SPI TRADING 10/8/07  O6004 H6004 L5912 C5933
8 Period DM +33-DI46 ADX 37.2 Rising M/as 5/5997 15/6103 30/6232 Falling

July 23rd was not a good time to take a holiday.  Indeed it would have been far more beneficial and interesting to monitor the markets on MARKET ANALYST.  I was looking for a top in our market – the caption for next YOUR TRADING EDGE completed as at trading 20th July – COULD THIS BE AS GOOD AS IT GETS? The answer is now in the market and technicals are confirming a significant correction and should provide great trading opportunities for those fast on their feet.  The SPI continues to live up to its reputation of being the most difficult futures contract on the globe to trade.  The overnight influence of SYCOM cannot be understated which clearly leaves traders at a disadvantage. The frequent opening and closing “traps” are well illustration by the ½ Hourly Chart on ASX 200 INDEX.  The published chart outlines some of the important technicals since the topping out in 24th July.  Directional Movement crossover to short market with  clustering moving averages which preceded a BIG MOMENTUM MOVE down.  The angle lines and support levels were broken like a hot knife through butter.  Gann followers were rewarded with the index turning down 288 (+1) trading days from June 2006 low.  The low on 6th August was followed by a Higher low on 7th and a subsequent rally to 6165.6 (50% retracement).  Both ½ Hourly and P&F charts had well defined uptrendlines – the close was another move up after 4 pm.   Of technical interested was the 3/5 day m/as together – observations of past performance is not a good idea to stay short  - this was a Wall Street inspired relief rally.  The bear returned in earnest on Friday with index closing on low and the total market advance/decline also making a new low.  The $64 question for Monday: Will it head lower? 

The MARKET ANALYST APC SPOT shows a wild nights trading down to 5825 with Rally high of 5970 and close at 5930 not far away from the cash market.  I have made a compass swing of the pattern which suggests a possible target of 5850 area.  The 5/15/30 m/as clustering so it should be an interesting opening.  A 2pt P&F chart is one worth doing and especially useful in the opening and closing sessions.  MA candlesticks are also great.

The big range of the past 14 days trading created some huge charts – and the published one reduced several times from the original 2 mm box which is a splendid chart for intra- day action.  “Charts become wallpaper” in this type of volatility where there is an element of panic in the streets and the press.  Best to focus on what the charts are saying. SPI traders are frequently subjected to huge margin calls so positions especially for holding overnight should be carefully considered.

Despite the panic proportions of some of the movements, the intra day action can be quite orderly and attention to trendlines can give profitable trades. Subject to Friday’s low holding (?) questionable, range retracements 6165/5937 1/3 = 6013, 50%= 6051, 61.8%= 6078, 78.6%= 6116. Time period of 108 and 144 should be observed – Mid point 14/8 11.a.m. 108 from low 10.am 17/8, 144 low 2.30 pm 21/8. The Directional Movement works well on 5 minute frame, also clusters of Harmonic moving averages.  The principal of holding shorts whilst the 30 m/a is falling and conversely in a rising trend – hold longs. The parabolic stop when placed in the Directional Movement Indicator box is great for trending moves and when the ADX crossed below the P.S. it is usually a good time to lock in some profits.  Friday’s chart is an excellent example for the “night owls”.

Traders would do well to keep breadth of the market figures. The Coppock Indicators I have been keeping for many years on mining and industrial gave plenty of warning where the distribution and topping has occurred over recent weeks with strong confirmation signals as the downtrend was really getting underway.

For followers of astrology – MA Astrological reversion makes this easy to come by - I had marked in my diary 27th July – VENUS RETROGRADE where reversals on Stocks, futures and currencies within 10 TDS – a 78% correlation.  Historically since 1967 – 8 year Venus retrograde has correlated with a crest from which prices can decline substantially  and expectations that this one will be fast and furious.  Venus ret. Will continue to 8th September.  23rd August –MARS a powerful opposition to JUPITER where stock market could have big range days – US markets 300 points UP or DOWN. This information is worth noting on your charts.

Cycle Gauge on ASX 200 stocks – Accumulation  5%(1%)     Advancing 12%(19%)
                                                         Distribution    12% (19%) Termination 47% (41%)
21% (9%) stocks above 4 week moving average 33%(37%) stocks above 30 week moving average 53% (54%) above 30 week moving average Cycle Gauge down on three time frames.  Trend Configuration supports bearish skew. Market closed bears keen and in control and committed.  Market has been in distribution Phase for 3 weeks.

Report on Mining market 29% (34%) in uptrend, 34% (32%) in downtrend.  Another bad day in the market and the pendulum will swing further into red.  There will be bargains but no urgency to buy right now.

FIBONACCI FORECASTER has been doing some splendid work on cycles.   He looks At parallels of cycle clusters which overlap in the period Sept. 21-24 which happens to be the change of season. Solar eclipse on September 11. “ Does this mean we are going to have a crash this fall. No, but its possible. Crashes only happen several times in a century but one cannot ignore the data or market history. Even if you don’t consider yourself to be a market historian, you need the facts to make your own decisions.   They certainly aren’t going to tell you about this on television. So lets just say this window has the potential to produce something significant.  We live in a different world to 1987.  Supposedly, the derivative world has been designed to spread around the risk wide enough so the system can absorb any shock. I’m not sure they completely thought the part of human emotion.  I don’t think there is a person on the planet who truly understands the implications of a derivative market meltdown.  You know, the part where everyone attempts to head for the exits at the same time.  The cycles are certainly going to give the system an acid test this year.”

Gann’s MASTER TIME FACTOR points to the dangers of a meltdown in the year ending “7” so SPI traders need to stay  even more alert.  The chart patterns should be closely watched.

For study purposes, the ½ Hourly chart for the period 27/6 to 20/7 included.