DOW E-Mini Weekly 26th January 2008

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Market Crash of 2008....If the market moves down into a ‘blow-off’ bottom in this quarter then I expect a massive counter-trend move upwards back towards the 3-month highs before the next major sell-off down later this year…

Market Crash of 2008:- remember it because we will all learn from it in the future.

These past two weeks, and especially the 'crash-pattern' of last week was something that we saw coming from the time price moved under the yearly balance points of 2008.

Last year saw two major drops in the markets, in 2006 the same, and in 2005 the same. But the big difference between the corrections of the past 3 years was the Yearly timeframe. Those 3-years were simply corrections within the Yearly bull-trend, where buying into stocks around Quarterly lows was an ideal strategy using Margin positions.

In 2008 it's not, and the overall trend can make lower lows in 2008 in the 2nd half of the year.

DOW CASH:- Trading under the 2nd stage of the bear market @ 12347... currently remains in a bear trend

"Historically, whenever the S&P comes off 23-25% from the 'peak' it's the time to be moving back into stocks (long-term).....Today when the S&P opens it will be down from it's peak 22%...however I think it's still to early to move into Stocks just yet, because I think the S&P will head down to 1170, as per Weekly report and the 3-year dynamic lows later this year... (10,450 DOW) , and much better Value for long term holdings." ( Feb 22nd 2008)

I posted this the day before the Fed cut rates sending the markets upward...there was going the be an UP move around these lows with or without the FED stepping in, because historically the smart traders are moving in around these levels...

But as I also mentioned, the S&P still remains under the important 'bear-trend' level of 1374... and below this, traders need to keep in mind that any weakness is going to send the market down into the lower levels @ 1170..


DOW Futures:-

Dead-cat bounce within the Weekly timeframe and still trading below January lows...

The bear-trend won't begin to dissipate until price is trading above February 50% level..

Trend guide next week is the Weekly 50% level @ 12225

Trading range highs 12700 Trading range lows 11450

If trading below the Weekly 50% level then expectation market is heading down until the 3-day lows catch up with price...

E-mini futures:-

Exact same expectation on E-mini futures:- a failure of the 3-day highs and highly probable the market will move down, especially trading below the Weekly 50% level....

High Probability pattern:- upside move next week.....

Down-day closing below the Weekly 50%, but then the next day 'HOOKS' back inside the Weekly 50 % closing above. The day after that, tests the Weekly 50% level (support), and then I favour a move towards 1390 in the 2nd half of the week as it rises upwards from the Trend Guide.

Next week:- Support 5-day 50% levels, whilst trading above those levels expectation market is consolidating and could go higher into the Weekly 'tops'...

Don't trade longs below the 5-day 50% level as 'Bear-trend' remains....

Bullish pattern will be a HOOK day....

Note: There has been no daily range breakout, price remains range bound between Daily Channels, therefore whilst price is trading either side of the 5-day 50% level, expectation market is moving towards Daily channels highs and lows, and remains in a consolidation pattern....

S&P DOW Weekly Report 19th Jan 2008

S&P 500

US markets sold off from the Yearly 2008 balance point into the Quarterly lows in 2008.

The same Quarterly support in the S&P cash since 2003, and price is now down into this level, and so far found some support around these lows on Friday.

The Dynamics of the market mapped out that price was making lower lows in this quarter, however sometimes we forget how quickly Price moves down to these levels.

We can see the previous falls in 2007 and remember how dramatic the first drop was in July 2007, and how dramatic this drop has been…

So will the market swing back upwards like every other time?

Probably not, because every other time price was trading above the Yearly balance point, whereas in 2008 it sold off down from the 50% level to the outer channels of the next timeframe….(quarterly)

Two things can now happen in the overall trend of the market:-

It can remain range bound between this level (quarterly lows) and move into a weekly sideways consolidation phase before the next trend down into the forward Quarterly timeframe from April 2008

Or it can continue down into a ‘blow-off’ bottom around 1234-40

If the market moves down into a ‘blow-off’ bottom in this quarter then I expect a massive counter-trend move upwards back towards the 3-month highs before the next major sell-off down into 1173 later this year…

This price action will unfold over the next few months…

Last Week’s price action was expected to move down early in the Week around the Weekly lows, find support and then head upwards on Thursday back towards the Weekly 50% level (resistance) before the next move down.

Everything played out precisely except Thursday, instead breaking down and moving into the Quarterly lows….

Next Week :- Weekly lows support 1288-90

Resistance:- Weekly 50% level 1376 and January lows 1391


For day-traders last week it was simply using the 5-day ranges and 5-day 50% level to trade down…It started on Tuesday as it followed the expectation of the move down into the Weekly lows (previous Weekly report)

The expected resistance (5-day 50%) on Wednesday back into the lows again, but Thursday didn’t break upwards (no longs traded anyway), and then continue down into Friday lows…


In conclusion:-

Major support around the Quarterly lows, the trend within the weekly timeframe is going to be defined by the 5-day ranges, and the trend within the monthly timeframe is going to be defined by the Weekly ranges.. (refer to the Daily report)

DOW...

