# XJO - Does anyone trade it?



## DTM (2 March 2005)

Hi all

I just wanted to know if anyone trades the XJO options series.  Yesterday I bought 4150 calls when it was around 4170 and  sold them today at 4194.  I was wanting to know what the reward ratio per point was as the profit was only 35% even though it had moved 24 points.      The returns don't seem very rewarding as opposed to shares.  

Your input would be greatly appreciated.

Regards

Daniel


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## positivecashflow (2 March 2005)

How long till expiry were the options you bought?


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## DTM (2 March 2005)

positivecashflow said:
			
		

> How long till expiry were the options you bought?




Hi PC

17 March 2005 strike price of 1450


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## wayneL (2 March 2005)

DT,

Did you buy near the open? The market makers will be playing at high IV's if an up day was anticipated. As the day wears on, volatiliy returns to normal. 

This is what it sounds like...volatility crush. The equivelent of a few days theta all in one day, cause delta shoulda been around 60%.

Typical market maker games.


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## DTM (2 March 2005)

wayneL said:
			
		

> DT,
> 
> Did you buy near the open? The market makers will be playing at high IV's if an up day was anticipated. As the day wears on, volatiliy returns to normal.
> 
> ...




Hi Wayne

I bought yesterday in the afternoon because price behaviour looked like it was going to spike today.  This morning it did spike and I sold out before 12.  It seems that whenever it spikes up, it normally peaks around 12, just before or just afterwards.

Pardon my ignorance, but could you explain that part about volatility crush again in english?    Sorry but am not too familiar with the greeks and relationship of market makers.  

Thanks in advance


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## wayneL (3 March 2005)

DTM said:
			
		

> Hi Wayne
> 
> Pardon my ignorance, but could you explain that part about volatility crush again in english?    Sorry but am not too familiar with the greeks and relationship of market makers.
> 
> Thanks in advance




DT

I don't know how much you know so apologies if too simplified.

Think of the value of an option as having two components...intrinsic value, which is the portion of value that is in the money (if in the money) and extrinsic value, which is the "time" value.

This time value is a reflection of the risk that the option will expire in the money. The higher the volatility, the higher the risk it will expire ITM. Therefore this time value will be higher.

Now if the implied volatility (i.e. the market makers perception of this risk) is high today for some reason the time value of the option will be expensive.

However if for some reason the MM's  percieve lower risk tommorrow (hence lower IV) the option will be priced considerably lower.

This is volatility crush, and has the same effect as several days of theta (time decay) rather than the one days theta.

Hope that helps


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## DTM (3 March 2005)

wayneL said:
			
		

> DT
> 
> I don't know how much you know so apologies if too simplified.
> 
> ...




Thanks Wayne, very helpful.


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## rembrandt (6 March 2005)

Hi DTM,

Firstly, does anyone trade the XJO ... you betcha ... money for jam !!

Secondly, on your numbers the XJO rose 0.05% for a 35% profit ... that is 70:1 leverage sunshine ... it doesn't get any better than that ... ave is around 25:1 for a bought OTM position. (remember leverage works both ways ... it can bite you hard if yer wrong)

Thirdly, why did you wait until Friday to enter ... we closed our LONG ... most entered the previous Friday !!!

You can follow our last XJO trade on HC ...(if your mods allow the link) *URL DELETED* 

Cheers ...


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## Joe Blow (6 March 2005)

rembrandt said:
			
		

> Hi DTM,
> 
> Firstly, does anyone trade the XJO ... you betcha ... money for jam !!
> 
> ...




Hi rembrandt,

I had to delete your URL because I felt it would set a bad precedent here at ASF. Please don't take it personally though.    Your thread over at HC looked interesting. Feel free to start similar threads here anytime.   

For anyone interested in the URL, please send rembrandt a private message. I'm sure he'll pass it along.


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## DTM (7 March 2005)

rembrandt said:
			
		

> Hi DTM,
> 
> Firstly, does anyone trade the XJO ... you betcha ... money for jam !!
> 
> ...




Hi Rembrandt

Thanks for the reply.  I only entered the trade that day because the price pattern was showing that it was going to shoot up the next day, so am more of a short term trader.  I am interested to know what kind of returns you would expect percentage wise if I had made the trade a week earlier.  I normally don't trade the XJO (although I keep watch of it) and would like to know more.  

Thanks for clearing up the reward risk ratio.  The call options I had paid for were itm so the reward of 35% didn't seem all that great as compared to shares (although I'm probably wrong because you'd know more).

Thanks again

Daniel


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## rembrandt (10 March 2005)

Hi JoeBlow ...  IMHO threads such as these need to be done selectively as at best might be considered hubris and at worst interpreted as 'advice' by ASIC watchdogs ... we want to be play by the rules.

As we all know, there is more to trading ETO's than pretty charts ... taking profits is a skill in it's own right ... XJOBQ moved in the last TWO DAYS from around $0.55 to current Bid of $0.27 ... a drop of 51% before the chart 'technically' called the SHORT reversal.

Updated chart looks like this ...







Cheers ...


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## DTM (10 March 2005)

Nice chart rembrandt.  What indicators are you using and what charting software do you use.


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## wayneL (11 March 2005)

DTM said:
			
		

> Nice chart rembrandt.  What indicators are you using and what charting software do you use.




DT,

In the absense of rembrant....

The software is metastock

Indicators look like a chandelier setup plus an EMA oscillator.

Interested in the interpretation....

Cheers


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## DTM (11 March 2005)

wayneL said:
			
		

> DT,
> 
> In the absense of rembrant....
> 
> ...




