Aussie ( SPI)Index Weekly 27th Dec 2008

Australian Index SPI Futures Monthly

The Australian market is still in SET-UP A:- drifting lower below the Monthly 50% levels and following the dynamic timeframes lower, eventually pushing the market into lower lows in 2009.

Next week is the last week of trading for 2008, so it's important where markets close on the last day, as they will set-up the Primary cycles for 2009 and how far markets will go lower in the new year.

In the mean time next week's trading will still be defined by the 3-week highs, and SET UP B won't occur until there is a Friday close above those highs. (White line)


SET UP B is the probability of markets moving back towards a 3-point level of 'TIME' before the market continues lower.

In this instance, Price in January would be rotating back towards the Yearly breakouts from 2008, the first Quarterly 50% level in 2009, and also the 3-month highs in January.

We also notice in the forward timeframe that there is now a higher low in the forward monthly timeframe, which often favours higher prices.

I still think all global markets will follow SET-UP B first before continuing lower in 2009, but if it doesn't markets will still go lower in 2009.


Financial Index

And the direction of the Financials will have a big bearing of the direction of the overall market.

The breakout of the 2008 lows in the Fin Index and the Financials were always going to struggle to move higher in the 2nd half of 2008, but I always thought the banks were moving into lower lows in the following year, as price follows the Dilernia Principle of 2 prices waves of time

And the financial Index will move down into the lower low in 2009.

So if you are thinking of moving into banks on the long side around those lows would be it.

At this stage the Financial Index is in SET-UP A and heading down into those 2009 lows, but there is still the possibility that SET_UP B plays out, and swings back into the higher timeframe 50% levels before price continues down into the lower lows for 2009.

Aussie ( SPI)Index Weekly 20th Dec 2008

SPI Monthly

SPI consolidating since finding support around November's lows.

I still have an expectation that the Market will continue lower in 2009, but I would like to see the SPI rotate upwards into the Quarterly 50% level before it continues down in the new year.

But that won't occur until there is a Friday close and breakout of the 3-week highs @ 3761.

This is simply based on price rotating back into the higher timeframe midpoints before the next trend continues lower in the new year.

For every breakout price will normally come back and test the breakout in the next Timeframe and then continue with the trend. A perfect example was October breakout and then the rotation back into the November 50% level, and then Drive down into lower lows in November.




SPI Monthly and Weekly

The down trend in the 4th Quarter ceased once price found support at the November lows but was verified with the shift in the Weekly 50% level @ 3506, and the market has now moved in a tight 3-week sideways pattern, which eventually price will breakout of.

As mentioned before, any up-trend won’t occur until there is a breakout of the 3-week highs.

Next Week gets interesting on the SPI as there is a divergence of the Weekly timeframes and a shift in the Filter from above to below @ 3532 (brown).

The downtrend can continue lower next week if trading below 3532 which is part of the bigger picture of continuing lower in 2009, and confirmed with a breakout of the 3-week lows.

But it also can be the spring board for the rotation upwards, which is what I think will happen, completing the retest of the Yearly breakout @ 4232 and the rotation back into the higher timeframe Quarterly 50% level.

As a SPI Futures day-trader I'll be trading on the side of 3606 as my bias either way next week.

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Aussie ( SPI)Index Weekly 13th Dec 2008

Australian Market Yearly

The Australian Market is going lower in 2009!!!

However it depends how it's getting there that's the important thing when trading.

Currently the Market is in Set-up A:- drifting lower below the Monthly 50% levels and following the dynamic timeframes lower.

Eventually price will reach the 2009 Yearly lows, but it still won't be the lows for 2009. But i'll get back to that in a few weeks time in the new Year.

Set-UP B:- Is what I think will happen or hope to happen.

SET-UP B is based on a timeframe breakout.

A Timeframe breakout normally comes back and retests the breakout at the start of the new timeframe, in this instance the Yearly breakout @ 4232 in 2008, and the start of the new Yearly timeframe in 2009.

