DOW S&P Weekly 1st March 2008

Global markets are consolidating around Quarterly support, and if there is going to be a next wave down it will come in the next Quarter or just after contract expiry in mid-March.

The current price action occurring now, which does seem like there's a strong ' support-base' building....however I can only make a forward conclusion by what I see, and I only view 'support' as being valid during this Quarterly timeframe which will disappear in April and project lower prices....

DOW Cash and DOW Futures Weekly charts

At this stage US markets are range bound and with 2-weeks before Contact expiry, if Price is still trading below March 50% level there is probably going to a 2nd wave down into the next Quarter when this current 'Support' disppears.....

As mentioned in the Daily report this week on the 27th, the Weekly cycles are a 'sell', and they have pushed the market back down as they did in December 2007, and until prices are able to close above the 3-weekly highs then we should continue to view the markets as heading lower in each Quarterly timeframe.

"As the Weekly timeframe begins to 'tighten' and get smaller, there will be a breakout of the range, which will probably occur the closer it comes to the next contract expiry."

DOW Daily

DOW Weekly ranges are getting tighter and we can see that for the next Wave down to occur there has to be a break of the Weekly lows. At this stage the Markets are still range bound between Weekly channels.

Friday's down-trending day has closed below the 3-day lows:- a change of the 3-day cycle and expectation is that price will swing upwards or consolidate for 2-days before the trend continues down.

The best Set-Up would be a rise UP towards March 50% level in the first few days next week hit the March 50% level and then move down into the Weekly lows.

Those Weekly lows are viewed as Support, but a break of these lows and the expectation is that price will begin to move down towards March lows....

DOW intra-day

The past few weeks on the DOW has been predictable in February:- it has been a consolidating monthly timeframe trading between Weekly channels, and when support failed in 1 day, the next day moved down into support and then rallied higher the next day.

On Thursday support had failed and the expectation was that price was moving down into Friday's support and the same pattern of a reversal up ('short-covering') . However 'support' had failed for the first time in many weeks, breaking the 5-day lows.

Therefore the expectation is the breakout of the 5-day lows on Friday, and price will try and push lower next week on Monday.

Normally the view is for price to rotate upwards:- lower Weekly open and break of the 3-day cycle would see a 2-day rotation upwards, but with Friday's breakout of the 5-day lows the expectation is to push lower on Monday into Weekly lows before any higher move or reversal pattern is going to play out.

S&P Weekly Cash and Futures

Same expectation is that market is currently supported around Quarterly lows, and with the expectation price is heading lower in the foreward timeframe.

Ideally I would like to see a test of the March 50% level before any major down-move.....

E-mini Daily chart

We can see back in the 1st January 2008 when the same pattern of the Weekly breakout occured and the move down into January lows.

And this is the same pattern that we need to see to verify any continuation down into March lows.

And the same could be said on March 50% level and the breakout of the Weekly highs, if for some reason the Week before contract expiry moves higher, as often happens. (Buying support into contract expiry)....


Next Week:-

Friday's breakout and expectation that a breakout of the 5-day lows and price will push lower on Monday....

Please read the daily report....

DOW S&P Weekly Report 23rd Feb 2008

Each Quarterly timeframe low will support price, and move back towards the Central levels on the higher timeframes...If there is going to be a 2nd wave of selling it will occur in the forward Quarterly timeframe, that being in the 2nd or 3rd Quarter.

Therefore for the next few months I'm looking for US and all global markets to move into a consolidation phase.....(Weekly Report 2nd February)


DOW Weekly Cash (left) DOW Weekly Futures (right)


Global markets are consolidating around Quarterly support, and if there is going to be a next wave down it will come in the next Quarter or just after contract expiry in mid-March.

The current price action occurring now, which does seem like there's a strong ' support-base' building, and could result in higher prices in the future, however I can only make a forward conclusion by what I see, and I only view 'support' as being valid during this Quarterly timeframe which will disappear in April and project lower prices....

DOW Daily futures

Until then the market is range bound and it's getting predictable on how price action is playing out.

Any time the market opens higher and near resistance levels they sell it down, and around the 5-day lows short-covering rallies occur. This price action won't last, but with 1 week remaining until the end of the month we should continue to expect the same.

As the Weekly timeframe begins to 'tighten' and get smaller, there will be a breakout of the range, which will probably occur the closer it comes to the next FED meeting..and contract expiry.

DOW intra-day

This week's trading provided some extremely robust trading set-ups each day. These types of markets are ideal for 'day-trading', because the 5-day levels play an important part, as price moves from the middle of the 5-day range outwards, and then back towards the middle of the range from outer channels

In trending markets or a trending Weekly 5-day period, you don't get as many high probability set-ups. This is obviously going to suit a certain style of trader compared to someone else, but by reading my daily blog I hope that it can suit everyone...

S&P Weekly Cash...

Exact same expectation as the DOW, and the exact same price action occurring......

E-mini Daily and intra-day

Last Week's high probability pattern was a rise upwards on Monday and then look for a down day on Tuesday defined by the Weekly 50% level.

