Australian Stock market is heading down into 2008 major support during this Quarterly timeframe.Once price opened below the Yearly Balance point and started moving down on Monday, the next level down target is nearly 600 points away...and my expectation is that price will make it's way towards those levels during this Quarterly period.
Price action during this month has followed the Dilernia principle of a two wave pattern lower into January lows. Around these levels there is an expectation that the market will find support.
It is a repeating pattern that around these levels, whether in rising UP-trends or moving Down-trends the market will find support, moving into a consolidation pattern for a number of weeks, before the next wave down occurs in the forward monthly timeframe, as each wave pattern moves within the monthly timeframe.
Last week's report was based on the market trading either side of the Yearly balance point:- below and it was heading down into the January lows.
This price pattern has just completed a 2-month lower low wave pattern. This pattern often provides the springboard for major reversals in the market, and the UP trend continues higher.
This is often confirmed once price is back above the Weekly 50% level. This price action of a 2-month lower low has resulted in major down trend reversals, and the Bull-trend continues.
However, all these major reversals using this pattern have been occuring in Primary BULL trends:- Price trading above the Yearly Balance point.
This isn't the case now:- it is the first stage of a bear market unfolding, but that is only confirmed with a monthly close below 'MAJOR Support'
The Primary Trend is the driving force in the market, over the past 5-years, it was safe to move into margin positions on stocks around these levels and ride the trend upwards over the next 3-6 months and more.
But in 2008, the risk of trading Margins positions at this level is still open to RISK.
When we look at the Dilernia Model, the expectation is that from the break of the 5-day lows on Monday @ 6231 the market was heading down into January lows.
The Trend was down:- therefore the highest probability trades during the week were the R44 'spiral tops'.
In fact, every higher R44 spiral point resulted in a high probability follow through:- Each point provided a huge edge when trading the overall trend of the market. This was because of the trend of the weekly direction, and where price was travelling from, and where it was going.
If January lows becomes a multi-week support zone until February, then the r44 spiral points will be just as robust, but the expectancy of every R44 spiral TOP is going to drop down into it's historical average of around 75%, and not sell-off from every top like last week.
The spiral bottoms in a consolidating Weekly timeframe will be just as important when trading the 'MONEY PATTERN'
In Conclusion:-
The Overall Market is heading Down during this quarter, and probably go lower.
Expectation that January lows will support the market and move into a multi-week sideways pattern, with the next down move occuring in February.
The Trading range next Week will be defined by the Weekly 50% level (Resistance)
And the Spiral-Points will be the best day-trading edge in the market without a doubt.
What the Dilernia Model © is for Trend-Trading, Spiral-Points © are for Day-Trading
Please refer to the Daily reports
All information is own and copyrighted by Frank Dilernia and cannot be reproduced without consent