Hmmm...  A bit hard to interpret as I have to visually draw candlesticks but will have a go.

Basically good time to buy is when the two sets of lines cross (in the set with the 3 lines, only two have to cross) and price changes markedly ie close is much higher than open giving you a long up candlestick (look at the bottom of the middle wave retracement).

A good time to sell is when the two sets of lines cross each other (at the peaks) but the open and close of the day has to be close together (ie open is nearly the same/lower as close) giving you a doji or short candle stick with little or no body. 

Off course this is only a generalization and a more aggresive interpretation than most would like.


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## money tree (16 March 2005)

wrote 20 XJO Jun05 4300.0 Call @ 63.0


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## DTM (16 March 2005)

money tree said:
			
		

> wrote 20 XJO Jun05 4300.0 Call @ 63.0




Big Call Money Treee, I hope you get it.  Would you like to share your reasoning behind it?  Is it part of a spread?


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## money tree (16 March 2005)

well one reson is the 4250 double top

second reason is the rally this week has been due to spi/xjo divergence into expiry. as I have seen before, the trend often reverses after an expiry day. probably the market makers way of raping the option traders.

third reason is I expect a correction by June, and if not, my breakeven is 4300 + 63 = 4363, which may be a struggle.


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## rembrandt (21 March 2005)

Hi Crashy (aka MoneyTree) 

We are LONG nicely green ...

Ignored the double-top preferring to test support at 4225.

Smart-money just wrote 300x$0.68=$204k ... serious margin.

Tomorrow will be interesting ... lol 

Updated chart looks like this ...






Cheers ...


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## money tree (21 March 2005)

bought back the calls today for 64c, -1

a breakout has been confirmed. will short later


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## Qlds007 (21 March 2005)

Crashy

Could you clarify something for me on the XJO series.

I was under the impression that 1 contract was equivalent to 10 shares however in another online program i run it states it is the usual 1000.

Also is the usual cash / stock margin requirements of circa 50% required in an XJO trade? Presumably there is only cash settlement on expiry?

Appreciate your info on this one.


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## DTM (22 March 2005)

Rembrandt or Money tree,

how would I go about setting up an account to trade the actual XJO.  Would I have to open an account with the SFE? or can I do it through commsec?  Is every contract worth $25 per point move?

Thanks in advance.


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## rembrandt (23 March 2005)

Hey Crashy ... you CLOSED your SHORT on Monday ??? ... looks like you zagged instead of zigged ??? Hope yer got back in.

I gave you the SHORT word on MONDAY ... "Smart-money just *wrote* 300x$0.68=$204k ... serious margin ... tomorrow will be interesting."

Updated chart looks like this ... this is not a reco to trade folks.







DTM: Talk to your Broker about setting up an ETO account to trade XJO. Info on Index Options at (http://www.asx.com.au/investor/options/trading_information/index_options.htm)

Cheers ...


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## DTM (23 March 2005)

rembrandt said:
			
		

> Hey Crashy ... you CLOSED your SHORT on Monday ??? ... looks like you zagged instead of zigged ??? Hope yer got back in.
> 
> I gave you the SHORT word on MONDAY ... "Smart-money just *wrote* 300x$0.68=$204k ... serious margin ... tomorrow will be interesting."
> 
> ...




Money tree, hope you got back in.  

Rembrandt, I can trade the options ok but was thinking about the futures.  Any recommendations?

Daniel

PS  Rembrandt, How did you know about the order execution for the "smart money."

PPS Money tree, what ever divergence you spotted the "smart money" spotted too.


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## money tree (23 March 2005)

"Smart-money just wrote 300x$0.68=$204k ... serious margin ... tomorrow will be interesting."

unfortunately it is impossible to tell WHO wrote the options and who BOUGHT them. Nor is it possible to determine if this was closing out an existing position or writing a new one. 

Open interest would tell but not till the following day, so rem did not have that info. Secondly, there is always another side of the trade.

rem, you said you were "nicely green" on your long but did not state that you bailed (and probably didnt). Also I would rather not hear about these 'after the fact' trades since they are easy to fake, and serve no purpose. A more useful and believable post would be:

'I am going long here because....'

(this way we can take into account your view when making out trading decision)

instead of

'I went long there (and am nicely green) because....'

I didnt get back in but no doubt there will be more permabull action any day....


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## money tree (23 March 2005)

Qlds007 said:
			
		

> Crashy
> 
> Could you clarify something for me on the XJO series.
> 
> ...




yes 10 for xjo not 1000

margin requirements are determined by the INTERVAL set by ACH. XJO has the lowest interval usually 2%. This means risk margin is the increase in value of the option if this 2% rise occurs. Cash settlement yes.


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## rembrandt (23 March 2005)

Hi DTM ... never traded Futures ... have a pal who does ... nothing to stop folks from initiating a discussion in Futures on this forum.

Regarding the 'smart-money' comment ... about 3.45pm last Monday  I saw that particular trade (300x$0.68=$204k) go thru in 'real time' ... gut instinct told me it was a huge SHORT.

I hesitated and missed the close ... I posted Crashy at 4:09pm ... a reversal for us means closing the open position and the analysis for the opposite reverse position which takes time to get set.

I couldn't execute until the following day by which time the reversal had confirmed according to the chart which is also in 'real-time'. 

Crashy:  Apologies for not delivering in a format you understand and approve of ... I'll do my own thing if it is okay with you chum. 

Gave you the tip on Monday and you will understand we were a bit busy on Tuesday ... we were caught LONG in several other positions and had to move fast.