When there was a large UP day on Wednesday, which occurred from lower support (5-day lows) the rest of the trading week moved into a sideways pattern resulting in some good set-ups....

Next Week:- I don't have an overall view of where the market is going or how it's going to play out, other than using the intra-day levels once again, and using regressive trading set-ups daily.

In conclusion:- Quarterly support and range bound, and with the Weekly timeframes begining to tighten there will be a breakout of this 4 week range shortly, probably timed with the start of the new month.

And for day-traders we simply look for the same patterns:- Sell higher opens and look for 'short-covering' rallies from support in the 2nd half of the day until the breakout occurs...

Please read the Daily reports......

DOW S&P Weekly Report 17th Feb 2008

DOW:

Weekly charts:- DOW futures on the left and DOW Cash on the right.

Range bound between Quarterly Support and Resistance from the breakout of the previous Quarterly lows, and the current view is further weakness in the forward quarter in April if price isn't able to close above the 3-week cycle highs @ 12703.

We subscribe to support being valid (BUY) and the resistance being valid (SELL), but eventually one is going to fail:- reverse the down-trend and move higher or continue with the down-trend into lower lows defined by higher timeframe analysis.

Daily chart:- DOW futures

Last Week's high probability pattern was simply using the Weekly 50% level:- above and it was moving back towards the 3-day highs, and above that price was moving towards the 5-day highs.

This price action was supported not only by the Weekly 50% level, but also by Quarterly support and a 'lower' weekly open (bottom-to-top)

Next Week's probability pattern is going to be the same, the Weekly 50% level @12399 is going to be the trend guide, as price remains between range-bound between Support and Resistance.

After last week's Price-pattern of a 2-day reversal down on Thursday and Friday, I favour an UP move on Monday towards the Weekly highs and resistance once again....

Intra-day chart:- DOW futures

Last Week's trading was 'text book' patterns:- 3 days up and probability of a 2-day reversal down from highs on Thursday was another probability pattern, but the important levels in confirming all the moves were the previous 5-day ranges.

Wednesday's UP move was confirmed by Tuesday's 5-day high. Thursday's reversal was confirmed by Wednesday's 5-day high. Friday's down move was confirmed by Thursday's 5-day 50% level...

And Monday's UP move next week is going to be confirmed by the 5-day 50% level (support)

Above support and the expectation is price is heading towards the 5-day highs.

Range bar chart:- DOW Futures

When we further analyse the Primary ranges (144) on the DOW, we can see that price is supported from Friday's level @ 12294, and the expectation is that price should move upwards 144 points to 12421....

Currently price is trading below the 3-day 50% level@ 12402 and below next Week's 50% level @ 12399, which is a short-term bearish pattern, therefore it needs to complete the 144 range upwards to confirm price is back above both those levels. Once it is above that the expectation is the market is moving UP towards the 5-day highs.

A bearish pattern would be:- 144 points upwards and swings back down below both those levels breaking support... or trading below support

Weekly Chart:- S&P CASH

Range bound between Support and Resistance, and until price can close above the 3-week cycle highs (on Friday), then the trend remains down and expectation it will follow the April range lower.

Weekly and Daily charts:- E-mini Futures

Exact same pattern last Week:- Quarterly support, lower Weekly open and rising upwards from the Weekly 50% level.

Next Week's high probability pattern:- 2 -day reversal and expectation of the 3rd day rising using the Weekly 50% level @ 1354 as a trend guide.

Note: Monday will start a brand new Weekly timeframe and the expectation is that price is rising towards the 5-day highs but also major resistance. Resistance is valid until it's broken and there is the potential of that occurring.

However a bearish pattern would be an UP move on Monday, but a sell-off from a higher Tuesday open. If this occurs and breaks the Weekly 50% level on Tuesday then the expectation is a major move down into the Weekly lows @ 1315

E-mini intraday chart

Support:- Monday's Up move should be verified by Price rising upwards from 1347.

E-mini Range bar (Primary Range R14)

Expectation that the UP trend should continue towards the 5-day highs.


In Conclusion:-

The Analytical view of the market is valid until proven wrong or it changes.

The Analytical view of the market is range bound between Quarterly Support and Resistance until it's broken.

The Short-term view of the market has been modelled to move higher on Monday towards the 5-day highs, this is valid unless price is trading below 'support'.

A Monday that rises higher has a random length:- it might reach the 5-day highs or it might not, but it's not a 'shorting' day whilst trading above the Weekly 50% level

A Monday that rises higher is the start of a new Trading week with the potential that price could continue higher each day:- But that's not my Analytical view because of Quarterly resistance.

A 'shorting' day will be valid around higher timeframe resistance and a higher open on Tuesday, but that will need to be confirmed by price moving back under the Weekly 50% level. If that price action occurs then my Analytical view is price is moving back down into Weekly lows, and at a much faster rate than many would expect....

