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)
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