SPI Weekly Report 15th March 2008

XJO Weekly charts

The further this Quarter pushes down, the lower the next Quarter will travel, and any UP side back to the trailing 50% level in the next Quarter is going to be less.

And the Quarterly lows in the next Quarter is starting to get close to my overall downward target in 2008 @ 4538.

"On Monday price will be opening around the Weekly lows @ 5165, and the expectation remains that price is moving down into March lows. Any reversal upwards from Weekly lows and it's only viewed as a short-term 2-3 day pattern before the trend continues down into March lows." Last Weeks Report.....

SPI Futures Weekly and Daily Charts

Daily counter-trend upwards within the overall Weekly down trend, and next Week's channels lows are now dynamically pushed down matching March Monthly lows.

We can see last Week's trading and 5-day sideways pattern supported around the Weekly lows @ 5156, but those Weekly lows for next week are now pushed further down @ 4999.

And with SPI opening on Monday below last Week's lows @ 5156, there is going to be more chance of downward follow through.

SPI Intra-day 44 point Range Charts

Monday Last Week had the Weekly lows and 5-day lows as initial support.

This Monday there is no support to help to market to move upwards. The only support in the short-term will be the lower 'Spiral-point'.

At this stage Monday looks to be heading down.

Note: As mentioned last Week......

"The 5-day ranges are a major driving force in the market, and the levels often play support-resistance, and also attract price towards the levels each day. The further the level away the greater the market will move.

However within the trading day, the range rotations don't always play out the same, yesterday was heavily influenced by 22 point rejections, whereas other days are often influenced by smaller ranges when markets consolidate (14-18 points)

On Tuesday 44 points was a major trading range, because of the 5-day levels (support-resistance), this was also the case on Friday, along with 22-point range rotations.

It is often a good idea to keep an eye on price action within the trading day and adjust, espescially after the first 90 minutes of trading has taken place (thrust), because it will give intra-day traders a good idea on short-term 'scalping' trading whilst the market is travelling from one level to the next, or consolidating above or below the 5-day levels."

Please Read the Daily Report's each day......

SPI Weekly Report 8th March 2008

XJO Weekly charts

Expectation of the 2nd wave down from April has started earlier in March, and the next Quarterly lows are being pushed further down.

What that basically means is that: the reversal back upwards into the April 50% level is going to be much less and will be relatively flat, and the potential down move in the next Quarter is going to be greater.

We can see how valid the 2nd phase of the bear market has been, as it's consolidating under the Yearly 50% level with the view that the bear market will move down into a 2 year wave pattern lower.

I still have the view that price will re-test the 50% level in the next Quarter, but the reversal upwards is going to be much less than if price had remained supported....

"SPI is back down into Quarterly support, with the expectation of further weakness down from the next Quarter in April.....However, SPI futures has closed on a Monthly timeframe (last day of the month) below Quarterly support. This isn't a good sign when the Monthly timeframe closes outside a major support zone on it's last day." Previous Weekly report


SPI Weekly Chart:- Last week’s close on the last day of the Month below Quarterly support was the first sign that these support zones would fail.

The 2nd sign was the break of the 3-week lows, with the expectation that the market path would begin a move down towards the March Lows.

This was helped by the US market following the exact same pattern of the Weekly Range breakouts.

SPI Daily chart:- On Monday price will be opening around the Weekly lows @ 5165, and the expectation remains that price is moving down into March lows.

Any reversal upwards from Weekly lows and it's only viewed as a short-term 2-3 day pattern before the trend continues down into March lows.

SPI Daily and SPI 24 hour chart

We can see the difference in Weekly ranges when we take into effect the overnight market action and larger Ranges.

What is a Weekly low in the day session, is much further down in the 24 hour market, with the Weekly lows @ 5013.

Intra-day 44 point Ranges

And each move is based on the 5-day ranges:- below 5181 on Monday and price is moving lower.

Above 5181 and price is starting a 2-day upward move before it continues down:- ideally from the 5-day 50% level...

But the market is going down into March lows and Support.....(Next Consolidation Phase)

Please read the Daily Report.....

SPI Weekly Report 1st March 2008

"Price remains range bound between 6040 and the Quarterly lows.... expectation remains that the market will consolidate between this range..... until the closer it comes to the contract expiry in March, before any potential 2nd Wave down.."

SPI is back down into Quarterly support, with the expectation of further weakness down from the next Quarter in April.

However, SPI futures has closed on a Monthly timeframe (last day of the month) below Quarterly support. This isn't a good sign when the Monthly timeframe closes outside a major support zone on it's last day.

