AMT Model & Methodology

[Frank D]

DOW and SPI (Aussie) Weekly charts

Expectation global markets would reverse off their July lows and swing
back towards their Monthly 50% levels.

Once they get to their Monthly 50% level next week, I've factored in
another wave down to complete the downtrend in 2008.

In the charts you can see that there is a trailing white line. This white line
is the 3-week cycle, which often defines the trend within each Quarterly timeframe.

This cycle is important because it's going to give me a better idea on
the speed on any reversal downward.

Basically, a failure to close above that level next Week (close of the
month) and there is a good chance that market will begin the next
down trend.

If Market closes above that level next Friday (close of the month), I
still favour further weakness, but it might take until after September and
the next Quarter to begin the downtrend.

A Friday close above the 'cycle' next Friday can attract more
short-covering for the rest of this Quarter. How far I don't know yet until the end of the month.

So let's see where next Friday closes....

Financials making good gains, and hopefully I'll be out of the of financials next week.

 

[Frank D]

"Expectation that the DOW is heading down towards the Yearly lows in
2008, but along the way there will be short-term counter-trend move
back towards their Weekly highs (from July's lows) and then continue
down...."

Weekly Report 12th July

~~~~~~~~~~~~~~~~~~~~~~~~

The DOW hit its Weekly highs, and has sent prices back down confirmed with a break of support on Thursday.

But this reversal down is a normal pattern, just like around the 5-day
highs each day, prices try push down within the current day (resistance) and then continue higher the next day.

This reversal down into the Weekly 50% level from the Weekly highs is
just a part within the bigger picture.

Next Week's 50% level will once again be the trend guide, and I think that
it's too early for markets to continue down in my opinion.

Even though I've modelled further weakness down in 2008, I would still like
to see price hit the monthly 50% levels before continuing down in August.....

At this stage consolidation between July's lows and the June breakout,
and then look for a 'pop' upwards from August back into the 50% levels.

 

[Frank D]

I'm not expecting a major counter-trend move UP like what occurred
in March this Year, my view is support forming around 4836 and
remaining range bound below 5100 until the end of July, and if there is
going to be a 'pop' upwards into the monthly 50% level, then there is more
of a chance that higher prices would occur from August.

After a rotation into the Monthly 50% level, my view remains that the
Aussie market is heading down into the Yearly lows @ 4538-82, which will
be helped by Resource stocks namely BHP” 12th July

~~~~~~~~~~~~~~~~~~~~~~~~

I mentioned a couple of weeks ago that my view on the SPI would
remain range bound between 5100 (June lows) and 4836 (July lows) for
the rest of this month.

And if there is going to be a ‘pop’ back up into the August 50% level
it was going to begin from August, and then the next trend downwards
to complete the 2008 lows.

With two days to go before the end of the month, I’m struggling to see
the market ‘poping’ up into August 50% level from next week, but
I can see the market down around the August lows.

I’ll be back into financials around those August lows once again looking
for the next 10-15% short-term counter-moves.

 

[Frank D]

SPI closes July right in the middle of the range, where I thought it would.

Below shows the August midpoint:- starting tomorrow (red dotted)

A set-up:- follows my previous analysis of a POP UP towards 5251

B set-up and it continues down next week towards August lows.

Which way the market goes I don't know.... gut feeling says the 'POP'

But personally I want the Index to move lower so I can move back into stocks once again around August lows.

Day Trading the SPI:- I don't care where the market goes, just simply follow the 5-day levels and Spiral point trading :- rotation and extension.

 

[Frank D]

When BHP topped out in MAY my expectation was that BHP was going
to rotate back down into July's fair value level @ 40.57, as per
Premium Report from the MAY highs

At the End of June I mentioned that 40.57 was the critical level and that
the expectation was that BHP would end up around $34.50 in August.

I was bearish on the Index, and for the index to drop it had to be helped
by BHP.

Once July started and dropped below 40:57 the market path was
mapped out:- Thrust pattern and extend, as per Dilernia model.

In July I was buying BHP around July’s lows, as per the Premium
Report looking for short-term swing patterns within the Weekly timeframe.

