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
