AMT Model & Methodology

[Frank D]

SPI Futures.

For those who have read my book:- we have a text book patterns in
the Aussie market

Double monthly lows in this Quarter: January then February.
Matching with the Quarterly 50% level @ 4463.
Breakout of the 3-day cycle @ 4517..
And upper target the Weekly 50% level.

However, the SPI doesn’t want to go higher because US markets don’t
have the same pattern.

DOW futures

Instead price is butting its head around resistance levels
(February 50% level), with the expectation that the trend will follow the same pattern
and continue down into the lows

Normally a 2-day reversal into resistance would continue down, but
that hasn't happened after Tuesday's high.

Therefore, I give US markets 1 more day to make a move, because
if Thursday ends up another consolidating trading day, then a breakout
of resistance is more likely to happen on Friday (break of resistance
and close above)

 

[Frank D]

SPI futures

Friday high reversal pattern @ 4563 and down into the 3-day cycle break
@ 4517.

So far this reversal has been a precise 42 point down move, which is
a statistical range for day traders and a retest of the break @ 4517.

If the market is going to find support today it will be around this level, as
a retest of the break @ 4517 can continue higher into the close,

As pointed out in yesterday’s report regarding the conflicting patterns in
the Aussie market and US markets.

Aussie market is trying to rise, whilst US markets are still butting
heads around resistance levels even though both the DOW and S&P
have closed on those resistance levels and there’s some selling during
globex hours

The interesting pattern on the SPI today is the Friday 5-day high and ‘sell’ pattern.

Friday high reversal patterns can often lead into a 2-day reversal
towards the 3-day cycle lows @ 4429. This will occur if US markets
reverse down from a higher Friday open using resistance levels and
continue down, or 4517 fails to hold in afternoon trading :- 2nd R42
range down into the close

As pointed out yesterday, a breakout of resistance in US markets can
often occur on Friday, if price moves down during globex hours into the
daily 50% level and then takes out the highs in late trading on Friday.

It's not a forgone conclusion that Friday will break higher, therefore the Monthly and Weekly 50% levels are still seen as resistance.

At this stage there are a number of patterns occurring in each market,
but the market dynamics & price action in the SPI compared to the S&P-500
and DOW are completely different coming into the end of the week, and
we currently have a choppy 5-day pattern.

 

[Frank D]

DOW Futures


"A breakout of resistance in US markets can often occur on Friday, if
price moves down into the daily 50% level and then takes out the highs
in late trading on Friday."

US markets trading around resistance levels and the expectation was that price would push down early on Friday.

Based on the price action in the 5-day pattern, my view was that any
upside would come late on Friday from the 50% level.

Friday has closed higher, which is what I thought would happen.

However, what normally happens is that Friday will breakout and close
above the resistance levels, which hasn't happened.

 

[Frank D]

SPI futures

Monday and Tuesday completes a 2-day 'stall' pattern after last
Friday's price action.

Any further gains will be dictated by US markets and the SPI trading
either side of 4553.

 

[Frank D]

SPI Futures

First time since last year that the SPI had opened above the 5-day highs
and it wasn’t coming back, as it reversed back into the Weekly 50% level
@ 4635.

 

[Frank D]

S&P 500

S&P completes the move into the Weekly highs @ 1105 and sells down
into the close...

Either price continues down 1 more day towards next week's 50% level,
which is what I would like to see happen, as part of the rest of
Tuesday's breakout & 50% level

or Friday continues with a with an UP day into a higher daily & Weekly
close (not ideal)

 

[Frank D]

S&P 500

As per Weekly report, expectation that this week would begin with a
2-day reversal, and the 2nd day reversal pattern has played out
with Tuesday’s lows holding support.

Based on current price action I would have to favour a move towards
the Weekly highs by Friday.

Price now needs to be trading above 1098 and cross-over the Daily 50%
level on Wednesday to confirm my view.

 

[Frank D]

S&P 500

Expectation that the trend would continue higher on Wednesday after completing the 2-day reversal pattern into Tuesday’s lows.

1104.25 is a partial exit zone.

Either the trend continues higher on Thursday & Friday as the
trend moves towards 1121 by Friday, and then higher highs into
March.

