open. (18th October 2007_

This Week's Trading is the first time that the overall UP Trend is
open to Risk and October resistance has been confirmed.

Short-positions
will exit on the lower open on Monday, because if the gap and 3-week
low support zones, which often can support the market.....

SPI Weekly Report 13th October 2007

This week has continued higher into the October highs. These highs can form ressitance zones until the end of the trading Month

The Dilernia Model forecasts Trends. The Dilernia Model also defines Support and resistance levels, in this cae the channel highs are resistance levels.

Short-term:- The Daily timeframe is still in a 3-day BUY cycle, the cycle will change with a close below the 3-day lows, however the market is trading above the Weekly 50% level the trend is still UP.

The Weekly 50% level is the guide for any weakness in the markets. Whilst markets are trading around these highs I would expect more rotation and consolidation than any new trends upward developing.

SPI Weekly Report 6th October 2007

Australian Market reeached the September highs and is now moving upwards into the October highs.



With the September highs disappearing this week, the market path is to continue higher into October.

Support was verified this week around the 3-day lows, and until the market remains supported then the view is to head upwards.

A break of the Weekly 50% level will be the first sign that the UP trend is open to risk but i'll come to that when it happens.

Australian Index Weekly 30th September 2007

SPI Weekly Report:-

The Australian Market has completed the 2-period monthly wave pattern into September highs. The target and resistance (6655) is only valid for September.

We can see the movemment into August highs @6255 and now the September highs @ 6655.

With the end of the Quarterly and monthly timeframes, there is a shift in the forward timeframes.The market is now forecasting further moves upward towards 7022 in the next quarter, as price moves in a 2-period Quarterly pattern following the same principles.

Even though there seems to be a lot of bad ‘fundamental’ news around, I think this has already been factored in with last Quarter sell-off. That sell-off in July was forewarned with ‘drops’ in the forward months, and at this stage there are no drops: - therefore I can’t have a view there will be any sustained weakness in global markets just yet.

Last Weeks trending week will hopefully move back into ‘rotation’. The expectation was that price was rising towards September highs, which ended up being a ‘bottom-to-top trading week.

Next week I’m looking for more rotation and far more ‘re-tests’ of the 3-day lows. Even though the expectation is the market rising upwards, I’d expected more down days.

It would actually be ideal to see a rotation back all the way towards the monthly and Quarterly 50% levels again before the next up move. (6363)