Expectation of the same sell-off pattern this Month: - From the Yearly Balance point into Quarterly lows:- and in my opinion the potential for further weakness in US markets this year can send the market down to 10414 later this year if it follows the 2nd stage of bear-markets using the Dilernia model.

The first stage began with price selling down from the 2008 balance point, and the 2nd stage is currently playing out with price trading below 12347...

If the DOW is going to head down to 10414, then it will be much later in the year, and it would have to be selling off from the 3-month highs:- therefore it needs to go into a multi-monthly sideways pattern before a 2nd correction takes hold.


Last Week the market moved down into the Weekly lows, however this week I don’t have a view how the US markets behave early in the week :- does it move down into the Weekly lows before reversing upwards in the Weekly 50% level.

Or does it moves upwards into the Weekly 50% level (resistance) before heading back down into the Weekly lows…..????

That is going to be simply defined by using the 5-day ranges and trading the direction of the weekly trends using the 50% levels, as price moves from the 50% level to the outer ranges within multiple timeframes....

Dilernia Theory:- movement from the middle of the timeframe towards the outer channels, and then the rotation of price back from the outer channels towards the middle of the timeframe, as Time and Price moves forward in step formation.

Read the Australian Weekly report of more information about the Dilernia model and market probability...

Please refer to the daily reports;-

All information is owned and copyrighted by Frank Dilernia

DOW E-mini Weekly 12th January 2008

Both CASH markets are moving down into major support levels for 2008.

These are critical levels in the market, and over the past 5 years these 'dynamic' levels have supported US markets, reversing off the lows and continuing with the overall Bull-trend.

However, most of these reversals have occured when trading above the Yearly balance points. This time it's not, and it might take a couple of months for any new UP trend to develop in the next Quarterly timeframe.

E-mini....

Expectation from the last weekly report, was for Price to come down into the January lows this week, find support, and then consolidate for the entire Week, before there could be reversal from these lows upwards next week...

DOW...

The reversal upwards next week was going to be defined by how the US markets closed on Friday :- if they close above the 5-day 50% level then my expectation they would move upwards and swing back towards the Weekly 50% level;- trading Longs from the 5-day 50% level upwards.

However, Friday's close was limp in both markets, therefore my expectation is that price is going to act like in November 2007, when price was initially supported around November lows in both markets, but moved down into a lower Weekly low the following week before swinging upwards.

Very similar to this week's price action:- January lows supported the market, but moved lower into Wednesday before swinging upwards, and then reversing down on Thursday from the 3-day highs.

In Conclusion:- US markets are supported around January lows, but the expectation is that price will move lower into the Weekly lows:- Expected support, and then swing upwards into the Weekly 50% level.

The last time the market rallied upwards, this time I think that the Weekly 50% levels in both markets will act as resistance.


Please read the Daily Report....

All information is owned and coyprighted by Frank Dilernia and cannot be reproduced without consent.

DOW E-mini Weekly Report 5th January 2008

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Last Weekly report (30th December) spelt out the entire scenario for this week, with the major trend guide being the Yearly balance points in both markets.

Once price was under those levels, the expectation was that price was heading back down to retest the August lows:- the expectation of a high-probability down-trending weekly timeframe closing down on its lows on Friday.

When we look at the the S&P Weekly timeframe, this Quarterly timeframe is pointing to lower lows in this Quarter compared to the previous two quarterly timeframes.

Around these lows are major support levels in this Quarter, however the speed of any down move to the levels is the unknown factor....

Because a lower Weekly close will naturally try and rotate upwards at the start of the new week (lower Weekly close will try and swing upwards into a 2-3 day reversal pattern)

The rotation is back towards the 3-day highs/ 3-week 50%

Most probable reversal zones next week are around 1398-1403

DOW is exactly the same:- Expectation that around January lows are short-term support and next week will look for a 2-3 day counter-trend move back towards the Weekly 50% level.

In Conclusion:- Major Down Trend whilst below the Primary 50% level.

This is the first time in a couple of years that price is below these levels. The Dow only spent a couple of days below this level in 2005 before reversing and resuming the UP trend.

Therefore any UP reversal next week not only has to reverse back to the Weekly 50% level, but continue higher into Friday and close above the Primary 50% levels....

Below I have calculated new Primary levels based on the close of the Weekly Timeframe.

Because the Weekly timeframe opened in 2007 it doesn't close until the end of this Week to officially move into 2008.

With this down-trend this week the new Primary 50% levels are now:-

13052 on the DOW (CASH Market)

1450 S&P (CASH MARKET)

Next Week:- Ideally I would like a push lower into support levels, and then look for a counter-trend move back towards the Weekly 50% level.

After that move the rest of the trading week is an open book, and that is going to be based on the Primary 50% levels...

Please refer to the Daily reports for up-to-date daily analysis "the trader trading"