Or there is still the possibility that US markets decide to move into
a sideways consolidating pattern until March begins, and remain 'range
trading' within the 5-day range (choppy)

Regardless of how bad the fundamentals look for the US economy,
there currently aren't any 'probable bear-patterns' or any
appearing on the horizon in US markets other than short-term 1-2 day reversal patterns.

 

[Frank D]

SPI Futures

SPI currently trading below the February 50% levels @ 4664, and price has
reversed down the 5-day lows on Thursday.

Price is still above the Weekly 50% level @ 4565, and currently the market looks like
consolidating into MARCH (2 days time)

I would normally look at this sell-off and simply factor in a short-term
reversal pattern into lesser timeframe support levels, and for the trend
to continue higher thereafter.

This would normally align with the price patterns in the S&P 500,
as the S&P continues up from Tuesdays lows and moves higher on Thursday & Friday towards
the Weekly highs @ 1121

However, in UP trends the S&P doesn't usually sell off during Globex hours
and be trading back below 1098.

The expectation of the up trend moving into the Weekly highs by Friday
is now less likely to happen, and my high probability 3-day pattern has fizzed after reaching
1104.25 and back below 1098.

Hoping into Shorts on Thursday isn't optimsed the larger timeframe
patterns.

Bernanke is giving another speech tonight at 1am our time, whether
that makes any difference is to be seen.

 

[Frank D]

S&P 500

As mentioned yesterday...

There are two possible patterns that can occur for the rest of February.

1. Follow my view of heading higher into the Weekly highs by Friday

2. Choppy price action for a number of days (consolidation until March)

My preferred pattern was to see Tuesday’s low support price and
then continue higher from Wednesday, Thursday & Friday into the
Weekly highs @ 1121.

However, selling during Globex hours before the cash market opened set-up
a push downward in the lows.

Thursday ended up moving down into the Daily lows, which matched
the lower Weekly 50% level @ 1086 and we end up with a
consolidating pattern within the 5-day range until March begins.

 

[Frank D]

SPI Futures

"Based on the current price action and the reversal
off Friday's lows, this could lead to a 2 day up move early next Week
on Monday and Tuesday.

However, it might struggle to rise higher than 4612 on Friday, but it
won’t take much for Monday to breakout"...Friday Report

Today's up day was set-up with a Monday high breakout and the completion of the statisitical range of 42 points.

Expectation that the price action in the SPI to continue into
higher highs by Tuesday.

At this stage US markets remain above key levels with only short-term counter-trend moves.

 

[Frank D]

SPI futures

SPI continued into this week's highs @ 4761 and stalled.

either the market continues lower (whilst below 4744), and follows a 2-day reversal pattern
back towards the March 50% level:-

Thursday pullback @ 4687-96...

Or buyers come in a prop it up above 4744 and Thursday continues to consolidate with an
upward bias:- trading above the monthly 50% level

 

[tech/a]

SPI futures

SPI continued into this week's highs @ 4761 and stalled.

either the market continues lower (whilst below 4744), and follows a 2-day reversal pattern
back towards the March 50% level:-

Thursday pullback @ 4687-96...

Or buyers come in a prop it up above 4744 and Thursday continues to consolidate with an
upward bias:- trading above the monthly 50% level

Frank

So If your trading the SPI based upon the last 2 days reports 1/3 and today.
Youd have been long and currently there is an each way possibility so you would either be taking profit on some and holding some or waiting for an outcome to the bullish side with a trailing stop below to 4687 ish.

Is that the way this week would have been traded to now?

 

[Frank D]

To begin with, it's imperative to optimise the SPI with price action in the S&P. And Ideally trading both.

Simply because a pattern in the S&P will have a large bearing on how you
are going to trade manage the SPI if holding longs or wanting to enter
a trade. This has nothing to do with day trading, as this is separate
thing altogether.

If I’m optimising the price action from last Friday’s lows and the
expectation of a 2-day UP move at the start of the week, your exit
would have been the 5-day highs by Tuesday

If the S&P had moved higher and has closed above it's own 5-day highs,
then you hold positions in the SPI because of the expectation that the
S&P will have a break and extend pattern in the daily range and
continue higher the next day, which means the SPI will open higher the
next day.