That entire walk-forward scenario is valid and can play out precisely until proven wrong, and that is simply going to be defined by price trading on the either side of dynamic timeframe levels (50%) and support/resistance....

"those who anticipate best will prosper"

Please Refer to the Daily Reports......

DOW S&P Weekly Report 9th Feb 2008

S&P:- Looking for US markets to consolidate around these Quarterly lows, with any continued weakness from April.....

A bear Trend in 2008 will move towards 1173 over the next 3 quarterly periods, as it zigzags within the Weekly UP and DOWN patterns

DOW:-

Same expectation;- US markets are consolidating into Contract Expiry, with any further weakness the closer it gets to April or after March Expiry....

9-month pattern target is 10414 on the DOW....

DOW E-mini Futures:-

Weekly rotating patterns with expectation that February is consolidating, and Quarterly lows supporting price.

With US markets trading around Quarterly lows (support) and a lower Weekly close (top-to-bottom), the expectation is that US markets will rotate upwards, using the Weekly 50% level as a Trend guide next week

Above the Weekly 50% level, and expectation Price is heading back to the 5-day highs...

Below the Weekly 50% level, and price is moving down into the Weekly .618 before looking for 'HOOK' trading patterns and a 5-day reversal pattern UPWARDS....

Support 11934 DOW.
Support 1293 E-mini

Last Week's trading was simply set-up with the Sunday's range, and a 'breakdown' of Sunday and expectation was that Monday was moving down into the 5-day 50% level.

A breakout down of the 3-day channel and 5-day 50% level on Tuesday and price was following the 5-day dynamic range each day.... (2nd day reversal back to the Weekly 50% level from a higher Weekly open)

Next week is simply the same:-

Sunday Range will set-up Monday's Trading :- UP or DOWN....

And the 3-day high Range high will confirm the breakout and the follow through of the 5-day dynamic Range highs each day....

Note:- Overall Trend is DOWN, and trading below the February 50% level, therefore potential to make lower lows in February is still a possibility, but that will only happen with a confirmed break below Weekly .618 levels....

Please refer to the Daily reports.....

DOW E-Mini Weekly 2nd February 08

2 weeks ago I mentioned in the Weekly report that the 'blow-off' bottom could occur in this Quarterly timeframe, and any reversal upwards would be towards the 3-month highs in the foward Quarterly timeframe.

We got the blow-off bottom, and now the market is moving towards the 3-month highs during this Quarter and into the next Quarter

Each Quarterly timeframe low will support price, and move back towards the Central levels on the higher timeframes, in this case the Yearly 50% level @ 13002..

If there is going to be a 2nd wave of selling it will occur in the forward Quarterly timeframe, that being in the 2nd or 3rd Quarter. Therefore for the next few months I'm looking for US and all global markets to move into a consolidation phase.....

Above is the Weekly chart of DOW Cash:- consolidation range between Yearly 50% level and Quarterly lows..

S&P Cash

Rising upwards from Quarterly lows and at this stage the expectation is that price will hit resistance around the Yearly balance point.

Forward modelling shows lower lows from April:- Expectation that market will consolidate between current Quarterly lows and Yearly 50% levels for the next couple of months, and only then would I expect further Weakness this year.

DOW futures:-

Last weekly report:- " 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..... then I favour a move towards 12700 in the 2nd half of the week as it rises upwards"

Price action reversed off the 3-day lows and 5-day 50% level on Monday (see intraday charts below), resulting in a HOOK day and the continuation back towards the February 50% level.

The January Resistance (trading below January Breakout) finished on the last day of the month, and at the start of the new month, the resistance disappears and market path can move more freely upwards.

Next Week:- Expectation of further gains towards the Weekly highs (12969) before reversing back down towards the Weekly 50% level later in the week.

E-mini Futures: -

Exact same price action with the 'Hook' day,then the re-test of the Weekly 50% level before heading into a higher close on Friday.

Next Week:- Expectation of further gains up into the Weekly tops before reversing back down towards the Weekly 50% level.

Price pattern Probability:-

Normally when the Weekly timeframe closes on it's high on Friday, I would look for a 2-day pullback towards the 3-day lows before resuming with the upward trend.

This might still happen, because I'm looking for price to move into both levels, however I'm looking for the market to move upwards into the Weekly highs and reversing back down in the later half of the Week, and not the other way around :- moving down and then UP.

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

Bullish pattern will be a HOOK day....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.... andremains in a consolidation pattern..."


Because the market is dynamic, and each timeframe project new highs and lows, along with a new dynamic 50% level, the market is moving inside the Daily channels and consolidating with an UP bias.

Each new day provides a new high, which then provides resistance, and until price comes down into the Weekly 50% level, then the same price action can occur until the Weekly highs are reached next...

GBP/USD this week is a perfect example of price moving towards the upper Weekly channels, each day hitting ressistance, but then reversing back down on Friday back towards the Weekly 50% level. Therefore it's the pattern that i'll be focusing on next week.....


Please Refer to the Daily Reports

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DOW E-Mini Weekly 26th January 2008

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