This week was disappointing, I was expecting two more days of higher prices into March 50% levels before selling resistance back down into Quarterly support.

Technically everything was pointing to higher prices during the week:- Quarterly support, breakout of the 3-day highs and trading above the Weekly 50% level.

This pattern was an ideal set-up for a continuation upwards into Friday, however as I mentioned last week there was also the prospect of a 2-day reversal down after the change of cycle before the 3RD day moves higher. The only problem was the 2-day reversal was much greater than expected with the break of 3-day lows @ 5553 on Friday.

"As the Weekly timeframe begins to 'tighten' and get smaller, there will be a breakout of the range, which will probably occur the closer it comes to the next contract expiry."

If March is going to follow the trend down with the monthly close below Quarterly lows, then it's going to depend on the Weekly lows @ 5432, with the expectation price is moving down towards March lows....

In conclusion:- break of 5432 and price is heading down.

Support of 5432 and price is swinging back upwards into March 50% level:- this could still occur because of the recent break of the 3-day lows (expectation of a 2-day reversal)

And that's also going to be defined by the 5-day lows:- the 5-day ranges and levels are the most robust view of the SPI within the Weekly timeframe.

Above 5437 and price will close the 'gap' and look for a rotation back towards the 5-day 50% level. And below it's heading lower.

Last week:- the 5-day levels were precise in so many ways:-

Support on Monday (5-day 50%)

Resistance on Tuesday (5-day high)

Support and guide for higher moves into Wednesday. (5-day highs)

Break of Support on Thursday @ 5707 (5-day high) and rotation back down into the 5-day 50% levels.

And Friday open below 5-day 50% level 5608-13 and push down

And on Monday it will be the same :- 5437

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Note:- Those 5-day levels do play a major part when 'day-trading':- trading reversals using swing points and trading momentum (breakouts), however I still use certain techniques to verify support and resistance. This is often using R22 and R44 point ranges (spiral points).

I trade 'longs' from lower points and trade 'shorts' from higher points, and much more valid and robust when those points align with timeframe levels in the market.

On many days these techniques will work perfectly, on other days they won't work because the day becomes a 'trending-day'.

'Trending-days' don't rotate as often within each day that provide entry points to trade the trend. I have a clear view of the markets based on price trading within the Dilernia model by simply using the 5-day dynamic ranges, but I still need a 'spiral-point' to get into the trend.

The past few weeks has been ideal with the amount of intra-day rotation, on Thursday and Friday there wasn't the rotation taking place as before, even though the trend was clearly defined using the 5-day range pattern.

Please read the Daily reports.....

SPI Weekly Report 23rd February 2008

Price remains range bound between 6040 and the Quarterly lows.... expectation remains that the market will consolidate between this range until April, with the view of further weakness either from the April 50% level or April highs.

Therefore the current view is:- a 6 week consolidating pattern of rotating UP and Down Weekly timeframes until the closer it comes to the contract expiry in March, before any potential 2nd Wave down..

2nd February Weekly Report

Quarterly lows supporting the market and we have moved into a tight trading pattern with predictable price action:- Sell higher opens along with 'short-covering' rallies off Quarterly support after 14:36 in the afternoon.

I expect this price action to continue, but not for much longer. Contract expiry and a new monthly timeframe just around the corner, and as often happens price will try and rotate back towards the March 50% level.

The entire market has flat-lined around Quarterly lows, due to the financial sector taking a beating.

I pointed this out in the Stock-Report (banks) some weeks ago ,the breakout of the Quarterly lows in January and the potential for much lower prices that many weren't expecting could occur, and with banks coming into timeframe support levels last week, the expectation is that they will try and swing back towards the April 50% levels in the coming weeks, which should help stabilise our market before the next 'sell' pattern occurs in the new Quarter.

Last week's trading and we saw the familiar patterns of price being directed by the 5-day levels and the 44 spiral-point ranges. I expect this to continue, as it has always done in the past, and will continue to do so in the future.

Things we need to keep an eye on are the 14:36 'short-covering' patterns around R44 spiral bottoms and timeframe support, and also the double R44 low patterns that occurred last Monday and Tuesday.

Also each current 5-day 50% level will play a gravitational role, and each previous 5-day 50% level will play a resistance and support level.

On Monday we will open in the middle, therefore the expectation is that it will push outwards once again. Normally it has been down on Monday, but it could easily be upwards with the last week of the month as it tries to swing back towards the 50% level of the next month:- March 2008........

Please Read the Daily Report..... " the trader trading".....

