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
