This year started with the first week trading just above the Yearly balance point (50%). The Yearly timeframe is the driving force behind major global trends, and once under the Yearly balance point, price was coming down to these levels, as price pushes away from the Yearly balance point and moves towards the outer channels of the Quarterly timeframe.
Every time the market gets down to these levels, the market reverses upwards and continues with the overall trend. But each time in the past, the market was trading above the Yearly balance points, not in 2008.
If we subscribe to market dynamics and price following TIME and PRICE modelling using my methodology, then YES this can be major support, and Yes markets can reverse upwards, but this time any reversal upwards is going to be limited, and any further move down is going to occur in the forward Quarterly timeframe, which is mapping out price down towards 5203 from April 2008.
Therefore using the Dilernia Theory: - price rotation down into outer channels (we are here now), rotate back up into 6027 over the next 2 -months, and then move lower from the 50% levels down into lower prices in the forward Quarterly timeframe…
We always start with the larger Timeframes first, and then move into lower timeframes and use the exact same theory.
However the theory in general doesn’t always follow the precise methodology, because it only takes one event or outside influence to change things.
For example, the expectation was always that price was moving down into these lower levels, but using timeframe modelling and the monthly timeframe, this next sell-off had a higher probability for price to head down not in this month, but the next month as it follows the February timeframe lower, in step formation.
Just as it does on the upside, the continued sell-off was modelled to continue lower next month.
And that 1 event that sped things up was the US markets continued sell-off this week, dragging the Australian market down much quicker than expected, but not unexpected.
In conclusion: - Any upside this month and my expectation that price will find resistance around the January Monthly breakout (lows), and then the February 50% level is going to be the next trend guide in the forward monthly timeframe.
When we begin to look at the shorter timeframe based on Daily and Weekly, we see the exact same price patterns in the market:- Support- Rotation- Break, and then Price continues with the overall trend of the much higher timeframes….
Therefore next week:- Resistance Weekly 50% level, further downside in the Weekly lows @ 5525.
The downside trend won’t officially stop until price moves back above the 3-day highs and breaks the Weekly 50% level, regardless how much support exists around these current lows
And then as Day traders we use the 5-day patterns to trade and minimise risk along with Spiral points, as price moves with the overall trends of the market from one higher timeframe level into the next, and then reverses upwards.In this case 5-day lows, 5-day 50% levels, and/ or 44 point spiral bottoms and tops.
Last Word: - We need to analyse and hypnotise the larger timeframes, but we don’t necessarily have to trade them. We simply utilise the overall market direction and trends to minimise risk.
For example:- this week I bought banking stocks, I think the levels I bought ANZ, CBA, and WBC constitutes fair value and price using my modelling. Since banks were floated in the early 1990’s these banks have probably spent less than a few weeks below these dynamic levels. (The Stock Report)
During the past 17 years we have seen the Asian Crisis, Tech Wreck, September 11, the bear trends in 2001-2003, and every other financial storm, and those three banks have remained above those levels every time.
Based on my modelling and Risk assessment, I waited until these levels to BUY into banks, and not anytime sooner , however I haven’t bought banks using Margin positions, only cash.
When it comes to futures, I still need to understand the market from the top-down and use support and resistance along with the overall trends in the market.
The last time US markets collapsed like this in 2001, the Australian market remain supported at the same dynamic levels we are now for the rest of the trading year before falling the following year.
The US markets will probably go down more, but I think there needs to be a major counter-trend move back towards the 3-month highs (over time) before the next major collapse into Yearly lows ( read US Weekly Report)
Please Read the Daily reports…
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