FYI | Dec 08 2013
The weekly closed last week on a downtrend for a third week. The market had its biggest weekly fall since June 2013 with a 200 point range. iQuant predicted volatility and a test of 5200 and it is exactly what happened. Our target from 31 October of 5220 has been met and we wait for a bottom and capitulation of the bulls. December futures expire 19th December and we expect volumes to pick up at the end of the week as funds are rolled to March 2014. With two full trading weeks left for the year the market is currently up 12.5% for the year and traders will be looking to lock in profits. Downtrends can be seen on all three timeframes. We continue to expect weakness and the weekly chart shows support down to 5092 and a break of this level will see the market oversold and may lead to a flash crash. The weekly downside target continues to fall with a retest of 5200 expected. We continue to expect new short term lows to be set on the way to our weekly target at 5092 – down from 5246 last week.
The daily short term shows a stop for Monday at 5205 with the weekly stop at 5255. The December downside target at 5217 has been hit and is now important resistance. Volumes are increasing as sellers are now increasing and looking for support. 5217 and 5255 are the key resistances for next week and any test and break of this level will reverse the weekly downtrend. A move above this level will indicate another short squeeze and a retest of 5465 highs.
iQuant indicates short positions with a stop at 5255. The weekly chart shows support at last weeks lows and we expect the market to retest the lows and set new lows for the Quarter. iQuant indicates weekly downtrends on 9 of the top 10 ASX stocks, RIO is the uptrend. AUDUSD has found short term support at 0.90 and a bounce to medium term resistance is anticipated. SP500 survived a sell off and break of the weekly uptrend below .1800 and a bounce from support at 1780 saw the uptrend hold for a 5th week in a row. Weekly stop for SP500 for next week is 1798 and is a key level to watch for the week. Refer to website for all reports including whether SP500 has hit a peak.
Bulls are starting to capitulate and finding bids thin. Daily from Monday shows a short term stop at 5205 and Bulls will need a close above 5205 on Monday to regroup. Resistance remains at 5217 and 5255 and Bulls need patience and wait for a confirmed bottom before entering longs. A close above 5255 at the end of the week will regain an uptrend for the Bulls.
Bears patience has been rewarded as the predicted increase in volume has come on the sell side. Weekly downside target at 5092 and last weeks low near 5150 are the key supports to be broken this week. Bears have good stops in place and watch the short term daily report for signs of a bottom. Support can be seen between 5154 and 5184 and we expect bids to be found at this level A close below 5255 will hold the downtrend and short positions.
iQUANT FORECAST RANGE 5092 – 5365
PIVOT POINT 5255
Review of prediction from 29th November 2013 for last week
The weekly closed last week on a downtrend for a second week. The market failed to regain 5400 and the weekly stop at 5387 held strong despite a number of tests. The November monthly prediction was spot on with a new downtrend after 4 months of solid gains from the June low at 4600. Downtrends can be seen on all three timeframes. We continue to expect weakness and the weekly chart shows less congestion and increased volatility should be seen this week after last weeks flat trade. The weekly downside target continues to fall with a break of 5300 expected. We continue to expect new short term lows to be set on the way to our weekly target at 5246 – down from 5254.
The daily short term shows a stop for Monday at 5360 with the weekly stop at 5358. The new stop for December is 5300 and a close below here at the end of the month will hold the Long term downtrend. Market now has solid resistance from 5370 – 5412 and any test and break of this level will reverse the downtrends. A move above this level will indicate another short squeeze and a retest of 5465 highs.
iQuant indicates short positions with a stop at 5358. The weekly chart shows congestion between 5300 and 5325 and the next move in the market will be a break of this range. iQuant indicates weekly downtrends on 6 of the top 10 ASX stocks. Strength in the banks after recent declines has seen selling in BHP. AUDUSD has found short term support at 0.907 and a bounce to medium term resistance is anticipated. SP500 had a lack lustre week with the 1795 weekly downtrend holding. Refer to website for all reports including whether SP500 has hit a peak.
Bulls have now lost control and are falling in number. Resistance is in the market for the first time since October. The market has failed to breach recent highs and Bulls will be under increased pressure this week. A close above 5358 at the end of the week will regain an uptrend for the Bulls.
Bears have started to test new lows. Last week Bears were able to move stock a peak levels and a capitulation of the Bulls will see an eventual test below 5300. A break of 5246 will break all medium term support and may lead to a rapid sell off. A close below 5358 will hold the downtrend and short positions.
iQUANT FORECAST RANGE 5246 – 5417
PIVOT POINT 5358
ACTUAL 5152 – 5352
“expect weakness and the weekly chart shows less congestion and increased volatility should be seen this week after last weeks flat trade – A break of 5246 will break all medium term support and may lead to a rapid sell off.” – iQuants weekly outlook from last week was precise. The high for the week was 5352 below the iQuant weekly stop at 5358 and the market sold off as predicted. The weekly target at 5246 was hit on Wednesday and the market was oversold in the medium term under 5246. Our long range target from 31st October has been hit with 5125 the last line of defence before a major correction. A bounce on Thursday was short lived as the market traded back into resistance. Thursday saw the start of the predicted rapid sell off as the bulls finally capitulated. iQuant Trader’s Notes provided 3 trades with 2 profitable trades for a return of 88 plus points. Short calls on Monday and Thursday provided good intraday returns for traders. With a short on Monday closed on Wednesday and an intraday short on Friday closed after 30 minutes of trading.
iQuant indicates a downtrend for the market on all three time frames. Our medium term target at 5200 has been exceeded and we see a possible bottom forming in the markets. Further capitulation of the bulls may be required with a fall to 5125 before the market turns. Medium term weekly traders are short from 5340 plus and the risk management and stops are working well, The November monthly has also proven precise with an eventual break of 5373 confirming the peak above 5400.
We continue to expect a retest of October lows at 5125. The VWAP on the futures for the week was 5251 down from 5359 the previous week. Bulls are looking for support which is yet to be found. The highest volume day was Wednesday as sellers found momentum to sell into before a failure at resistance saw short term traders cut positions.
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ASX200 report tracks the December ASX200 SPI. The ASX200 index is currently trading at a 6 point discount to the futures. All levels in this report refer to the ASX200 SPI futures
The information contained in this communication is general information only. Any advice is general advice only. Neither your personal objectives, financial situation or needs have not been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice. Iquant Systems Pty Ltd (CAR No.435627) is a corporate authorised representative of Avestra Capital Pty Ltd (AFSL No. 292464).
Copyright © 2013 Iquant Systems, All rights reserved. Re-published with permission.
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