Market Dynamics 2007

The same AMT model 'high-probability' pattern in 2005 and
2006 has come along in 2007, and I will be following the exact
same strategy as I have done in the past, I will be moving
into 100% cash on all leverage positions probably next week,
and remain in cash until the next alignment some months later.

My long term trading stocks will remain held and I will add to
them once again in the latter part of the year.





We can see price following the AMT model from resistance
in the September-December level for a number of weeks @5468,
and then the breakout in December 2006.

Whenever there is a breakout of ‘time’, the expectation is for
price to move into the next timeframe that being the
January-March 2007 extremes.



Frank Dilernia

Note: Alignment in 2006 came after the bounce from
the AMT model June lows and break back above the 3-month 50%
levels in August.

1st January 2007 report below...

http://www.datafeeds.com.au/AMT1-1.pdf

DOW….

This week on the DOW my main focus is too see how Wednesday closes because it is the last day of the month, which in turn sets up the new market dynamics for March 2007

At the beginning of the Trading year my view was for the markets to push higher towards February-March 2007.


Coming into the end of the month and the start of the new month, market dynamics based on the AMT model has shifted, and new levels are clearly defined ,and very important support levels are coming into play from the 1st March 2007

Price is coming down into major support. The DOW and most US markets haven’t tested their 3-month 50% levels. The Australian market tested these levels in the first week of January, bounced precisely and rallied towards the Jan-March Quarterly tops that were calculated at the start of the year.


If the US market's are going to continue with the Trend then these 50% levels have to hold this week and next and bounce.

The worrying thing is the 3-month divergence at the top for March, the MARCH high is currently showing a lower dynamic high, and this could be the first sign that change of trend is about to happen.


This will only be confirmed by a close below the 3-week lows on Friday, but by Thursday, if price is trading below both support zones, then there is a good chance that the market will follow the AMT model back towards the March lows.


A two-month wave into April will take it back towards to the 3-Quarterly 50% level currently 11939. However that will depend on the close of March that sets up the dynamics for April



.............DOW Weekly chart left...............................DOW Daily chart Right



The model of expectation based on the AMT model is... whenever a change of trend occurs with the break of 3-month 50% level; it's the start a two-month wave towards the 3 monthly dynamic lows for each preceding month. The trend of any market or stock is simply define by trading the side of the dynamic monthly 50% levels.


It is the price action around these lows this week that's going to give the direction of the trend for March and April 2007.

If it does break and markets move lower, volatility will sure return and we should see some large trending days, ideal for day trading. However the bias will be to the downside.


Frank Dilernia

.... it's good to see, that you are still around, Frank ....

happy trading

yogi

Yes a true professional,with the best understanding/explanation capability of Cycle and Time analysis I've seen.

Always meaty stuff with great charts and explanation.

1 day later and markets have broken their 3-week lows and headed straight towards the monthly dynamics lows in February. This push lower has shifted the March Dynamics, and it has gone to matching the overall pullback zone of 11939 on DOW.




..............DOW weekly chart....................................DOW daily chart


The exact March lows will be calculated at the close of the last days trading of February.



Yesterday I was looking at AMT model, because of where price trading the expectation was a 2-month wave into April, but because this sell off is occurring in late February this is part of the first month, March is part of the 2nd month.

After that the focus will be on April 50% level, but regardless of what the market does, volatility is back and there are going to be some great range trading and day trading in global markets for a number of weeks.

Frank Dilernia

Frank

I've been working through your AMT reports and am trying to make sense of them.

If you could explain to a layman - now that most markets have broken through the 3-month 50% level, you expect them to make higher highs from here? ...or head back to the 50% support level...?

Thanks in advance
dodgers

First of all always look at your weekly bar chart and work down, think of a weekly chart as 1 bar, there are 5 days within 1 bar, if the market is going to reverse down its more than likely going to happen next week. (US markets)

The only expectation in the short term would be a reversal back into the 3-day lows, which hopefully would line up with the 3-month 50% level. (support)

A couple of things to look for, if the weekly charts close above the 3-month highs in March then you could find the market moving towards the new dynamic highs in April. (2-month wave into the next dynamic highs, the opposite of what has just occured), otherwise you can have the rest of the month consolidating as it hits resistance (March highs) until the end of March before the next up move in April.

Personally, I think if the market makes a higher high in April I would think the market will rotate back down in MAY, it wouldn’t surprise me to see a major consolidation for a couple of months before the next up trend begins later in the year.

It all depends what you want out of any analysis, if you are a medium term stock trade I think the bigger picture is extremely important. If you are a short-term day trader the bigger picture isn’t so, you just trade your set-ups and systems regardless of any preconceived idea.

Short-term

Normal price action within the weekly pattern will see one trending day, and 4 consolidating days or rotation days, even though the market looks to be making higher highs, you’ll find most days rotating within itself. The way I trade, (swing and momentum futures) I’ll miss every major move in the market because I have certain exit criteria, I’ll never hold for a 100 point move on the market but I’ll know over the next few days as the market rotates I’ll make up for any miss trending period.

Today on the US markets is an example of consolidating or rotating days after the trading day.


I hope this helps.

Frank Dilernia

Thanks Frank thats very interesting

I'll get a copy of AMT to study this in more detail...

First of all always look at your weekly bar chart and work
down, think of a weekly chart as 1 bar, there are 5 days within
1 bar, if the market is going to reverse down its more than
likely going to happen next week. (US markets)

The only expectation in the short term would be a reversal back
into the 3-day lows, which hopefully would line up with the
3-month 50% level. (Support)

A couple of things to look for, if the weekly charts close above
the 3-month highs in March then you could find the market
moving towards the new dynamic highs in April. (2-month wave
into the next dynamic highs, the opposite of what has
just occurred), otherwise you can have the rest of the
month consolidating as it hits resistance (March highs) until
the end of March before the next up move in April.