Two of the most critical compontents in Techincal analysis is:- Support
& resistance. The Dilernia Model defined the support, the resistance
(40.57), and the Trend lower.

I mentioned that all long positions should be exited last week, as BHP
will begin its next wave down, and so will the SPI. (premium report).

The Support that existed in July isn't valid in August.

Note:- it won't surprise me to see BHP around $28.00 but it might take the first Quarter in 2009 to get there.

 

[Frank D]

DOW and S&P

Aussie market opens below the Monthly midpoint in August and sells
down into the Weekly lows yesterday, drag down by Resource stocks….

Whilst US markets follow the ‘pop’ UP in August back towards their
50% levels…

As per Weekly report some weeks ago:- a ‘pop’ upwards at the start of August and it might take
a couple of weeks before any new major down trend eventuates.

The important part on this 'pop' is Friday's close.


DOW Weekly and Daily charts

S&P Daily and 5-day pattern

 

[Frank D]

S&P Daily and 5-day pattern

US markets continue higher following the 'pop' at the start of August and
a higher close on Friday :- Weekly 'bar'.

This week was to follow the 5-day trading pattern set-ups, with
the expectation of price moving back into the monthly 50% levels and
Weekly highs on Friday.....

 

[Frank D]

S&P Weekly and Daily Charts


Often when markets breakout of the monthly channels they often come
back and re-test the breakout and then continue with the overall trend.(Weekly chart left)

This is what's been happening in the US markets at the start of August, a
re-test of the June breakout. ('pop' pattern)

There is major resistance around these upper levels, based on the
June Breakout and also the Monthly 50% levels.

I also pointed out in the Weekly report, that for any UP trend to
continue price would come back and re-test the Weekly 50% level,
before any new UP trend could continue.

And this is what's happened this week (right chart)

http://usindexweekly.blogspot.com/2008/08/dow-s-weekly-report-9th-august-2008.html


Overall I'm factoring in another wave down this Quarter to bottom out
the market in 2008, but that's going to depend how US markets react to
this Weekly 50% level and this Friday's close....

A bullish trend should bounce off the Weekly 50% level and continue
higher into Friday confirming the break above the 50% levels.

A failure to close out on Friday, and as per Weekly report, I would begin
to look for continuation down probably in the last Week of this month.

 

[Frank D]

"Any new down trend won't occur until US markets lead..... (Read US Weekly Report) , and dragged down by Financials"

Last Week's expectation was a higher Weekly close on Friday in US
markets, but it was how and where Friday closed was the important parameter on any new down-trend developing.

Friday couldn't close above the monthly 50% levels (resistance), and
as pointed out in the Weekly Reports, the next down move will be
dragged down by Financials, and financials were hit hard on Monday in
the US...

There are still a couple short-term patterns that I want to see for any
down trend continue:- A lower Daily close below the Weekly 50% level.
A higher daily close but below the Weekly 50% level.

And then the next day continuing lower:- higher daily open and
rejection pattern away from the Weekly 50% confimed with a break of the 5-day lows.

 

[Frank D]

S&P Daily....

"I'm expecting a short-term counter-trend move (higher daily close),
which should hopefully align with the Weekly 50% level before any new
down trend continues lower:- probably next week.

Probability pattern is to continue down into Wednesday's lows:- support

If US markets have a counter-trend UP day, then a move back towards
the 50% level"


Tuesday had the lower daily close below the Weekly 50% level
and Wednesday is the higher daily close.

Normal rejection pattern is a higher daily close and the trend selling
down from the Weekly 50% level from a higher daily open the next day.

This could still happen on Thursday, but I'm factoring in that
US markets could have a 2nd 'stalling day', and I would focus on Friday
or early next week for any 'potential' down trend to continue....

Ideally a 'sell' pattern would be a two day counter-trend move or
stalling pattern, and the trend continues down from the 3rd day:-
verified with a break of this month's lows (4th Week sell).

If Thursday (2nd stalling day) closes back above the Weekly 50% level,
then it's a 'hook' pattern, which doesn't favour Friday closing lower on most occassions.

 

[Frank D]

Previous posts were based on the S&P, but the same patterns appearing
in the SPI this week..