Is this the sum total of your analysis given you completely missed the trade ... "rem did not have that info" ... "did not state that you bailed and probably didnt" ... "these 'after the fact' trades" ... "they are easy to fake" ... "serve no purpose" ... pretty classy stuff from a professor of an option trading school.

Cheer up ... happy easter.


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## money tree (24 March 2005)

hold up there scooter!

"I gave you the SHORT word on MONDAY ... "Smart-money just wrote 300x$0.68=$204k ... "

I dont see the word short in there. It was a vague statement. All you told us was that *somebody* wrote 300 contracts of *something* for 68c. Given that you were LONG a natural assumption would be that the 'smart money' wrote PUTS worth 68c agreeing with your view. If the 'smart money' was shorting while you were long, you would have said something to that effect. 

Given that I was short while you were long, I find it odd that you now claim you said short was the place to be at that time. And now you claim you exited Tues AFTER seeing todays carnage. Guess we will never know huh.

If you want to show your trades so that others can worship you, at least have the decency to post them in real-time instead of waiting till they become winners. Harry hindsight is the only person who would find your posts useful otherwise.


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## DTM (24 March 2005)

XJO down 40 points as we speak.  An overall drop of 120 odd points for the week.  Wish I had been able to catch this wave down.      

When is it going to stop??    (probably as soon as I get on  )

More importantly, will it go back up?  Anyone care to share their thoughts?


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## rembrandt (24 March 2005)

Hi DTM ... just a hello here from Harry Hindsight.

We have several SHORTS and are closing out ahead of the Easter break ... 

Updated chart in 'real-time' looks like this ...






Cheers ... happy easter.


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## DTM (24 March 2005)

Nice charts Rembrandt.  Makes reading the market a lot easier.  Will have to get me some of that.

Happy easter everyone.


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## SuperTed (24 March 2005)

Doesnt your optiongear software (that you recommended in a previous thread) do simple charts like that DTM?


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## DTM (25 March 2005)

SuperTed said:
			
		

> Doesnt your optiongear software (that you recommended in a previous thread) do simple charts like that DTM?




Hi Super Ted

Looking for real time charting during trading.  Also can't work out how to put the indicators overlaying the candlesticks on optiongear rather than trying to do it visually.


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## money tree (30 March 2005)

time to go long


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## money tree (31 March 2005)

when the lemmings all turn into bears, you know its time to go long. XJO was massively overdone. If you needed a 200 pt correction to wake you up to this fact, as it seems many here did, your pulse on the market aint that sharp. 

Going short this late is like going long @ 4260.....


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## tech/a (31 March 2005)

You know every time I read your posts you have this total air of superiority.

*Post substance not chest beating know it all superiority.*

Your a financail advisor.
You passed your options course with distinction.

You expect everyone here to show humility. 
You post in riddles flexing your knowledge of secrets.

Yet you admit to not having enough capital to finance distribution of your 100% risk free options trading method.

The lemmings you refer to may well be myself but the information Im drawing from are from advisors like Nick Radge who would eat you alive in ALL aspects of trading including your pet options.

Your post at 4.30 yesterday calling to go long after a close of trade which turned on a dime to regain large losses----then your chest beating lemmings comment today after the DJI rose 132 points doesnt show to me at least a fine tuning into the market.

So your a financial advisor and you sell a course.
dont see threads of acknowledge ment on the benifits of your course----like you see on various forums for Radges!

Get out from beind your suit and your ego and have a beer with the real people you might actually learn something.

Hey Ill also buy your course where do I send the cheque-----I might learn something.
You havent all the answers to prosperity----plenty of theory it seems.


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## rembrandt (31 March 2005)

Hi Crashy ... Larry Lemming here (aka Harry Hindsight) ... thanks for the LONG tip ... all us lemmings sure needed that !!!

Oh dear ... I gave you the SHORT tip and all you wanted to do was get ugly  ...  you were SHORT and the trade went against you by $200 and you kacked yer pants !!! 

21/03/05 ... "bought back the calls today for 64c, -1" ... and you sat on the sideline for the last 10 days !!!

You totally miss the SHORT OF THE YEAR and not even in the trade yet you are the noisiest person in the room ... and your best is a miserable attempt to character assassinate me ... you poor sod !!!

Where is the IGNORE button on this forum ???

Crashy ... beep beep !!!


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## money tree (31 March 2005)

look out folks, he's blown another head gasket!    :swear: 

your tantrum is quite funny, considering how hypocritcal it is. 

firstly, I made the call BEFORE the market jumped, those who trade CFDs or Symex could have easily gone long. It was not possible to make the call until close confirmed the reversal doji.

secondly, I did not make a hindsight call after the market has moved in my favour for 2 days unlike someone else, who strangely you did not harrass.

thirdly, I did not attack you. the purpose of the post was to warn turncoat bulls that now is not the time to go short. you wrongly took this as a "chest beat" although there is no evidence of that.

you lecture me on 'superiority' after many here complained about your loudmouth egotistic rantings and abusive behavior. and dont forget the whole bold and colored text issue. how rich.

Your baseless and unjustified personal attacks do not phase me in the slightest. 

cheer up


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## Joe Blow (31 March 2005)

Okay guys, now that all three of you have had your say how about we leave it at that before things get even more heated?

Lets get past the pissing contests and start playing the ball, not the man.


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## money tree (31 March 2005)

lol rem  : 

I wouldnt have put you in the lemming basket, but if you feel you belong, so be it. Still claiming you made a short call eh?   

Yep, Im guilty of using a stop. I went short near the top when everyone else was long but somehow Im the bad guy. My apologies for using good money management. 
And when I offer a differing view to getting short at the bottom, Im attacked again. Oh well 

I was busy writing puts yesterday while you guys were buying them.....

as Han Solo said to Chewbacca: "laugh it up, furball!"


