Aussie Index (SPI) 1st MAY 2010 Weekly

SPI monthly and Weekly

SPI completes the reversal pattern from the April highs towards the monthly 50% levels in MAY.

As per previous Weekly report....

http://austindex.blogspot.com/2010/04/aussie-index-spi-3-april-2010-weekly.html

Therefore the market is trading around support and with the expectation that the SPI is moving towards the 2nd Quarter highs @ 5156-5170:-

higher high 2-month wave pattern into JUNE

Confirming pattern is a breakout of the 5-day highs and trading above the Weekly 50% level.

My only concern about this pattern failing is the levels where US markets are currently trading....

I'd be much more confident if US markets were also trading around their monthly 50% levels. (read US report)

Aussie Index (SPI) 24 April 2010 Weekly

SPI monthly and Weekly

The Aussie market has continued down but the US markets have failed to follow with the double top patterns and have continued higher.

3-week lows support and Friday 5-day low support should see next week start with a 2-day UP move:- random length.

It's a bit too early to tell what will happen after a 2-day UP move, as price isn't rising up from the monthly support levels in MAY.

However, we could see a move back towards the April highs by the end of next week and continue towards the 2nd Quarter highs in MAY.

Aussie Index (SPI) 17 April 2010 Weekly

SPI Monthly and Weekly

SPI trading around resistance and as per previous reports, for the SPI to continue towards 5170 the most robust pattern is to revisit the 3-month 50% levels.

This is based on a 2 timeframe wave using the quarterly timeframe:- the 3-Quarterly 50% level in the first Quarter and continues towards the highs in the following quarter.

And along the way following another text book pattern using a lesser timeframe & 2-monthly wave pattern, in this case the monthly 50% during this Quarter and another 2 month wave pattern upwards.


The reversal pattern from these highs and the expectation of a down move needed to wait until the DOW had completed it's break and extend patterns in April @ 11082, and because of this I'm looking for the trend to continue down.

And Orderly Text book pattern would be moving into the MAY 50% level and then heading higher.

However, it's not about the Aussie market, it's about US markets.

If US markets follow #3 (Read US report), then the Aussie market could follow another double monthly low pattern, but this time using the single monthly lows not the 3-month lows.

As we can see the first monthly low is @ 4686

Aussie Index (SPI) 10 April 2010 Weekly

SPI Monthly and Weekly

2nd Quarter target 5170+

Weekly high resistance should continue towards next week's highs and April's highs.

I still subscribe to the view that the next best set-up towards 5170 should occur from the monthly 50% levels, which may take 4-6 weeks to unwind.

Up trend currently helped by US markets break and extend patterns from March highs into April's highs (Read US report)

Aussie Index (SPI) 3 April 2010 Weekly

SPI Monthly

Start of the 2nd Quarter and expectation during this 3-month cycle is that the trend will continue towards 5170+

However, the SPI is still trading below the 3-year 50% level @ 4969 and in my opinion can continue to form a resistance zone until price retests the 3-month 50% levels.

In the first Quarter we have had a double monthly low pattern in February and a move towards the high in March:- resistance

The red channels are the single monthly range. We can see a breakout of the monthly highs @ 4767, which in theory should continue to push slightly higher in April but then rotate back down towards the monthly 50% levels.

There are two possible patterns during the 2nd Quarter...

A:- retests the 50% levels and continues towards the Quarterly highs @ 5170+

B:- finds support but continues to consolidate until MAY

Why?

The most robust UP trends often coincide with both the 3-month 50% levels and also the single monthly low (red), which is currently @ 4686.

That means that if April 50% level supports the market the monthly low will shift higher in MAY (B) and provide a better set-up to breakout of the 3-yearly 50% level and continue towards 5170+


These are a few of principles that I subscribe to...

1. all trends originate from 50% levels and push outward
2. breakout of the timeframe will continue until the next timeframe is reached:- break & extend
3. trends follow wave patterns of 2:- month & Quarter

In the above example we can see price trading above the March 3-month 50% level and heading into the March highs.

However the important pattern was not only the trend moving up from the March 50% level, but at the same time breaking out of a timeframe high:- single month

The breakout was the single month high of February:- RED.

That means there are two princples occuring at the same time....

1. Trend pushing outward from the 50% level.
2. break and extend pattern into April's highs.

The current resistance in March disappears and around April’s levels the risk increases, because the short term breakout pattern will complete, but it doesn’t mean the price will reverse down into a new 'bear-trend'

It’s simply a completion pattern:- break & extend pattern during a Quarterly cycle from one month into the next.

The 2nd Quarter Target remains @5170

Because we are treating each Quarter as its own cycle, for those wanting to Buy back into the market would need to be patient and use the 50% levels as support once again during the next cycle.

Because price is has tested the 3-Quarterly 50% level in February the expectation remains that the Trend is following a 2 Quarterly pattern towards the highs in the 2nd Quarter (5170)