Forecasting with DiNapoli Levels

11/16/2007 12:00 am EST

Focus: COMMODITIES

Joe DiNapoli

President, Coast Investment Software Inc.

Interviewer Tom Aspray asked Joe DiNapoli, the creator of the Fibonacci DiNapoli levels trading strategy, to expound on what his numbers are currently projecting for gold and crude, as well as the Dow Jones Industrial Average (DJIA). Joe uses logical profit objectives (LOPs), including objective point (OP), contracted objective point (COP), and expanded objective point (XOP) to calculate potential support and resistance levels.

Joe explained that his DiNapoli levels work across different markets and time frames, in projecting support and resistance well ahead of time. Joe cited several cases in which his levels accurately predicted market tops and bottoms—several years in advance. But he added that the levels can be employed for predictions days, weeks, and months in advance also, allowing traders to get out in front of the market.

Tom asked about his predictions for gold, and Joe said he had two forecasts, the first—$730—which was surpassed. And his next forecast is $1,026, which he expects to be met by early 2008.  The direction is clearly up, unless there is a major liquidity crisis. As for crude oil, Joe anticipates a run to higher prices, but a pullback first, in the short-term.
 
Moving on to the DJIA, Joe’s forecast wasn’t nearly so sunny. He believes the Dow has reached an important resistance level, at a contracted objective point of 14,100, a forecast that was actually calculated when the Dow was at 7,200, several years ago. Given what is occurring with the financials, the war in Iraq, and the US dollar, Joe stated that he was very doubtful that this area will be surpassed. In fact, he believes we are facing a similar period to the markets of 1974-1980, in which the Dow traded in a very broad, wide trading range. He thinks inflation is going to catch up with us, and that for now, we will remain in a downtrend, or at best, a trading range.

In closing, Joe and Tom discussed how to position trades going into market reports. Joe commented that it’s best to have no position going into the report, but once the report manifests, it’s time to make your trade. He noted that on the DiNapoli levels, the point at which the red and blue lines combine denotes an area of confluence. He plays reports frequently, taking scalping trades out of the market, buying on proper pullbacks in what is obviously an uptrend.

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