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## tech/a (31 March 2005)

Excellent.

Love the coyote.

As you can see thats my country!!!

Now whats the code for ACME.


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## Joe Blow (31 March 2005)

rembrandt said:
			
		

> Where is the IGNORE button on this forum ???




Hi Rembrandt,

The easiest way to put someone on ignore is to simply view that person's profile, then click where it says 'Add XXX to your ignore list' (right above where it says 'Contact Info').

Alternatively, you can edit your ignore list in the miscellaneous options section of your UserCP: https://www.aussiestockforums.com/account/


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## RichKid (9 April 2005)

XJO index (ASX 200) staying well above that crucial support around 4080. 

Very volatile trading recently but stuck in a range until Friday's break to close above 4160.

Anyone care to have a dabble at drawing some lines on that chart before one of us do? I thought there may have been a small rounding top initially but it didn't complete, confirmed by today's little run. I also thought it was a bearish flag (again until today's break above 4150). Wheret to now is the question. With the economy so fragile that the rate rise didn't eventuate (or due to govt pressure) and with the prospect of another rise very soon it doesn't look good overall, maybe it'll range.

Any views? Money Tree? I'm interested in your reasoning if you have time to post and any other views, I know Tech's away but maybe DTM or Rembrandt are watching the indices??


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## money tree (9 April 2005)

xjo has bounced 100 pts as expected. I would say the top is in. We may get a double top, which would make shorting easy......otherwise a pick in either direction at this point would be a gamble.

expect a range of 4000 - 4250 next 3 months.


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## reichstag911 (10 April 2005)

I position trade the Spi and will post when i go short (soon i think) for a trade that may last days or weeks - depending on how long the trend lasts.

Cheers.


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## RichKid (12 April 2005)

money tree said:
			
		

> xjo has bounced 100 pts as expected. I would say the top is in. We may get a double top, which would make shorting easy......otherwise a pick in either direction at this point would be a gamble.
> 
> expect a range of 4000 - 4250 next 3 months.




imo if it closes at 4075 or below twice then that's the reversal about to get into full swing- based on horizontal support on the chart. Very volatile recently, it's ranging allover the place, the US reporting season wont help either. Might be a time for gold buying. Eitheway the index is still not threatening the all time high, that's when things will get interesting...


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## RichKid (12 April 2005)

reichstag911 said:
			
		

> I position trade the Spi and will post when i go short (soon i think) for a trade that may last days or weeks - depending on how long the trend lasts.
> 
> Cheers.




Yep, keep us posted, I'm looking for a good entry to go short too, just the xjo for me.


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## DTM (12 April 2005)

RichKid said:
			
		

> Yep, keep us posted, I'm looking for a good entry to go short too, just the xjo for me.




I thought the XJO would drop today but looking at today's price movement, it looks like it will shoot up tomorrow morning.


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## DTM (13 April 2005)

Shoot up it did in the morning but didn't expect it to drop like that.     I thought there would be some bounce but after today, I think the stock market won't reach its peak again.  I'm definitely bearish now.


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## RichKid (14 April 2005)

A big drop, resources stocks appeared to have propped it up till now,with metal prices and oil all dropping it's been a near thing- currently around support. BHP failed to get the iron ore price hike it wanted that may have resulted in the mark down as well.

I was watching some of the xjo Citibank warrants- the market maker disappeared suddenly, no buyers no sellers. Very volatile. Let's see where it ends today- above 4080??


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## RichKid (14 April 2005)

Not a pretty sight for the bulls so far...


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## rembrandt (16 April 2005)

Hi RichKid ... those SHORT are nicely green.

The focus here and the US relates to critical support levels being broken as I have posted elsewhere ... the DOW and XJO have both failed 61.8% Fib support levels meaning without some postive stimulus a freefall can occur.

Updated chart looks like this ... dragged a Fib study over my R/S levels.

Chart look messy but important to confirm these critical levels ... Monday here could see a retesting of the 4025/4030 level ... finger on the trigger for those SHORT.







Cheers ...


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## RichKid (16 April 2005)

rembrandt said:
			
		

> Hi RichKid ... those SHORT are nicely green.
> 
> The focus here and the US relates to critical support levels being broken as I have posted elsewhere ... the DOW and XJO have both failed 61.8% Fib support levels meaning without some postive stimulus a freefall can occur.
> 
> ...




Rembrandt,
That's a great chart, makes things clear. I'm waiting for a pullback but all depends on that crucial fib level you show, the metal and oil prices will tell the story imo. I had my eye on 4080/4075 (50%) as the first support level, that's now gone. H&S patterns despite the popularity in the public eye aren't always reliable, the fall in volume leading to this drop is what really had me interest. When a market panics no amount of logic will halt it, nice to have chart to watch it all unfold.

In fact I'm seeing oil at a crucial stage too so if it goes down to another higher bottom (below 50) then there go the woodsides, santoses and other big cap firms that have been holding up the XJO. BHP appears to be falling back to trend but may oscillate around it (which means could go much lower). 

Keep us posted, I've noted a few Gann followers waiting for a confirmation for a fully fledged short too. Next major support imo is the previous high several hundred points below....a long way to fall!!!


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## RichKid (18 April 2005)

A nice goemetric pattern, lower lows, lower highs in a channel. Sign of some flattening out today but overall trend is still down, might see a pullback before long, metals and gold, oil all still down. 

When will the bargain hunters or fund managers jump in to buy 'low'? Gapping at open with ease, dow and S&P may affect it again overnight. Even the 'defensive' stocks are taking a bit of a drubbing. If the instos start selling bigtime this'll get ugly.


