AMT Model & Methodology

[Frank D]

----- Original Message -----
Sent: Wednesday, October 17, 2007 11:47 AM
Subject: SPI


SPI

Market rallied on open completing the R44 upside @ 6750... A
bullish market would have remained above 6744 and continued
higher towards the 87 high.

This reversal and back under 6744 and price action is
bearish.

The R44 move down will complete @ 6717, so there could be a
day range that rotates around these 44 point lows, as part of
the stalling day, but trading below 6744(3-day low) after the
early upmove is a 'weak' trading pattern.

Use same pivots tomorrow along with 44 point moves..(new pivots will be drawn on the completion of this last 44 point range first thing tomorrow)

Todays price action confirms this 5 day (weekly pattern) is favouring
futher down moves towards higher timeframe 50% levels (monthly), but
at the same time I can't discount tomorrow moving higher as part of the
2nd day of 'rotation'.

That will depend on where the market opens based on US trading.




US Markets.

Tuesday:- US markets followed the rotation down, after the break
of the 3-day lows and the 3-week 50% level. Both US markets
rotated back down into previous 3-week 50% levels finding support.

Very similar price action on US markets as what is occurring in
the SPI:- down bias based on the weekly ‘bar’.

Because of no larger timeframe ‘drops’ forewarning a major down
move in global markets, I view the markets with buyers coming
into the market trying to prop it up, before it rotates down as
it follows the weekly trend down.

'Drops' normally provide swift down moves, this rotation down
looks far more orderly;- rotating days.

Today on the SPI is a classical example of this, and I’m sure the
US markets will do the same.

Until there is a ‘daily’ close
back inside the 50% levels ('hook')then the bias is down….

6744 has been a guide on the SPI this past 2 days, and I would treat
the 3-day lows in US markets the same way.

 

[Frank D]

2-day rotation playing out, hitting resistance around upper pivot @ 6790, but not necessarily a ‘sell’ day, this will be confirmed tomorrow.

A bullish 2-day swing can see the market head back towards the 3-day highs…. a weaker pattern will see a lower open and break back under 6744 tomorrow….

 

[Frank D]

2- day rotation ends, as it head back towards the 3-day
highs.

Tomorrow is my ‘sell’ day.

That sell can be from a higher open tomorrow if US markets
move higher, or from a lower open.

There are no major drops in the markets forewarning swift down
moves on monthly timeframes, but just like today, the daily
range has a random length, the day might only travel 44 points or
it could travel down much further.

Risk levels tomorrow of 6847, and 6790.

As long I don’t fight the daily trend confirmed with the
Risk levels.

Frank

 

[Frank D]

----- Original Message -----
Sent: Friday, October 19, 2007 7:22 AM
Subject: SPI report 19th October

SPI

Thursday:- part of the 2-day counter-trend move upward after
the change of the 3-day cycle.

Friday:- After the two day counter-trend move there is
an expectation that the 3rd day will move with the trend defined by
the 3-day cycle. In this case down. This is confirmed with
'drops' in the weekly timeframe, which normally sends the
market down.

Daily system goes short today.

Depends on the open of the trading day, but the expectation is
that price will come down and complete the R44 low @ 6785.

Last week, these r44 lows would send the market upwards, as
they provided the 'lows' for a number of days last week. It
could still happen, and that is why traders should respect
price trading above 6790, and try not to fight the trend.


Scenario: I favour down moves, but not whilst price
is trading above 6790. (after R44 completion @ 6785). The
daily range has a random length, it could only be a 44-point
range today, or it could be very similar to yesterday and have
a much greater length...

 

[Frank D]

US Markets

Break of the 3-week 50% level and markets have moved down into the higher timeframe 50% levels. Price action using the Model defined the market path of price, however the ‘speed’ of any move is the unknown factor.

Expectation for this 5-day weekly pattern was a ‘down’ bar.

A weekly down bar has a random length, this week full-filled the price action of market rotation back into ‘support’

At the start of next week the expectation is that the market will move in a ‘2-day’ counter-trend move upward, using these higher timeframe levels as support.

However the first expectation is that there could be a push down first into the 3-week extension before support is confirmed and a rotation back into the weekly 50% levels next week.

Normally these higher timeframe 50% levels would support the market. This is also confirmed with the ‘lower’ weekly open.

These monthly 50% levels will be confirmed by a lower ‘Weekly’ close (support), and rising upwards from a lower weekly open. (next week)

The big difference between other times are: - price is not rising upward from a double monthly low pattern with the expectation price is rising higher into a double monthly high pattern, as we saw in July:- 2-monthly period wave pattern rising upwards into August/September

This ‘Time’ it’s coming down from a higher monthly high pattern. So certain factors need to be confirmed. I do expect some support/consolidation around these lows, but again the 3-week 50% level will confirm market resistance and further upside gains.

