Aussie ( SPI)Index Weekly 27th Sept 08

XJO Cash

Yearly lows reached @ 4538 and expectation that the next Quarter will rise upwards in monthly step formation to close the year higher, and then the expectation is that price will continue lower in 2009.

My job is to find the highest probability entry for myself and my readers to take 15% on stock positions the last quarter.

Add that to the reversal off March lows in the first Quarter, April's higher lows in the 2nd Quarter and then the move upward into MAY's highs. The double low pattern in July and September in the 3rd Quarter, and you soon begin to see that over the course of the year trading LONGS in a bear market can be very profitable.

SPI Weekly and Daily

As mentioned before, the Yearly lows and reversal upwards is dependant on October 50% level in the next few days.

I also mentioned that the up move next Quarter is dependant on resource stocks, it still wouldn't surprise me to see the October 50% level push the market back down in double lows.

Even if there is a double low in October my view still remains a higher close in the last Quarter.


"In ‘bull’ market stocks normally compound 12% per year, however the potential to make money could even be greater in a bear market than in a bull market, even though the trader is buying stocks in a down trend.

How is this possible?

In a Bull market stocks rise upwards, but don’t necessarily reverse back down into double monthly lows more than once a year. If banking stocks remain in a consolidating trading pattern in the current year, price will come back down far more often, which increases the frequency of trading. Whilst the exit strategies are based on exiting around the higher timeframe 50% levels, or even using the Weekly channel highs.


Depending on the entry level this will give the trader the potential to take between 10-15% on stocks in each 3-month period. The expectation is that, in every Quarter price could move back down into the lows. If the trader can use this strategy every Quarter, then there is a potential to make around 40-50% on stocks using swing trading patterns and channel lows in Bear Markets, as they consolidate for the rest of the current Year."

BOOK:- The Trader Trading ….. principles of successful trading….


BUT those 40-50% returns were achieved in the 3rd Quarter alone depending on which banking stock was traded, therefore the 4th Quarter might throw in a few more pleasant surprises.

Aussie ( SPI)Index Weekly 20th Sept 08

XJO Cash Weekly charts

This Week the SPI and XJO reached the 2008 Yearly lows @ 4538.

This was my down target for 2008, and both hit the level precisely and rallied, as did US markets.

The lows for 2008 have been set, and my expectation is that price will begin a gradual up swing in the next Quarter.

How far the markets will move will depend on Resource stocks in the next Quarter, and then each monthly step formation, with the possibility of moving back towards 5355 over the next 3-months.

As was the case with this year's down trend into 4538:- there is a market path for price to move towards based on higher timeframe dynamics, but price will zig-zag within lesser timeframe dynamics until it gets there, which is often based on each Monthly timeframe.


SPI Weekly:-

2 plays for the rest of 2008 based on the lows this week.

A set-up:- Bounce off the Yearly lows this week and moves back towards the September 50% level by the end of this month.

Reverses back down into October 50% level finding support, and then continues higher over the next Quarterly timeframe towards 5355.

B Set-up:- Wild Weekly swings into the end of this month, and markets continue down from October 50% level into the October lows because Resource stocks continue lower , forming a double bottom around October lows, and then markets reverse to close out 2008 higher.

Which Set-up will occur???

I don't know, but Set-up A wouldn't surprise me.

As I have been saying for weeks, the markets had to come down lower in this Quarter before a 3 -month counter -trend move upwards, and finally that completed this week....

However, any UP move in the next Quarter won't stop the inevitable:- globals market will go down into 2009

Therefore how high we close in 2008, determines how far we go down into 2009, and global markets will go down in 2009

Aussie ( SPI)Index Weekly 13th Sept 08

"So far the Weekly cycle support has been verified @ 4830 with Friday closing above it, but the SPI probably won't continue higher until another 5-days of trading :-3rd week contract expiry.

When looking at US markets they couldn't remain supported above their 3-week cycles lows, they actually closed lower, which often favours a continuation down."

Previous Weekly Report

SPI Weekly

SPI was dragged down by US markets last week, with a 5-day choppy pattern remaining above 4830.

This week is contract expiry, with December contracts running at a 45 point premium to the SPOT often sees the SPI move higher into Thursday and the day of expiry.

How far the SPI will move is any one's guess, but a move back towards 5164:- 3 week highs is a probability.

But after that I see don't see too much strength in Global Markets.

October becomes interesting because of the drop in the 50% levels.

I've mentioned before that I want to see lower prices in this quarter before a 3-month counter-trend move upwards, but if prices start trading above the forward Monthly 50% level in October, then the view is that the Aussie Market will begin a gradual rise upwards in a 'Monthly' step' formation towards 5355 in the next Quarter.

SPI 5-day pattern

Until then :- Day traders continue to use the 5-day levels and Spiral point set-ups each day.

They are the most robust intra-day set-ups that you can use, because they operate with high statistical probability when using Swing and Momentum techniques.

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Aussie ( SPI)Index Weekly 6th Sept 08

"Therefore:- like in April this year expectation still remains that September 50% level is resistance which could last for the next 2 weeks (more consolidation):- Ideal for spiral point trading and 5-day patterns.

And if price does continue higher towards October's highs it should push higher in the 3rd week"

Previous Weekly Report

SPI Weekly chart

Exact same pattern as April after the 3-week breakout on the Upside :- Price often reverses down and re-tests the 3-week cycle lows to determine how valid support is.

And so far the Weekly cycle support has been verified @ 4830 with Friday closing above it, but the SPI probably won't continue higher until another 5-days of trading :- 3rd week contract expiry.

But when looking at US markets they couldn't remain supported above their 3-week cycles lows, they actually closed lower, which often favours a continuation down.

http://www.usindexweekly.blogspot.com/

However, I still can't see a major 3-month counter-trend up move like April-May this year until lower prices bottom out in this Quarter.

Therefore if it doesn't go down then it's more sideways price action, which suits me fine.

SPI Daily and 5-day patterns

I'm not concerned where the market goes in the short-term, as long as I trade the 5-day patterns using spiral point trading.

When looking at the bigger picture we make certain conclusions of the trend and where price is likely to go.

We also try and forecast the market in advance because of those same patterns repeating.

Then we try and think in probabilities and find high probability patterns and trade them which fits in with the certain Weekly and 5-day parameters.

As day traders, our job is to find patterns which rotate towards the 50% levels and then thrust outward as the trend continues within the Weekly and Monthly timeframes

The current trends in Index markets are consolidating patterns with little trends. These patterns don't last long because eventually markets will move back into directional trends which last for 2-3 months.

I still have the view that price will continue lower in this quarter but understand that markets don't move in straight lines, they zig-zag towards destinations ;- dynamic support and resistance.

I'm also smart enough to understand the short-term timeframes using the 5-day pattern and adapt to the market, and continue to trade the same daily patterns of rotating and extending patterns within the 5-day range using high probability patterns:- Spiral Points (c)

If you are day-trading the SPI or any other market, it's also imperative to monitor a number of different markets, especially Forex. Because what you see in the SPI, you'll also see in the Euro, AUD, GBP, JYP, DOW, S&P and so on......

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