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## reichstag911 (27 April 2005)

I'm still short.

*The XJO dead cat (bounce) has decomposed and it's going south again soon*


Sorry forgot to post it here too  : (

From: "reichstag911" <reichstag911@condi-is-a-dyke.com> 
Date: Thu Apr 21, 2005  6:41 pm 

Subject: TRADE: SPi shorted at 4045 Thurs 11 pm AEST 
It's a position trade - it could be days/weeks til the trend finishes.


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## RichKid (27 April 2005)

reichstag911 said:
			
		

> I'm still short.
> 
> *The XJO dead cat (bounce) has decomposed and it's going south again soon*
> 
> ...




Hi Reichstag,
Good to hear from you, wondered where you'd gone, nice to see you doing well out of it!
Nice pattern going down, next point to note around 3900 imo, near uptrendline.  Seems headed way lower but we'd better play it as it pans out. US markets aren't helping and metals still wavering. Maybe another very short spurt (spring) up for XJO before rejoining the decline. Now where were those fib levels...


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## reichstag911 (28 April 2005)

G'day RichKid,

XJO  my next target is 3940/50  and eventually 3478 - 3565  ??

BEAR PARTY TIME : P


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## RichKid (2 May 2005)

Hi folks,
Any other XJO/SPI/XAO traders stll actively shorting? Reich/DTM/Rembrandt? I'm looking for another xjo short entry this week, should be some further volatility with lots of economic news being released in the US and locally. Next leg of downturn due this week imo. Looks like its got a bit of short term upward momentum left in it. Upto the metal markets and the S&P now overnight.


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## DTM (2 May 2005)

I had the Fibonacci support level at 3966 and it bounced off at 3969 last Friday afternoon.  It proceeded up after that.  I had today pegged as an up day and it looks like it will continue on through tomorrow.  The Banks held up the XJO last week otherwise it could have been a free fall.  I think tomorrows announcement for Westpac will push the banks up further but the banks have to start retracing soon as they are in the top of their trading range.  When the banks start retracing, I think it could really accelarate the XJO as most stocks seem downward inclined.  That could be by the end of the week.

  Just my opinion.

Oh, and I've got the XJO's next level of resistance at 4024 and I think it will smash through that tomorrow.


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## rembrandt (2 May 2005)

Hmmm ... chart shows possible new support level (S3) at 3965.

The LONG entry was triggered this morning ... next is retest of 61.8% Fib level at 4030.

Updated chart looks like this ...






Cheers ...


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## RichKid (3 May 2005)

Glad the hear the views folks. That 61.8 fib level is certainly looking very important again. It coincides with previous horizontal support and also has been confirmed by recent closes. Overall the 'big picture' imo is down but not knowing about EW patterns (not as much as I should) it's unclear where the short term move is- I still see another dramatic drop down as in the previous instances to get that bear pattern down towards the diagonal uptrend line around 3900. Two consecutive lower tops and unconvincing attempts to reverse. Need caution for short term plays. Multiyear trend is still up, just a matter of how quickly it'll end imo. 
Agree about the banks DTM, can't see why anyone would hang onto them in the current environment. Dividends will only take you so far, panic can set in suddenly, this is the wrong time for them to be hitting new highs as they were one of the few sectors holding the bourse up. Oil is also dropping so the big oil/gas co's are not going to be flying for a few weeks imo as I expect oil to lag based on bearish pattern. Gold may also lag as it's stuck in a range.


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## DTM (3 May 2005)

rembrandt said:
			
		

> Hmmm ... chart shows possible new support level (S3) at 3965.
> 
> The LONG entry was triggered this morning ... next is retest of 61.8% Fib level at 4030.
> 
> ...




XJO hit 4030 very quickly this morning and then its dropped 50 points as I'm writing.  Even the banks can't hold this one up.  Reversed all my calls into puts this morning and am waiting to see how far it drops.  Could be the beginning of the end.


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## RichKid (4 May 2005)

We're seeing  a minor rally towards the end of the day but it's fallen far today. Wonder if it can recover? Looks to me like the next big drop is due this week. Look out 3900!


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## rembrandt (4 May 2005)

Hi DTM .. apologies ... we aren't always able to post in a timely manner ... you were correct to go SHORT. 

Updated chart from another forum ... "60/40 SHORTS to hold at risk of being stopped out tomorrow". 







Cheers ...


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## RichKid (4 May 2005)

Look out for the end of the recent years' uptrend, about to break 200 day moving average too imo. I thought it might keep fallling during the last quarter hour today but it recovered a little bit.  Sure to be more profit downgrades, I still think the Dow and metal prices will have an extra impact so watch out for overnight news.


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## DTM (4 May 2005)

The size of today's drop suggests to me that it will continue on through tomorrow.


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## RichKid (6 May 2005)

DTM said:
			
		

> The size of today's drop suggests to me that it will continue on through tomorrow.




Damn bulls spoiling our bear party, might be time to be a turncoat for a few days. Overnight weakness in S&P and general negative sentiment suggests this'll be shortlived. But it is near to bouncing off support. Trend is still down short term despite fundies trying to buy in 'cheap'.


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## Rockon2 (27 May 2005)

Hello all;

Yes i trade the xjo.... Although mostley do day trade.

Cant keep my hands of $$ on the table .  

Did well today . went long last night and exited today .. see tick chart.


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## DTM (27 May 2005)

Rockon dude....You're on fire!!! 

Welcome to the forum and look forward to your posts.


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## Rockon2 (27 May 2005)

Bit rough. chart that is.. 

keep trying .