The weekly 50% level will define the strenght of the trend.

Once again it’s not the price traded but the ‘time of the trade’ that’s important, as price rotates and extends, as time moves forward.

Everyone that knows my work, knows that I look for repeatable patterns. This price action from the break of the weekly 50% level down to the monthly 50% levels is a repeating pattern.

However I’m not screaming out that I’m looking for a 2-month down pattern. It’s too early to say this will happen. At this stage my expectation is a slight push down on Monday with the extend 3-week lows used as support.

The support should be confirmed on Monday, but rising upwards from Tuesday with a counter-trend move back towards the 3-week 50% levels before it hits resistance once again.


The Markets have had only ‘Weekly’ drops’ forecasting weaker weekly patterns. We have just experience this, now let’s confirm the rest.

Next weeks support is based on monthly and Quarterly 50% levels, but only after the support is verified from lower weekly lows @ 1491 on ES, 13403 on DOW

SPI

Compare price on the SPI to the US markets and there is a massive drop to it’s own higher timeframe 50% levels, all the way to 6260.

Now the only way the SPI is going to go down to that level is if US markets continue down after the 2-day reversal pattern next week. But that is a 'path' the SPI can take during this month of October

Daily system will exit on lower open on Monday to be neutral position.

Frank Dilernia

 

[Edwood]

good shout for Friday as a sell day Frank

 

[Frank D]

US markets:-

Push down early on Monday, down into Support
and now moving in a 2-day counter-trend move.

Dilernia Report 20th August

Daily system will exit on lower open on Monday based on sycom price

Why exit the shorts if there is a possibility of further down moves?

Because of the ‘gap’ on the R87, on most occasion a lower open
like this will see prices try and close the gap on the upside
from Monday. (gap 6678)

As price isn’t opening near any ‘pivots’ the Risk level will
be the ‘open’ of the trading day. This is because of the
‘Spiral’ point on both the R44 and R87.

With the expectation price will rise into the pivot lows of 6631
and continue higher overnight

Lower open on the SPI on Monday is following the US markets
higher and also rising upwards from lower Spiral points on
Monday.

This up move from the lower weekly open is also supported around
the 3-week lows @ 6599. Whilst price is trading above those
lows then the weekly trend is UP.

However, not every day within a rising weekly trend moves up.
That will depend on higher daily opens and what happens in
US markets.

At this stage ‘Weekly’ support in confirmed, but my view is
only short-term 2-3 days, and I would expect at least a couple
of weeks of consolidation before the next trend develops
from November.

As long as price remains above certain levels then that’s
the current view.

Frank Dilernia

 

[Frank D]

Gap down on the SPI this morning ended up working out much
better.

Sometimes the gaps overnight don’t work in favour of
‘range completion’ for day-traders, but the 30-point lower
open today worked perfectly….

----- Original Message -----

Sent: Tuesday, October 23, 2007 9:58 AM
Subject: SPI report


Opened much lower than expected, but the expectation
still remains that the r87 will complete from yesterday’s swing
lows.

(day-traders) Partial exits @ 6658 and take the day off/ and or
gap

Whilst price is above 6631 trend is up....2-day counter-trend move

Risk is 6631

 

[Frank D]

Weekly Principles:- Whenever the Weekly timeframe closes on its lows, the expectation is that the next week there will be a 2-day rotating/stalling period. On most occasions this is a reversal towards the
weekly 50% level.

There are instances that there will be 1 weekly timeframe that closes down against the trend within the monthly timeframe before the following week resumes the trend…(the trader trading ‘principles of successful trading’)

The book is now available to pre-order… please click link

http://www.datafeeds.com.au/futures.html

SPI


This is what is occurring in most global markets. There were
only weekly ‘drops’ forewarning weekly timeframe weakness last week,
and that has occurred. Now we are trading upwards from lower
weekly opens, and today’s higher open will complete the first expectation of
the reversal into weekly 50% levels @6730

Now it gets tricky….

A lower weekly open and the expectation is that Friday will close higher,
so the expectation is a series of higher highs into Friday. However, not
every day closes higher in an UP trending weekly ‘bar’. There will
be instances of down days, especially from higher opens.

The 3rd day is always critical, because it can continue to move
higher towards the 3-day highs during this week, which are still @ 6829,
or begin to move back down because of price still trading below the
3-week 50% level and also the 3-day cycle is a ‘sell’

What do you notice about today’s open???

It’s opening in the middle of the 5-day range. Day trading in the middle
of the 5-day range is one of the hardest areas of trading. It can be
choppy, and it can be a ‘tight’ trading range’ that often frustrates traders.

Sometimes it better to sit it out on these days and once again trade the
next day.

However, ‘day-traders’ have the pivot levels as shown below in the range chart

Frank Dilernia

 

[Frank D]

the trader trading ' principles of successful trading'


SPI.....