If the S&P has reached the Weekly highs then partial exit the SPI.

There is an observed phenomena that derivative markets are
non-linear, which means 63% of the time markets remain within a
dynamic range.

They get too high or low in a dynamic 5-day range they can rotate
back. And the same applies with the Weekly levels, they can move into the
extremes and then rotate back 2-days.

Whilst the S&P is above higher timeframe 50% level you want to be focusing on longs (hold longer) and use support levels.

This could mean two things:- If you are out of the market then you
would want to wait for patterns to align in the S&P even if you are trading the SPI.

If you are already long in the market (after partial exit) then you can optimise
the entire exit based on the monthly high target in the S&P, or if the S&P
closes below the Weekly 50% levels (cover longs)

At the end of the day it's about Identifying the trend, where the trend
is going, and then recognising reliable patterns to find robust entry levels.

The easy part is identifying trends and where they are likely to go.

The hard part is capturing those trends with reliable patterns:- high probability set-ups.

And High probability set-ups don't happen that often, if lucky once or
twice per week. And they are far more vaild if the set-up in the SPI
is matched with the same price action in the S&P.

 

[Frank D]

SPI Futures

Early resistance and sell off from today’s highs @ 4761, but afternoon
buying after 3pm propped the market once above 4744.

Is the SPI going to go higher or it is going to reverse back down into
the March 50% level?

There is nothing to suggest either way other than it has hit resistance
during this week, and this level will shift higher next week.

If that down move is going to occur it will happen based on US
markets moving lower on Thursday and not higher.

If I look at the S&P 500 I would think it was going higher. It’s above all
the 50% levels and moving dynamically within the Weekly range towards
the March highs @ 1152.

However, whenever the S&P consolidates above the Daily 50% level
for the first 3 days and can’t break resistance (Weekly highs) alarm
bells begin to ring.

Often a short-term bear pattern occurs with a break of the 5-day 50%
level on Thursday @ 1111

Because the market is regressive and range bound within a 5-day range,
this can often push the S&P back into the 5-day lows on Thursday, and
I have seen on occasions these lows fail to hold support on Thursday
and break lower

Therefore if long the SPI you don’t want to see the S&P 500 trading
below 1111 in the short term…

If short the S&P (weekly highs @ 1120), then the interest is in the 5-day
50% level on Thursday and price trading below it.

If long the S&P then you want it to remain above 1111 with a bias
towards 1131+

If day trading the S&P then the key level is 1111 and focus on 8 &
14-point range movements:- 14 points from the current highs is 1111.

Just as the SPI is 21 & 42 points.

Note:- DOW futures has just broken below the 5-day 50% level, so the bell is ringing

 

[ThingyMajiggy]

Nice wrap Frank Keep it up

 

[tech/a]

Frank

Thanks for the reply.
I dont have the time to answer as I would like to---having a break so will visit again on a seperate thread so not to clog this one up sometime next week.

 

[Frank D]

S&P 500

A position trader trading Longs on the S&P with the expectation
price is rising towards the monthly highs, nothing has changed and dynamically the market points to higher prices next week.

If short from the Weekly highs, then the 2-day filter (yellow) is what you want to see broken and confirmed with a break of the 5-day 50% level.

At the week comes into the close, shorting this week's high has
less probability of providing a 2-day reversal, because the line of
resistance disappears and moves higher

If long using the filter (intra-day trader), the market move upward was 8 points, which is a day-traders first target range intra-day.

 

[Frank D]

S&P monthly and Weekly

S&P completes the move into the monthly highs @ 1138 and will continue higher next week.

March highs will complete a double monthly pattern during this
Quarterly cycle, which I would normally view as a high in the first
quarter and then look for any higher moves in the 2nd Quarter using support levels (50% levels).

With the view that price is continuing towards the 2nd Quarter highs (yellow).

 

[Frank D]

S&P 500

S&P continues the slow climb upwards and should be reaching a number
of resistance levels in the higher timeframes from Wednesday onwards.

Any resistance is viewed as only short-term weakness, as my view is to
make higher highs in April