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## RichKid (27 May 2005)

Rock On, good try with the chart, almost there. I've just had to do the same. PM me and I'll send you instructions. First find the file for the image on your computer and then open it via paint. It's quite easy from there.
Look forward to more of your charts once you get it going, nice breakout there in the chart you posted.


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## DTM (27 May 2005)

RichKid said:
			
		

> Rock On, good try with the chart, almost there. I've just had to do the same. PM me and I'll send you instructions. First find the file for the image on your computer and then open it via paint. It's quite easy from there.
> Look forward to more of your charts once you get it going, nice breakout there in the chart you posted.




Rich, could you send me that message too please?

Thanks in advance.


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## RichKid (27 May 2005)

DTM said:
			
		

> Rich, could you send me that message too please?
> 
> Thanks in advance.




Hi DTM,
No sweat (once I work backwards to remember it)- I'll post it in a new thread in the beginners forum: https://www.aussiestockforums.com/forums/showthread.php?p=12733#post12733

Okay, back to the XJO, I'll delete these last two posts once Red sees the msg. Red- my new thread is probably more accurate than the instructions in my last post.


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## Rockon2 (28 May 2005)

Gday Richkid, Thanks very much for the welcome. 
I certainly will pm you for instructions on pasting charts, ( monday Possibly)
I seem to run into all sorts of probs,, :swear: 

I can get it into paint ok, but dont seem to be able to rezise it ? . and I keep forgetting which format to save it as.

Anyway a few more tries, and with your help, i should get there.

Thanks for your welcome DTM  

Yes!!!  what a cute Avitar.. I pinched it of someone else in cyberspace.
every time i see it, i have to smile. Whoever made it did a great job.

This Forum came as a recco by Mofra, whom i chat with a fair bit at Commsuc.. I also recognise a few other names as well. 

P.S. Richkid, I just went and found your post on copy and editing charts from pro trader  ( found in the Beginers Lounge section )....So I'll follow your instructions

Ok nuff for now... Oh And I see the Dow was flat overnight, looks to be consolidating at these levels.  Be a quiet monday methinks... Cheers .


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## Mofra (28 May 2005)

Rockon2 said:
			
		

> This Forum came as a recco by Mofra, whom i chat with a fair bit at Commsuc.. I also recognise a few other names as well.




Better behave now Rock, otherwise I'll be copping it


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## rembrandt (29 May 2005)

Those LONG will be nicely green ... finger on the trigger to take profits.

Trailing stop at 4085 (red indicator)






Cheers ... tight stops.


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## Smurf1976 (4 June 2005)

rembrandt said:
			
		

> Those LONG will be nicely green ... finger on the trigger to take profits.
> 
> Trailing stop at 4085 (red indicator)
> 
> ...



We seem to have gone through the various resistance levels on this chart. So are we now headed for a retest of the all time high???

The Dow was down on Friday night (our time) but then there have been quite a few times recently when moderate falls in the Dow were followed by decent rises on the ASX.

Any thoughts/opinions?


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## rembrandt (14 June 2005)

Those who held LONG will be swimming in mega green ... finger on the trigger to take profits.

Trailing stop at 4194 (red indicator).






Cheers ...


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## wayneL (15 June 2005)

rembrandt said:
			
		

> Those who held LONG will be swimming in mega green ... finger on the trigger to take profits.
> 
> Trailing stop at 4194 (red indicator).
> 
> ...




NICE!

I notice that these are not SPI charts. Are you trading this with options? What strategies etc?

This looks like fun, I might do something similar on the "cubes" (QQQQ)

QQQQ = an exchange traded fund that tracks the NASDAQ composite (for those who are unfamiliar) 

Cheers


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## RichKid (17 June 2005)

Not sure about RS but I trade it via options and warrants (options only atm), trying to find a good price but a bit confused as I found some odd numbers via fair value calculator vs mm price. Trying to figure it out in terms of greeks etc but not clear yet. I might post a new thread on the options in question in the Derivatives forum- maybe Wayne, Pos and the other options traders can make sense of it for me. I'm waiting for a strong reversal signal to short it.


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## RichKid (17 June 2005)

Like the XAO for this one, a nice big bullish candle, tearing away at the end of the day- an impulse bar like with the XAO? Let's see if those metal prices and gold, oil etc carry on with it because if they do then our resource stocks will prop up this market for awhile. Not sure if this deserves to be called a broad based rally. I'm still looking for shorts unless it establishes support at the previous high. Any views?


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## ob1kenobi (18 June 2005)

RichKid said:
			
		

> Like the XAO for this one, a nice big bullish candle, tearing away at the end of the day- an impulse bar like with the XAO? Let's see if those metal prices and gold, oil etc carry on with it because if they do then our resource stocks will prop up this market for awhile. Not sure if this deserves to be called a broad based rally. I'm still looking for shorts unless it establishes support at the previous high. Any views?




I agree! Nice to see a return to a more positive outlook in the market but can it continue and will it be led by the resources stocks? I don't know but I know I'll be watching with interest. Could there be traders in this mex tidying up for the end of the financial year as well?


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## rembrandt (22 June 2005)

Hi WayneL ... not SPI ... I trade ETO's and currently running a parallel Aussie200 pozzy with CMC for comparision purposes. 

Charts are my own in Metastock and I mostly write my own indicators. 

Time to take profits as trailing stop (red indicator) triggered.







Cheers ...


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## Smurf1976 (22 June 2005)

rembrandt said:
			
		

> Time to take profits as trailing stop (red indicator) triggered.
> Cheers ...