Nice push up early in the trading day hitting ‘Dilernia-Pivots’
on the high @6760 and rotating down.

Two bearish patterns:- failure on the 3rd day around pivot
highs and trading below the 3-week 50% levels.

However, there is an expectation that there will be lower closes
in an UP trending week. This is one of them, and it depends on
US markets tonight and where it opens tomorrow.

Bearish pattern will see a lower open tomorrow below 6628, or
price needs to remain below 6628 tomorrow, this would probably
full-fill a lower low next week (2-period weekly low pattern in
the forward trading week.)

A higher open on the back of higher prices in US markets and
the Weekly UP trend will probably continue higher.
(further report tomorrow)

Frank Dilernia

 

[Frank D]

SPI...

Nice set-up today, push down into a perfect 44 point @ 6651 and into
pivot lows, and now with this R44 ‘hook’ and trading above 6691
hopefully set-ups up for further gains today-tomorrow. That depends on
US markets tonight.

But in the middle of the 5-day range can be choppy and can remain
range bound for today.

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

----- Original Message -----
Sent: Thursday, October 25, 2007 8:14 AM
Subject: SPI report


Technically:- the 5-day pattern is bearish, it's still trading below the
weekly 50% level and in a 3-day 'sell-cycle'

It's opening once again in the middle of the 5-day range,
so trading can go either way on open and could be choppy.

Probability:- A rising lower weekly pattern from Monday has
the potential to rise higher into Friday or make higher highs.


Depends on the open of the trading day, but whilst price is trading above 6691 the bias is to rise (Risk 6691 on open)

Trading Day:- Random length, could be an inside day after 44 point completion, as it’s trading in the middle of the 5-day range.

Or a 'bullish set-up' can follow the probability pattern of making higher
highs on Thursday breaking the 3-day highs and heading towards
the next Pivot where Daily system will exit, as long as price remains
above 6691

 

[Frank D]

US Markets:- 20th October

At the start of next week the expectation is that the market
will move in a ‘2-day’ counter-trend move upward, using these
higher timeframe levels as support.

These monthly 50% levels will be confirmed by a lower ‘Weekly’
close (support), and rising upwards from a lower weekly open.
(next week)

However the first expectation is that there could be a push
down first into the 3-week extension before support is confirmed
and a rotation back into the weekly 50% levels next week.
The support should be confirmed on Monday, rising upwards
from Tuesday with a counter-trend move back towards the 3-week
50% levels before it hits resistance once again.

Today On US markets:- the weekly 50% level on the DOW
formed resistance sending the futures down 180 points before
the weekly UP-trend kicked back into gear.

Friday:- trend will be simply trading on the side of the
50% level. Consolidating trading week would probably drift
back into the 50% level of the past 5 days closing out the
trading week in the middle of the range.

Above and expectation of higher high into Friday, before
an expectation starting next week of a 2-day rotation back
down.

SPI:-

Copy and paste yesterday's report (Risk 6664)

Frank Dilernia

the trader trading 'principles of successful trading'

 

[Frank D]

US markets verified support off higher timeframes 50%
levels this week, and then followed the Weekly timeframe into
higher highs on Friday. (Previous week verifies support and
next week rises up from lower Weekly open and higher prices
on Friday)

DOW expectation is a continued up move into the 3-day highs,
before any short-term consolidation next week using next weeks
50% level as support.

Note: Support needs to be verified i.e. Price comes
down into support, and the next day opens higher and follows
the market path of higher timeframes towards the 3-week highs
@ 14100+

SPI:-

Daily system/position goes neutral on Monday on Index.

But expectation on markets is to continue higher in this Quarter.

Frank Dilernia

the trader trading 'principles of successful trading'

 

[Frank D]

Objective trading rules:-

Higher in 2008, as it moves in a 2-period quarterly timeframe higher:-

Breakout of 2007 Primary high and expectation that the market will move higher towards the forward modeling pattern in 2008

Medium term:- higher in this quarter heading towards 7000+

Monthly timeframe:- expect 1 week down period before support is confirmed and then heads higher the following week.

This 1-‘weekly’ down period was forecasted with a precise rotation down using a ‘forewarning model’ pattern called ‘Dilernia-Drops’.

Support verified using 50% levels and now expectation is that the market will move in a 2-monthly wave pattern upwards. (Random length)

The only time this will come under Risk is if there are other ‘drops’ forecasting reversal patterns in the market using higher timeframes or hitting upper extremes.

Or something ‘spooks’ the market, which no one will see it coming.

That’s the way my objective view stands on global markets.Even with sky high oil prices.


