SPI Monthly (24 hour markets)Expectation the SPI is heading down into the February lows, but it has been lagging the price action in February compared to the DOW Jones and other US markets.
http://usindexweekly.blogspot.com/2009/02/dow-s-weekly-21st-february-2009.html
The expectation is for the SPI to move down into 3128-2950 and then look for a bounce upwards.
Any Bounce upwards will only be short-lived, as there is an expectation that the Australian Market is heading much further down in 2009
So what is going to turn the market around in the Short-term?
It has to be Financial and banking stocks!
The Financial Index is coming down into a major support level in the first Quarter @ 2900.
This has the potential to bounce the banks and move them upwards taking the market higher.
Note:- 2900 is not my low target for the year on Financials, it is around 2500.
Therefore any bounce off 2900 and targets are the 3-week highs exit, as there is a view over lower prices towards 2500 in the Fin Index.
If February closes below 2900 in the Fin Index, the Aussie market will be on it's way down towards 2600
SPI Monthly and Weekly (Day Session)
I expected more weakness this month down into 3128, but instead February continues to be range bound and resisted around the Weekly 50% level.
Next Week's view is that 3411 will be the next resistance zone, trying to push the market lower once again.
The interesting part in the SPI compared to the US markets is, there hasn't been a breakout below the 5-day dynamic lows to confirm more weakness. The SPI continues to swing around within the 5-day range, which is ideal for short-term Spiral point trading
In conclusion
I mentioned at the start of February that a move down into the February lows in the first 2 weeks of the month has the potential to reverse upwards 25-30%.
We still haven't reached those lows yet.
We have three scenarios….
SET-UP A:- reversal off the February lows next week back into the March 50% level and then continues the down, as it follows the Primary cycles into lower levels.
This is lead be a break of the Financial Index below 2900 and monthly close below
SET-UP B:- for any 25-30% reversal upwards to occur, the last week needs to bounce lead by Financials along with US markets following the same pattern:- double Monthly lows.
If that occurs then there is the view of a slight push higher in March to complete the remaining percentage move.
Set-up B is a retest of the 3-month highs in March-April and then the market continues down into lower lows in the 2nd Quarter.
Maximum move is towards the March-April highs
SET-UP C:- fails to hold February’s lows and continues down in another breakout pattern, similar to October in 2008.
Lead by Financial Stocks breaking below 2900 and heading down towards 2500.
Regardless of any bounce off these support levels in February, or even if Set-up B occurs, The Australian Market has to go lower to complete the Primary trends of 2009.
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