SPI Weekly 50% level break on Tuesday, Wednesday counter-trend
day, and Thursday sell pattern from the 50% level:- rejection and
thrust pattern.

Target downside the 5-day lows:- which may or may not get down
that low today, because statistically once the SPI travels 87 points in
a single day it will often consolidate and move into a sideways pattern...

Which could result in short-covering the down move (consolidation)...
or further weakness in the afternoon as it heads down towards the
5-day lows.

 

[Frank D]

Everything about the past 3 weeks of trading set-up Friday as the
potential continuation of the down trend in US markets

From the 'pop' upwards at the start of August, the 2nd week's failure
to close higher on Friday above the August 50% levels, and then the
sell pattern this week and break below the Weekly 50% level this
week.

Even after Thursday's failure (2nd day stall) and no 'Hook' day above
the Weekly 50% level looked like a 'text book' Sell pattern on Friday

Friday looked to be the ideal set-up....except it moved up from support
on Friday instead of breaking lower....

As a day-trader it doesn't really matter where the market goes:- simply trade the levels.

But as a swing trader on stocks over weeks and months, I was hoping
this was going to be the final drive down into 2008 lows before we finally
get a 3 month counter move upwards.

Friday's price action at this stage only leads me to think more sideways
price action, even though next week is the 4th Week :-

4th Week:- last week of the month often starts the next trend, which
leads into the continuation of the trend in the following month.

 

[Frank D]

S&P Daily and 5-day pattern

"As per Weekly Report I'm bearish on markets with the expectation of
lower prices.

What's the first sign of a reversal pattern at the start of the Week?

Price trading below the Yellow channels on Monday with the expectation of
a lower daily close on Monday followed by another lower daily close
on Tuesday (random length)" Monday Report

~~~~~~~~~~~~~~~~~~~~~~~

Monday:- 2-day down move confirmed with a break of support on Monday, and 4th week sell pattern playing out.

Expectation of lower prices by Tuesday, along with trading below the Weekly 50% level (resistance)

Let's see how US markets act after Tuesday's trading.

I would really like to see this week break the Weekly lows so finally we
can get a blow off bottom on global markets before a 3-month
counter-trend to close higher in the last Quarter of 2008.

 

[Frank D]

FOREX AUD/USD....


First chart (Weekly):- When AUD hit the July highs @ .98 cents, I
put out the report that I was looking for a reversal pattern down into
August lows

The exact same pattern on all currencies against the USD

On the way down it was simply a case of shorting the 3-day filter or
50% level (get back into the trend) with the expectation that price
was continuing down. (Dilernia Principles)


We can see in the first chart below the August Breakout and continuation
down.

Whenever there is a breakout of the monthly lows, as was the case in
Index markets in January, price will normally go back and re-test
the breakout in the following month (September in this case) :- verify
the breakout and then continue down for the following two months. (Dilernia Principle)

2nd Chart Daily and 5-day pattern:-

If we subcribe to the theory of double low patterns from previous
breakouts (dilernia Principles) :- ie breakout of the Weekly lows
and continuing down into the 2nd week lows, then we need to keep in
mind that the 3-day filter will eventuatlly breakout or reverse on the UPside.

This current price action in currencies is playing the 2-timeframe
pattern breakout pattern ( Weekly lower low), which can result a reversal
upwards and follow the September re-test of the breakout.

Therefore:- The 3-day filter remains resistance but will eventually
breakout, which will lead to a rotation back into the September 50%
levels, and then hopefully continue back down into lower lows later this year.

This should hopefully apply to all currency spreads against the USD.

 

[Frank D]

S&P Daily

"Trading below the Weekly 50% level, which could see a swing back to
re-test the same level on Wednesday...

Yesterday's view was for a continuation down:- short the 5-day 50%
level.

However Tuesday didn't complete the 5-day low pattern, and on
Wednesday US markets are in a similar position as last Friday....

Rising up from support and back into the Weekly 50% level..."


~~~~~~~~~~~~~~~~~~~~~~~~~

More sideways price action in August and the usual 2-day swing
patterns within the Weekly timeframe.

No probability pattern for Thursday..

The price action over the past few weeks have been ideal for intra-day
swing traders on global index markets.

Personally I would love to see the same price action continue for a
few weeks more.