DOW...



ES...



ER2



SPI




Frank Dilernia

AMT Model and Methodology (c)

Frank Dilernia

Truly incredible stuff,

I'm not even in Frankee's league.

But I was interested to see his weekly target was within 3 pts of one of mine posted a week or so ago.

tech/a said:

I'm not even in Frankee's league.

But I was interested to see his weekly target was within 3 pts of one of mine posted a week or so ago.

Click to expand...

That would add to your case TecH!

Read the ATM info on the site really interests me, so after I learn about Wave and Market profile and futher into Gann I will totally be into Market Dynamics, ATM. So looks like a have a busy 10-20 years infront of me better clear my calender. Aint trading grand!

tech/a said:

I'm not even in Frankee's league.

But I was interested to see his weekly target was within 3 pts of one of mine posted a week or so ago.

Click to expand...

Tech,

Not 100% sure of what price the wave 5 section is exactly but..................

XJO closed at 6151 yesterday so you where pretty much on the money man well done.

Aussie200 xjo hit a hight of 6200 which lines up with the 5 at 6200 does your price need to be closed above or just hit?

I am thinking i have cocked it up

I’m a firm believer the price patterns based on Market dynamics continually repeat themselves, this 2-month wave extension in April to 6236 was a high probability pattern.

This zone is now a major resistance zone, it is also a price pattern that often repeats.

There are only 3 things a trader can do; trade LONGS, trade SHORTS or STAY OUT.

Using the AMT model I’ve eliminated 1 of those things, trading LONGS.

So now I’ve got two options, either Stay Out or trade SHORTS.

However….

On Monday my systems will go LONG, They won’t go SHORT until ‘higher’ prices on Tuesday.

So for Monday I’m now leaning to STAYing OUT because of two different expectations.


BUT….

Nothing is guaranteed when it comes to trading… there is no guarantee that 6232 is the high, there is no guarantee the market will reverse Down, and there is no guarantee the market will rise based on my systems, the only thing that works is following a method that has a probability of desired outcome that provides dollar rewards.

That is why I’ll be trading LONG’s on Monday and following my systems regardless of any preconceived idea.

I’ll be trading LONGs because over the course of a number of trades my trading has a desired outcome that provides dollar rewards.

If I get stopped out and the market follows the AMT model down then so be it, I’ll move onto the next trade.

If the market moves higher on Monday, does 6232 provide resistance again?

It can, however….

Using sequential data, this 3-day pattern last occurred on the 19th February, the last time it rallied and took out the previous daily highs. If it does the exact same thing on Monday then based on previous price patterns the SPI can move towards 6250+ by Tuesday.

Now I’m not in the job of predicting the market, all I’m going to do on Monday is trade Longs and let the market run it’s course until the end of the day.

There are only two options left once in a trade, I either get stopped out or make profits

Frank Dilernia

Switch to shorts on Tuesday.

However if the market moves as high as the exit zone today and
opens up higher on Tuesday (2650+), then I don't expect
much downside, I hope I'm wrong but previous data suggests
it's normally a stalling day without not much range.




Frank Dilernia

It was a banks & resources day today.

So I am guessing that this was our 'trading' day, with the XJO up 1.01%. An interesting phenomenon I noticed at the close was the 5 banks all matched quit a bit lower at the auction from the days highs. I would assume that the bullish sentiment that was there during the day may have tempered a bit getting ready for some consolidating days or rotation days?

I'm thinking that Fridays are usually orchestrated for lower values in both share prices & index's in preparation for a Monday ramp, as has been the pattern for a while.

So should the 'fade' at the close be cause for concern or is it just me who views it this way ie as Frank alludes, a rotation day tomorrow?
Will the US markets take more notice of the worsening fundamentals and correct?

Higher prices on Tuesday.

On open today I have conflicting systems, my daily system remains LONG my Range Bar systems go short.

Normally traders holding Long positions will Exit on higher prices and remain on the sidelines until the next day when systems align once again.

For short term traders they would focus on ‘shorts' but exit zones will be between 28-30 points of the range, exit and remain on the sidelines until the next day.

AMT model....

Because prices are now trading above the AMT model highs due to these higher prices on Tuesday, the resistance zones of last week can now become support zones for this week.


Frank Dilernia

"For short term traders they would focus on ‘shorts' but exit zones will
be between 28-30 points of the range, exit and remain on the sidelines
until the next day." (sycom high 6275 day 6247 low)

Now for a short term trader who has shorted the market today, we
have moved down 28 points from highs and found a lot of support
around these levels in early trading

Depending on your 'short' trade and entry price you would look to exit
1 contract or all (6247) and then run stops above your entry price or
above today's highs. (system short traders would exit 1 and hold
with stops above today's highs.

There is no guarantee that this is the low will be the low today, or
sycom highs are the high, but the statisitical movement of the SPI
during rising trends is 28-30 points so you want to be at least trying to
work with that.



When markets breakout of the monthly extremes, prices will try and
move towards the next timeframe that being the weekly timeframe @ 6310,
it just will probably be choppy for a couple of days as it tries and make it's way towards that level.

I have no idea how the market will behave but I favour and 2-day consolidation phase as the 3-day lows catch up, and most likely the
next move higher will align with 'long' systems on Thursday.

Frank Dilernia