Therefore my expectation is that early in the first Quarter price will try to make it's way back towards 4232, and then continue lower.




SPI Futures Monthly

"Those 3-week highs in all global Index markets are extremely valid resistance zones, and have been all year.

But eventually they will break, and markets will begin a rotation upwards as part of the larger timeframe cycles" Previous Weekly report

We can see the test of the 3-week highs early on Monday and the push down.

Set-up B won't occur until there is a breakout and a Friday close above those highs (3763)

Once that occurs I'll be looking for a move towards December's 50% level (resistance), stall and another consolidation period for about 2 weeks, and then a higher move back towards the Quarterly 50% level in the first Quarter of 2009.

That price action meets the Yearly timeframe breakout.

Once that occurs I would be looking for the next leg of the down trend into the 2009 lows.


SPI FUTURES WEEKLY

As we can see there was a shift in the Weekly 50% level from top to bottom, and whilst price is trading above the Weekly 50% levels, I still have the view that markets should be heading higher, but we need to verify this with a breakout of those 3-week highs.

For Day traders they can see the same re-occurring patterns over the past 3 weeks, Higher daily opens result in lower Daily closes, and lower Daily opens result in higher daily closes.

Eventually there will be a breakout of the 3-week range and will result in the next trending period, which in fact is simply the rotation back towards higher timeframe 50% levels, and the next 'Thurst' pattern based on the Dilernia principles of following the Primary cycles of the market into new lows in 2009.

Aussie ( SPI)Index Weekly 6th Dec 2008

SPI Monthly and Weekly charts

The trend is down and the expectation is that the Trend will continue lower in 2009.

Currently I have the view that global markets are moving lower into December's lows and complete the double monthly low pattern before a potential reversal upwards.

However, I've always maintained that for any trend to continue lower in 2009 price needs to swing back upwards and move back towards the 3rd Quarter breakouts (September).

This will result in the retesting of the 2008 Yearly timeframe lows verifying the breakout, and then continue lower in 2009.

Once that UP move occurs, my view is that breakout level will form a resistance zone and markets will be moving lower in 2009.

But things get extremely interesting next week in all Global Indexes and currencies...

The important part on any trend continuating lower, or even any major trend reversal begins with the break of the 3-week channels, in this instance the 3-week highs

Any long term trend won't change unless there is a breakout above the 3-week highs, and then continues above the Monthly 50% level.

This normally occurs with a Friday close above the Weekly highs, and the following week continues higher.

Any continuation of the long term trend (down) normally occurs with price retesting the 3-week highs and then rejecting downward, as it continues with the trend towards the Monthly lows.

SPI Weekly and 5-day pattern

Last week's view was a higher Weekly open and a 2 day down move. That played out and then the next 3 day's consolidated within the 5-day range and the SPI Primary Range of 87 points.


Next Week:- I have the expectation that Global markets are moving towards the Weekly highs next week. http://usindexweekly.blogspot.com/

Around those Weekly highs and the view is resistance ( until broken with a Friday close above), with the expectation of a move down into December's lows to complete the 2-monthly timeframe pattern.


A breakout and Friday close above those Weekly highs, and my view is that markets are moving back towards higher Monthly close in December, as it goes looking to move back to re-test the Yearly breakout in early in 2009.

Therefore for any reversal upwards needs to see a Friday close above 3770.

The trend remains down and the expectation is that market's will continue down, but any reversal upwards in the medium term will begin with a breakout above those 3-week highs confirmed with a Friday close above them.

Those 3-week highs in all global Index markets are extremely valid resistance zones, and have been all year.

But eventually they will break, and markets will begin a rotation upwards as part of the larger timeframe cycles.

Aussie ( SPI)Index Weekly 29th Nov 2008

SPI 24 hour market

So 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 & WEEKLY


November 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.

Aussie ( SPI)Index Weekly 22nd Nov 2008

Australian Index: XJO

November 50% level push down into November’s lows, with the expectation of a 2nd wave down into December’s lows.