 

[Frank D]

AUD/USD Forex

Two days ago I mentioned keep an eye on AUD for any reversal back
towards the September 50% level (along with other spreads)

After completing the double weekly low pattern on Tuesday, today was
the first sign that a continuation upwards 'could' occur.

Break of 5-day 50% level and test and reject pattern using 'spirals'

Long off the 5-day 50% level with matching 'Spiral point'

@ 8638 partial exit on Spiral high @ 8675 +36 pips

moved open positions to Breakeven stop from entry and hold.

It's either going to reverse back down from .8699 and take out my stops,
or continue higher and back towards the 5-day highs and higher next week.

 

[Frank D]

SPI Morning Report.....


US markets rally and the SPI could end up back to the August 50% level
@ 5233 by Saturday am (sycom close).

Not the price action I wanted to happen, as the 4th Week is moving
higher and not heading down.

Today:- 5-day highs resistance 5145-55

Ideal pattern is for price to come down and close the gap from yesterday's 5-day high @ 5095. (44 points).

Today:- After that closure (down R44) price could reverse
back upwards and continue higher into the 5-day highs.

Note:- 5-day highs (5145-55) are resistance, which means price could
remain below these highs all day and reach 5233 based on Sycom
moving higher because US markets continue higher.

If there is a 2.50pm rally on Friday breaking the 5-day highs, then
the expectation is price is moving back towards the August 50% levels
on the last day of the Week & Month :- higher Friday close.

Basically don't short trade above 5155...

Random support 5095 Thursday's high

~~~~~~~~~~~~~~~~~~~~~~~~~

Today so far....

First Part of Friday has completed and remaining above Thursday's 5-day highs...

Now let's see how the rest of Friday and this afternoon pans out...

 

[Frank D]

SPI Futures and Aussie Index

"Ideally I want to see a completion down in this quarter to bottom out
the markets, so we can finally get a 3-month counter-trend
move upwards.

4th Week:- last week of the month often starts the next trend, which
leads into the continuation of the trend in the following month, but who
is not to say that next Week just continues higher"....

Previous Weekly Report

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

When certain things happen I have to acknowledge that a
continuation downward in this Quarter might not eventuate.

Even though price is still trading below the Monthly 50% levels in
September, This week's 4th week rally and breakout of the 3-week
highs normally shows further strength in the new month....

Below is the SPI Weekly futures showing the 3-week cycles (White line)

Whenever price closes on the opposite side the market often reverses
the trend.

It occurred in March and June, and now in August.

The big difference between the two previous 3-week breaks and now are:-
I had an overall view that price was reversing from March lows and
moving into a 2-month rally into May's highs. In June I had the view
that markets were coming down from May's highs into a lower low pattern
in July.

In August I don't have a view on any counter-trend move upwards.

I do have the view of a 3-month counter-trend Up move, but only if price made lower lows in august, which it hasn't.

Therefore like in April this year, expectation still remains that September
50% level is resistance which could last for the next 2 weeks
(more consolidation):- ideal for spiral point trading and 5-day patterns.

And if price does continue higher towards October's highs it should
push higher in the 3rd week this month lead by US markets.

But........

 

[Frank D]

SPI Weekly and 5-day pattern


Expectation September 50% levels will continue to be resistance for at least
2-weeks, and US markets reversed down from their September 50%
levels on Tuesday.

Any robust Weekly trend will be supported by it’s 50% level within the
5-day pattern and continue higher, on Wednesday it’s 5081.

Any robust reversal pattern within the Monthly Trend will break the 50%
level and continue down with a bias to close lower on Friday.

If September 50% levels are going to play the resistance game, then I
can’t see 5081 supporting the SPI for too long. 5081:- Random support..

 

[Frank D]

Lower Weekly close playing out this week :- September 50% level
rejection.

A couple of ideal 'short' patterns using the 'open trading principles'.....

A today's 5-day 50% level rejection pattern down....

As pointed out a couple of weeks ago in the Weekly report... I hope these consolidating weekly patterns continue for awhile yet, because they
provide ideal 'spiral-point' trading set-ups within the 5-day patterns.

below 5040 and continuing down into the 5-day lows @ 4998