Aussie Index (SPI) 16 Jan 2010 Weekly

SPI Monthly and Weekly

"A lot of resistance levels around 4956-68, and the sign of any reversal will be a breakout of the 5-day lows (White line)"....Previous Weekly report

As per my view of 4956-68 being a major resistance zone I'm expecting the market to reverse down from these levels and begin to move into a larger Trend reversal.

4956 was reached precisely during the week in Sycom and then followed by a break of the 5-day lows, as US markets followed my expectation of a 2-day reversal down at the start of last week.

Currently the SPI is being supported around the Weekly 50% levels.

The major breakout of support will begin with price trading below 4781, which will probably occur during an overnight session. If US markets continue down next week, as part of my view of a trend reversal then over the next 3-weeks things should begin to get some decent volatility back into the market.

I could be completely wrong on my view, but little things can grow into big things, and the current price action that is occuring is acting in a manner that often leads into big things.

Note:- I'm not expecting January 50% levels to hold support.

If price is still above those monthy 50% levels by the end of the month, then there's the potential of the market breaking out of those upper resistance levels in the 2nd half of the first Quarter.

Aussie Index (SPI) 9 Jan 2010 Weekly

SPI monthly and Weekly

Expectation of an early push upwards into the Janaury highs, and as per previous report there is a lot of resistance levels around 4956-68.

Whether there is a breakout on the Upside (monthly close above 4956, or a reversal pattern down from these highs, we need lesser timeframe patterns to validate the moves.

That's probably going to happen based on the price action in the S&P 500 (Read US report).

First sign of any reversal will be a breakout of the 5-day lows (white line) @ 4878.

Aussie Index (SPI) 2 Jan 2010 Weekly

XJO Dilernia Model

The price action in 2009 was quiet predictable, without the usual hindsight, as most of the information is already in my book.

The patterns were...

2008 4th Quarter breakout and extend pattern into the 1st Quarter lows in 2009.

1st Quarter support and reversal back into the 2nd Quarter 50% level.

The 3rd Quarter 'Thrust' pattern away from the 50% level and into the highs.

The 4th Quarter highs and reversal down into the November 50% levels....

And lastly support confirmed in late December for a move back towards the highs.

2010 should be an interesting year.... as I'm looking for the market to make its way down towards the 50% levels.

The only way I can get bullish in 2010 is for the XJO to be consolidating above 5101, and if that's the case the market in 2010 would be up towards 5700+.

However, I prefer my patterns to be orderly, that's why I would like to see the market come down into the 50% levels, and any potential moves higher would come later in 2010 as those upper levels shift higher dynamically.

I like my markets to trend from 50% levels.

At this stage I'm treating those upper levels as resistance.

SPI monthly and Weekly

Weekly highs dynamically shift upwards next week to match the January highs....

And it's those January high's that I've got my eye on to determine which direction the market is going to take.

The Financial Index and the Energy index are not in the same position as the XJO....

The XJO is trading around the highs, so I would treat those upper levels as resistance with the expectation that the market will rotate back down towards the 50% levels.

However, both the Financial Index and Energy Index are positioned for potential 'thrust' patterns at the start of the year. (read the stock Report).

And it will also depend on the direction the S&P 500 takes early next week. (read US report)

Aussie Index (SPI) 26 Dec 2009 Weekly

SPI Monthly and Weekly

"Friday's price action often suggests that next week will begin with a 2-day UP move:- random length.

Tuesday is above 4690, then there is a bias to move into a higher Weekly close and towards the Weekly highs @ 4811"...... (Previous Weekly report )

Last week’s played out as expected after the price action in the previous week and Friday’s pattern suggest the market would begin with a bias of the first 2-days rising. Once there was a 5-day pattern breakout on Wednesday ( above 4690) the rest of the week expected to trend upwards.

At this stage the trend remains buoyant and most likely continue towards the January highs in the first Quarter.

I should have a better idea on market dynamics after 1 more week and potential trends for 2010.

Aussie Index (SPI) 18 Dec 2009 Weekly

SPI monthly and Weekly

With the SPI trading below the December 50% levels and not moving down into December lows this week, it's now looking like the market will remain in a consolidation pattern until the end of the Year.

Friday's price action often suggests that next week will begin with a 2-day UP move:- random length.

Therefore if the first day is trading above 4690 (daily close), there could be a chance that the market is moving back towards the 3-week highs @ 4811.

Based on the overall market dynamics I still favour a down move in 2010, but if Tuesday is above 4690, then there is a bias to move into a higher Weekly close.

Of course any moves in the market will be dependant on price action in US markets.

Aussie Index (SPI) 12 Dec 2009 Weekly

SPI monthly and Weekly

Last week the market was trading above the December 50% levels, and the expectation was for the trend to continue higher.

I also pointed out that I expected the first 2-days in the week to move lower, and when that occured this placed the trend below the monthly 50% levels on Wednesday and it's struggled to move higher ever since.

If the Trend is going to follow the trend down in 2010, then the market should continue lower next week, and then continue lower in the first Quarter of 2010 towards 4300

However, based on the price action in the US there doesn't seem to be the same 'weak' trend appearing, and if price is trading back above the December 50% levels next week then the bias is to move back towards 4831 and the 4th Quarter ends up a consoldating 3-month range after October's highs

The 3-week cycle is a 'SELL'. (white @ 4831)

For the market to get bullish there needs to be a Weekly close back above 4831.

And if that happens then the January Quarter 50% level is the trend guide with the potential to push upwards in early 2010.

At this stage I'm happy to sit on the sidelines until the first Quarter of 2010 (trading stocks)

Aussie Index (SPI) 5 Dec 2009 Weekly

SPI monthly and Weekly

Expectation of higher prices in December as part of a 2-month wave pattern upward during the current 3-month cycle.

As long as price remains above the December 50% levels, the bias is to continue higher.

Depending on the price action in US markets early next week, there could be early weakness in the first two days, but if price remains above support I’m expecting the market to continue higher into a higher Friday close.

Last week’s UP move and short-term reversal pattern down on Friday, is normally associated with the change of the 3-day cycle from a ‘sell’ into a ‘BUY’.

The market normally stalls and reverses to retest support levels and then price continues with the monthly trend.

Even though the UP trend during this month is expected to rise higher, (2-month wave pattern) I’m also expecting a larger trend reversal into 2010 (read previous reports).

Normally I can pre-empt those larger trend reversals in the market, but for next week I have the view of the trend remaining stable.