Any chance you could explain exactly what the trailing stop that you are using is? It's a moving average (?) of how many days? Likewise the other lines (yellow, green etc.) on your chart. I assume that they are all just moving averages (?) but over what time period?

Thanks.


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## RichKid (28 July 2005)

Looks like this has got the bull run fever again. I wonder if it'll retest the previous highs? Some slowing down in the last two days. Rembrandt, still out there?


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## rembrandt (28 July 2005)

Hi RichKid ... still here ... just not every day.

Support confirmed and smooth LONG entry at 4240.

Broke thru the trendline at 4305 and letting it run ... 

Looking toppy and trailing stop at 4360.






Cheers ...


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## rembrandt (18 August 2005)

Nice run-up and those LONG should consider closing as stops triggered.






Cheers ...


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## markrmau (18 August 2005)

Are you going short yet or wait and see?


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## DTM (18 August 2005)

Looking to go long myself tomorrow but will wait and see how first 30 minutes go.


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## Battman64 (19 August 2005)

Nice call DTM   
Hope you made some money.


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## DTM (19 August 2005)

Battman64 said:
			
		

> Nice call DTM
> Hope you made some money.




Hi Battman,

yes nice move today and hopped on BHP.  Plan to stay on for the next two days and get out Tuesday.  Very toppy looking IMO.

Battman, regarding the SPI, what drives it?  Is it the actual movement of the XJO or is it where ever the herd goes. ie What ever the supply demand that drives the futures.  I notice that a few times the futures traders get it wrong so my question is basically do watch what the crowd does or is it the underlying or a bit of both.

Thanks in advance.


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## Battman64 (20 August 2005)

Hi DTM,
Sorry for the delay....I had a big night.
I feel pure *EMOTION* drives the SPI.
(Just like any market I suppose)
Providers / Speculators / Day Traders etc
I try NOT to watch the "Jo".


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## rembrandt (24 August 2005)

The Market is defying gravity and pulled the old flip-flop on us ... a symbol of uncertanty which inevitably is good for traders.

I held off signalling the flip-flop LONG as I think 4500 is an important psychological resistance level and the SHORT signal today is confirmation of this.

The next test will be 4450 or resistance R1 as major support at 4400.






Cheers ...


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## RichKid (24 August 2005)

rembrandt said:
			
		

> The Market is defying gravity and pulled the old flip-flop on us ... a symbol of uncertanty which inevitably is good for traders.
> I held off signalling the flip-flop LONG as I think 4500 is an important psychological resistance level and the SHORT signal today is confirmation of this.
> The next test will be 4450 or resistance R1 as major support at 4400.




Great work as usual Rembrandt, always love your charts!! Dividend season may hold this up a bit as people hang on for the divs in September. 4400 does look like an obvious level for support short term, nice round number too. I was going to construct a strangle for that tight period just below R1 but  hadn't done enough research on how these option strategies work so did nothing instead. Might get another chance if it falls into a tight range around 4400- it may become a strong support/resistance level if it follows the script.


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## markrmau (25 August 2005)

rembrandt said:
			
		

> pulled the old flip-flop on us ... a symbol of uncertanty which inevitably is good for traders.




Doesn't that flipflop look earily similar to mid march, just before the big slide. :goodnight


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## wayneL (25 August 2005)

The old Flip Flop eh?

I fell for that one just last month!

(Sorry, couldn't resist. You can't half tell the old Get Smart fans.)


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## Rockon2 (25 August 2005)

Gday All,  Nice chart rembrandt..

Yep looks like we're in for a correction, short atm, but hopefully a bounce tomorrow to load up some more perhaps..
I notice the Dow and FTSE has broken trend as well.


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## The Estimator (25 August 2005)

Hey Guys,

I know I'm only a newb and should probably be sticking to the beginners area but I was reading through this thread and was interested to see references to Fibonacci numbers.  I see most of you guys use this in some way in your charting.  I've done a bit of searching and most roads lead to Elliot Waves.  Is this the system your showing in your charts Rembrandt?  I was hoping you boys in the know could give me some recommendations on information sources regarding this use of phi in charting.  Any good books or useful tutorials out there?

Also DTM its good to see a guy having a go.  You can see from the start of the thread that your not as sure as a couple of the others but you have a crack and put your predictions up unlike some of the moaners earlier in the thread.  Hope I can pick this game up like you appear to have in in the short amount of time this thread has spanned. (Though even at the start you were well ahead of what I am now).

PS Sorry for the "slight" thread hijack :freak3:  
Cheers,

John


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## tech/a (25 August 2005)

Rembrandt

As a Metastock User I'm interested in you RED trailing stop.

Is it an ATR?


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## markrmau (29 August 2005)

Obviously what we are seeing today is panic over the US hurricane. It has been upgraded to category 5, and is close to the gulf oil prodcing areas. Oil futures have spiked, and SP500 could fall a bit tonight.

Insurers are down, but only QBE should have exposure through loyds. They will soon release an announcement saying this risk is part of normal operation etc.


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## rembrandt (29 August 2005)

Retesting 4400 as expected ... will it hold as support or breakdown?






Cheers ...


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## Mofra (29 August 2005)

Short here -  first lower high & lower low confirmed on the Jo EOD (and the RSI daily), heading into September which is traditionally a "less positive" month and it's not often the XJO stages a quick recovery after ending a day 50 pts + down.


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## DTM (29 August 2005)

Mofra said:
			
		

> Short here -  first lower high & lower low confirmed on the Jo EOD (and the RSI daily), heading into September which is traditionally a "less positive" month and it's not often the XJO stages a quick recovery after ending a day 50 pts + down.




