SPI 24 hour marketSo far the 4th Quarter breakout pattern in the first week of October is playing out precisely.
October lows resistance, reverse back into the November 50% level and thrust downward into the November lows....
And now a rotation upwards towards the December 50% level, with the potential of further weakness next month.
SPI MONTHLY & WEEKLYNovember lows support and a late rally on Friday has pushed the SPI upwards, as it looks to move towards the December 50% level next week.
Once Tuesday opened above the November lows @ 3584, helped by US markets reversing off their November lows, my view of November support and rotation back towards the December 50% level is playing out.
I also have the view that there is a double monthly low pattern to play out, with lower prices down into December's lows.
The move down into December's lows will depend on Financial stocks, Resource stocks, and also US markets....
http://usindexweekly.blogspot.com/2008/11/dow-s-weekly-29th-november-2008.html
FINANCIAL INDEX & BHP (resource stocks)
Financial Index:-Banking stocks have struggled to bounce upwards in November because of the breakout of the November lows:- Financial Index resistance
These resistance levels shifts in December, so any bounce in this Quarter has the potential to move towards the December 50% levels, as resistance disappears.
It is the same pattern as the October breakout and November 50% level 'thrust' pattern downward.
Because of the breakout of the 4th Quarter, there is also the pattern of following the the market lower into December's lows in the Financial Index.
Resource stocks BHP:-
BHP drops the bid on RIO and BHP Shares rally back towards the Monthly 50% levels....
BHP thrust pattern down from November's 50% level into November's lows reversing upwards
At this stage I would treat BHP as range bound between the December 50% levels and the Monthly lows.
There could be a move higher towards fair value in December, but being a higher weekly open and in a bear market, I would view BHP as range bound between those levels.
Therefore there can be higher prices early next week, but at this stage I can't see the Aussie market higher than the December 50% level, but I do see lower lows in December when looking at Financials and Resource stocks.
The Reserve meets on Tuesday and the expectation of a cut on % rates.
How much is cut will obviously influence the direction of the market in the short-term.