SPI Weekly Report 17th February 2008

Weekly charts:-SPI futures on the left and XJO Cash on the right.

Range bound between Quarterly Support and Resistance from the breakout of the previous Quarterly lows, and the current view is further weakness in the forward quarter in April if price isn't able to close above the 3-week cycle highs @ 6026.

We subscribe to support being valid (BUY) and the resistance being valid (SELL), but eventually one is going to fail:- reverse the down-trend and move higher, or continue with the down-trend into lower lows defined by higher timeframe analysis.

A Weekly pattern of a small 5-day range that has just completed can often move into a 3-day trending period upwards:- figure 27 in the book illustrates this, and I have modelled US markets to rise higher on Monday which gives further reason for the SPI to breakout of this 5-day range.

Daily chart SPI future 24 hours

A 3-day rally could move as high as the 100% Weekly 50% level....(SELL ZONE)

Or a breakout on the downside could move down towards the 100% lows (BUY ZONE), the latter will follow if US markets reverse down on Tuesday (Read US Weekly Report)

Daily Chart SPI Futures

Last's Week probability pattern:- was based on Monday's reaction to the Weekly 50% level:- above and price was moving towards the 5-day highs, like what occurred in US markets. This was because of Quarterly support and a lower Weekly open.

A down move on Monday and it was back into 'short-term' Risk trading using timeframe levels and spiral points. And that's what we got last Week.

Next week's Probability pattern is going to be defined by the 5-day 50% level @ 5595 and for the market to continue upwards it needs to break above the Weekly 50% level @ 5685 on the back of strength in US markets...

Intra-day chart SPI Futures 44 point ranges

Last week's price action and consolidating 5-day pattern provided some robust patterns which provided high probability follow through. Friday's late rally was perfect example using the Reversal pattern and the R44 spiral low.

Next Week:- the Analytical view is that the market will breakout of the 5-day range, this should occur from price rising upwards from the 5-day 50% level and continue higher towards the 5-day highs.

The most robust pattern would be a rise from a 44 point low.

The 44 point range needs to complete before 'open-trading' begins on Monday:- A down move provides the best Risk entry.

If the 44 point range rises upwards on Monday into 5642, then it gets tricky because a couple of price patterns could play out on Monday....

It just continues higher towards the Weekly 50% level and more (opens higher on Tuesday based on US markets rising higher)

Or.....It moves down from the R44 high (gap completion from Friday @ 5638) and once again moves into a rotating-stalling daily pattern (opens higher based on US markets)

In Conclusion:-

The Analytical view of the market is valid until proven wrong or it changes.

The Analytical view of the market is range bound between Quarterly Support and Resistance until it's broken.

The Short-term view of the market has been modelled to move higher on Monday towards the 5-day highs, this is valid unless price is trading below 'support'.

A Monday that rises higher has a random length:- it might reach the 5-day highs or it might not, but it's not a 'shorting' day whilst trading above the 5-day 50% level.

A Monday that rises higher is the start of a new Trading week with the potential that price could continue higher each day:- 3-day rally until it reaches resistance.

A 'shorting' day will be valid around higher timeframe resistance and a higher open, but that will need to be confirmed by price moving back under the Weekly 50% level. If that price action occurs then my Analytical view is price is moving back down into Weekly lows, and at a much faster rate than many would expect based on US markets reversing.

That entire walk-forward scenario is valid and can play out precisely until proven wrong, and that is simply going to be defined by price trading on the either side of dynamic timeframe levels (50%) and support/resistance.... and using 44 point spirals.

Please Refer to the Daily Reports......

SPI Weekly Report 9th February 2008

"The Australian Market (XJO) is consolidating around the January-March Quarterly lows, and my expectation that price will remain range bound between these lows and January 6040 until the end of March...."

Previous Weekly Peport 2nd Feb 2008

Price Remains range bound between 6040 and the January Quarterly lows....

Expectation remains that the market will consolidate between this range until April, with the view of further weakness either from the April 50% level or April highs.

Therefore the current view is:- a 6 week consolidating pattern of rotating UP and Down Weekly timeframes until the closer it comes to the contract expiry in March, before any potential 2nd Wave down....

When we compare the down move in August 2007 and the 'crash-pattern' in 2008, we can see that even though the range lengths are comparable, the 'Dynamics' are completely different.

In August 2007, the Weekly pattern moved into a 'Fake-break' below August lows but then moved back inside the following Week and then rallied upwards.

Whereas in January 2008, it is a 'Crash-pattern', and the breakout in January (Resistance) is confirmed with the February 50%, along with the higher Weekly open reversing down...