However, November’s lows haven’t held, which coincided with Resource stocks breaking their 4th Quarter lows on Wednesday, along with US markets moving down into their November lows the following day.

http://usindexweekly.blogspot.com/

Therefore I would look for a similar pattern as the October breakout, where price will probably swing back to retest the November low breakout @ 3584 sometime next week, and then more than likely continue down into the double low pattern in December.

SPI Monthly and Weekly

Last Week I was looking for a down move on Monday and Tuesday to complete the November low pattern, and then from Wednesday to begin a swing back towards the Weekly 50% level, before the market continued down.

Except on Wednesday Resource stocks broke lower on the day they lift the 'short-ban' driving the market lower, and US markets were still much higher as they were moving down into their November lows:- Dilernia Model

However, I expected Resource stocks along with Financial stocks to continue lower this month, and slightly lower in December also.


Next Week:- October low breakout 3548, and expectation price will remain below this level for next week.

Personally I would like to see Monday and Tuesday next week continue the drive down into lower prices towards next Week's lows, and then see how Wednesday opens.

If Wednesday opens above Tuesday’s lows, we will probably see a short-term 3-day move back towards 3584.

If you notice the breakouts in multiple timeframes, price comes back and retests the breakout and then continues with the trend, which is what has been happening throughout this year.

A close below 3584 in November, will probably see lower prices in December.


What's going to push the market higher is Financials, and banking stocks aren't ready for any moves higher other than short-term 3 to 5 day up moves.

December's lows complete the double Monthly low pattern, which can provide a relief rally similar to when the double Monthly lows pattern occurred in March 2008.

And in late December or early January begin a major swing back towards the Yearly breakouts @ 4232

And the same pattern of a retest of the yearly breakout of 2008 :- 4232.

Which hopefully occurs in the first Quarter in 2009.

Therefore it can bottom out in December’s-January’s lows, and then swing back to reset of the yearly breakout. Which will take about 2-3 months to complete the move back.

After that move, I wouldn’t touch stocks because price will mostly come back towards to the previous lows over the following 3-6 months and continue lower in 2009.

As a new Primary timeframe begins, and probably move into lower lows in 2009.

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Aussie ( SPI)Index Weekly 15th Nov 2008

XJO Australian Index

Expectation that Global Index markets would swing back into the November 50% level and then continue down into November's lows.

At this stage the expectation is that November's lows will form a robust support zone, but continue lower into December's lows.....

Dilernia Principle:- 2 timeframe wave pattern on the breakout.

Once December's lows are reached, then there is an expectation that market will swing back up to retest the Yearly low breakout @ 4232 , and then continue down in 2009.

SPI Monthly and Weekly

November's lows should be reached next week, which will coincide with the G20 meeting giving markets enough reason to reverse off their lows and swing back into the Weekly 50% level.

But because of the monthly 2 timeframe wave pattern, I've modelled a lower low in December before the market reverses back towards 4200+.

There is still an expectation that 2009 will go lower, but the pattern to confirm the market going lower is a re-test of the break early in 2009 then continue down into lower lows.

SPI Monthly and Weekly 24 hours.

In the 24 hour market :- the Dilernia Model has different levels because of the greater ranges.

We often see price move in the day session within their own timeframe levels, but will extend to greater ranges based on the 24 hour model.

In the day session the SPI continued down into the Weekly lows @ 3747.

But in the 24 hour market, price continued down into it's own Weekly lows @ 3674.

What do you notice when the market broke out of Octobers lows?

The market moved in a 2 timeframe wave pattern down into the Weekly lows @ 3706 and then reversed back towards the November 50% level.

Next Week the double Weekly lows @ 3559 match closely to November's lows, and the expectation of a swing back towards the Weekly 50% level.

I'm not expecting markets to rise much further than the Weekly 50% level, but there is a possibility of a 4th Week UP move but more weakness in early December.