Frank Dilernia

 

[Frank D]

SPI:-

Medium term:- expectation move towards 7000+ from November

Short-term:- Expectation of a 2-day stall rotation back down (higher Weekly open/random length )

Risk Pivots:- Stuck between 6796 and 6815, with expectation of ‘gap’ fill down (min move 44 points from swing highs),

Shorts above 6815 open to risk today (day trading)

 

[Frank D]

SPI……


Medium Term:- Expectation to go higher in this Quarter 7000+


Short-term:- Part of the 2-day stall rotation back confirmed with system:- ideally down into the break of the 3-day cycle cycles @ 6767 and exit short positions to be neutral or continue to hold.

Day trading: - R44 completion @ 6793, partial exits… with Day trading risk above 6815 for the rest of today….

Note:- A bullish scenario will remain above the 3-day highs 6767 and either move higher tomorrow or gap open much higher tomorrow on the back US markets heading higher into the end of the trading week.

A weaker scenario:- is a continuation down, as part of the 2-day reversal back into the weekly 50% level 6714, which then defines the risk for the rest of the trading week.

A 2-day rotation has a random length, it can reamin above 6767 or it can come all the way back into the 3-day lows which are currently @ 6630, which aligns with the last day of the trading month…..

Support needs to be verified, with the next day moving away with the trend after any 2-day rotation.

 

[Frank D]

SPI continues the ‘positive expectation’ of down moves towards the 3-day break @ 6768:-

* Where position traders can off load and go neutral,
* Or neutral on close today,
* Or continue to hold ‘shorts’ with the expectation that price
is coming down further overnight.

Why continue to hold shorts if you think the market is going
to 7000+?….

First day of a 2-day rotation has a random length, It's not a
BUY day today, so either exit or remain short, and secondly
US markets could come under pressure on any negative news.

US markets expectation of moving higher whilst trading above
the weekly 50% level. It opened above on Monday and continued
higher in both ES and YM…

However, forewarning pattern on weekly timeframes once again.
This pattern can result in selling this week if trading below
the 50% level, which can result in a random length that can last
1-day or the entire trading week.

Weaker pattern will see a rotation back down into the lows of
the past 3-days…as it consolidates into the end of the month (1 more day)

Trend is defined by Weekly 50% levels in both US markets.

It all depends how US markets react to the Fed and % rates

The trader trading ‘principles of successful trading’

 

[Frank D]

SPI..

Last day of the trading month and the Dynamics shift with the
expectation that markets are moving higher in the next month.

We can see in the Weekly chart on the day session (below), the SPI
is hitting upper monthly resistance, this resistance will disappear at the
end of today's trading which will allow for prices to move higher towards
7000+ in the forward month/s


A higher Weekly open and expectation is that price will rotate down for 2-days:- Yesterday was the first and today is that 2nd day, and not helped by US markets now trading below their weekly 50% levels, and they have started the first day of rotation back down waiting for %rate ann.


SPI will come down and complete the range @ 6768, and bullish market will remain above the break of the 3-day high (6767) and head upwards.

A weak market (2nd day rotation), as another down day will have a random length, as pointed out yesterday, which can go down much further due to the large gap to the 3-day lows, to close out the trading month.

Frank Dilernia

the trader trading 'principles of successful trading'

 

[rub92me]

SPI..

Last day of the trading month and the Dynamics shift with the
expectation that markets are moving higher in the next month.

We can see in the Weekly chart on the day session (below), the SPI
is hitting upper monthly resistance, this resistance will disappear at the
end of today's trading which will allow for prices to move higher towards
7000+ in the forward month/s

Frank Dilernia

the trader trading 'principles of successful trading'

Hi Frank,
Thanks very much for your detailed analysis every day. I have a question about the above. Isn't the disappearance of monthly resistance you allude to rather artificial? Why do we wipe the slate clean when the next month starts? I guess I'm not clear on the significance of moving in to the next month aligned with what happens to be the Calendar month. Could we move back the start of the monthly cycles by say 3 days and come to a similar conclusion?

 

[Frank D]

Rub92me,

Market dynamics is based on Time and Price, that is the close of the timeframe, so you can’t move back 3-days and come to the same conclusion, because the timeframe hasn’t ended.

Why do we wipe the slate clean?

Because through my experience the market is based on cycles, trends, support and resistance. And as each timeframe moves forward, those support and resistance levels move forward. They aren’t static they are dynamic.

Someone might look at the market now and think it’s a double top and the market is coming down, I on the other hand acknowledge the resistance in this month, but also know through repeating patterns that the resistance won’t be there in November, and has less resistance to move higher.

But I also know that in shorter timeframes there are other cycles, even though the expectation is for higher prices in November. Not every day is an up day.

Then the question you need to ask yourself is:- how am I going to profit by trading the bigger cycles? And that’s by trading and holding stocks over longer timeframes using Margin, whilst trading derivatives over 1-3 days.


Keep in mind there are much bigger cycles in the market based on Quarterly and Yearly timeframes.

Frank