The Weekly 50% level next week is going to define the trend @ 5593, and any further weakness this month and expectation is that price has a market path to move down into February lows.

In conclusion: the overall trend is bearish defined by higher timeframe 50% levels, but there is major support around these current lows based on Quarterly Support.

The view is that the Quarterly lows are supporting the Market, and we have just completed a DOWN closing week. Therefore there is a potential of an UP trading week defined by the Weekly 50% level, with a view that price is moving back towards the highs on Friday....Rotating Weekly Timeframes....

Last Week's high probability pattern was the 'Sell' from Monday's highs down, as it follows the overall higher timeframe dynamics.

Next Week's high probability pattern is going to be simply defined by the trend direction of 5585, with an UP bias...

The two previous Friday's rallied after testing the Dilernia Pivot and moved upwards towards the 5-day highs in 1 day....

Yesterday (Friday) didn't test the Dilernia Pivot in early trading, but came down late in the day and tested it and found support. Therefore my high probability pattern is going to be the completion of the rest of the move.

The previous two Friday's rallied towards the 5-day highs, therefore my view is that next Week will move back towards the 5-day highs.

That UP move has a random length, because it might take a number of days to actually complete the move. It could happen in 2 days, or it might take the entire week to get there, but that's the view next Week...

Note: The Overall Trend is down, and the potential to continue down and follow February lows lower is a high possibility, but that's not my high-probability pattern, my HP is to move up from 5585 and continue higher.

If it takes a number of days to get to the 5-day highs, then the R44 spiral bottoms will play important trading levels along the way....

An Ideal 'Position-Swing' trading set-up, is to remain 1 lot long all the way, but have trading contracts using partial exits, and re-enter using spiral bottoms...

If it moves down on Monday below 5585, then it's back to short-term 'RISK' trading, using timeframe levels and Spiral points.... but that's not my view on Monday....

We will know how valid any UP move is going to be, because the first valid confirming price action is not only rising upwards on Monday from 5585, but getting back above the 5-day 50%.....

At this stage my view is a consolidating market trading between 5-day ranges, therefore once it get to the 5-day highs, we are looking to 'sell' down again using higher timeframe resistance levels..

Please Refer to the Daily Reports......

SPI Weekly Report 2nd February 2008

The Australian Market (XJO) is consolidating around the January-March Quarterly lows, and my expectation that price will remain range bound between these lows and January 6040 until the end of March....

And will probably move back towards the Yearly balance point @ 6213- 6328 the closer it comes to the end of the March contract (Expiry), and then April Highs in the forward Quarter.

Last Week's report was based on the Quarterly lows supporting price, but the first expectation was that price had to come down early in the Week to close the Gap, and test the 3-day lows before any Up trend could continue....

Whenever the market is trading around the middle of the timeframe, the expectation is that price is moving towards the outer channels, regardless of which timeframe it is..

When the SPI opens next week, Price will be opening in the middle of the monthly 50% level, therefore the expectation that price needs to move away from the middle and push outwards...

3-month breakout of January lows @ 6040 is first resistance....

When we look at the 5-day pattern, the Market will open on Monday around the Higher channel, the expectation is that price needs to rotate back down towards the middle of the range before any upward move next week can take place. Even though the expectation that price is moving higher in February, my expectation is that price will move back down first before any UP move occurs.

On Monday the SPI is going to open around 5960, this places the SPI above the February 50% level @ 5896, and using the lows of January ‘breakout’ (Resistance 5962) we are looking to trade the SPI down on Monday back into 5896, and any short-term weakness in the SPI and expectation price will move towards the middle of the past 5-day range over the next few days. (2-day reversal at the start of the Week)

Looking at the market Dynamics using a number of different timeframes, the Aussie Market looks like it will move into a sideways choppy pattern with no clear direction throughout February.

The Volatility will soon drop and the Daily Ranges will decrease and we move into regressive trading:- selling higher opens and Buying lower opens. The trending periods within the Weekly timeframes that we have recently seen will make way for consolidation and back to normality. (smaller Ranges)

Thursday's trading last week had over 850 points of range volatility within 1 single day. That is something I haven't seen before, and it will probably be a long time before I see the same thing again.

Friday's Trading was exactly like the Friday before, rising upwards from the Dilernia Pivot and making it's way towards the 5-day Range high, with more Buyer appearing from an R44 spiral bottom around 14:36....

Last week we traded the market down in the first two days from the 5-day highs, and I'll be looking to do the same again next week, back towards the 5-day 50% level @ 5755, along with using spiral tops to trade down.


Please Refer to the Daily report...

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