Hmm...., I don't know.  I was looking to go long at the end of the day but will wait until tomorrow morning to confirm this.  Looking at CBA in paticular.


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## mit (30 August 2005)

Hurricane downgraded and the DOW finished up and oil back to $66. I assume that all things being equal we should have an up day today.  Given that the 50 point drop in the XJO was probably pricing in an expected 100+ drop in the DOW and the DOW in fact rose by 60 points you would expect a strong move.

Today's close will probably give us a strong lead on the future of the market, better than yesterday's knee-jerk reaction to news.

MIT


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## DTM (30 August 2005)

XJO up 40 points in first 15 minutes.  I should have followed my instincts yesterday.  I was also looking at BHP also and its up 45 cents.


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## markrmau (30 August 2005)

I'm not convinced that the strom damage to gulf oil production was as small as crude futures seems to be pricing in at the moment.

Just because it hit land as Cat. 3, and damage to New Orleans was not nearly as big as feared, it was a much bigger storm over water where the oil platforms are. I have heard that there are 2 platforms adrift, and who knows what damage has been caused to underwater infrastructure.

Then again, the market is always right!


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## Rockon2 (30 August 2005)

Spot On Mit...


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## phoenixrising (31 August 2005)

Steve Forbes of the CEO Forbes Convention at Syd Opera House says oil at $35 to $40 by this time next year.

Wonder what he knows that we don't?


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## wayneL (31 August 2005)

phoenixrising said:
			
		

> Steve Forbes of the CEO Forbes Convention at Syd Opera House says oil at $35 to $40 by this time next year.
> 
> Wonder what he knows that we don't?




Well sentiment is so universally opposite to this view, he could be dead right.


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## Milk Man (31 August 2005)

Maybe he thinks the bubble is about to burst on the US economy. No americans wasting money on credit= less production, transporting goods, SUV's...

Low demand = low prices. He might think the end is nigh but I don't think anyone really knows a timeframe except Greenspan & Co.


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## tech/a (31 August 2005)

wayneL said:
			
		

> Well sentiment is so universally opposite to this view, he could be dead right.




I think that Opec countries are very concerned at Oil prices.
Ponder this.
Consumers are already demanding alternative fuel sources and Multiple Millions are being spent.There are already some in place.

When--NOT IF-- a few become viable--the wealth of these countries will go from Riches to rags--what else have they to offer??

So it is in their interests to have fossil fuel as a viable alternative (Which is what it will become rather than the principal fuel source--environmental factors aside!).


Its like 20% interest rates-- theyve been and gone---and may again but all will return to a mean.


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## mit (31 August 2005)

wayneL said:
			
		

> Well sentiment is so universally opposite to this view, he could be dead right.




I believe he is putting forward the view that in the short term there is enough supply to meet demand and the price is being held up by speculative pressure rather than by economics.

I agree with him, however, I think that Peak Oil is real and if it drops it will only be temporary until it starts rising because we are running out of the stuff.

It might be better if the high price is maintained even though it is hurting us all as it will force us to look for and use alternatives before we run out.

MIT


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## rembrandt (1 September 2005)

Support held at 4400 and next test psychological 4500 resistance level.







Cheers ...


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## Smurf1976 (1 September 2005)

phoenixrising said:
			
		

> Steve Forbes of the CEO Forbes Convention at Syd Opera House says oil at $35 to $40 by this time next year.
> 
> Wonder what he knows that we don't?



The maximum supply can not realistically surprise to the upside in a big way in economists' speak since supply is a function of: existing production _less_ natural production decline _plus_ new development coming online _plus_ enhanced output of existing operating fields _less_ production losses due to breakdowns, natural disasters, wars, quota limits etc.

Alternatively it's A - B + C + D - E = production a year from now.

The existing production is reasonably known. And the decline rates of existing fields are known pretty well too. New development and enhanced production projects not already underway is basically too late to affect production in 12 months time so the score is known there too. That leaves production losses due to breakdowns, natural disasters, wars, quota limits etc. as the only significant unknown over the short term (and 12 months is most certainly short term in this oil supply forecasting game).

There are various models of world oil production based on three fundamental approaches. These are:

(A) Resources assuming unconstrained development apart from Antarctica being off limits (assumes unlimited foreign investment in OPEC countries etc.).

(B) Actual planned production from operating and planned fields with or without assumed development of known and probable reserves over the longer term. 

(C) Demand forecast which assumes that supply will rise to meet demand as a general economic principle and that sustained price increases (in anything) do not occur in practice. 

I use method B in my own model since it suits my purposes for doing forecasts. That said I acknowledge the usefulness of method A. Method C has about as much credibility as a political promise during an election campaign IMO (remember that bull markets and bear markets in anything (including stocks) are impossible according to this model and that there's no such thing as under or over valuation in markets)... 

So, what does Smurf's model say? In short production up just on 2% over the next 12 months globally. But this was before the storm in the Gulf of Mexico so it might be somewhat optimistic now. Various other models show pretty similar results.

(For those interested, the major production increases are deepwater fields in Angola and Brazil, heavy oil in Canada and NGL's (natural gas liquids) globally excluding North America. Smaller production increases are expected in some other locations but the majority of existing producers are expected to decline naturally over the period.)

With the probability that US refinery production is affected for some time yet due to the storm, the crude supply globally exceeds refinery capacity. An excess of crude oil no matter what the final products demand is seems likely. So it stands to reason that _crude_ oil prices ought to fall whilst refined product prices could go the other way (unless final demand stabilises or falls).

The North American gas situation needs watching very closely since that could potentially add very substantial oil demand (fuel oil and mid distillates) via fuel switching if Gulf of Mexico production is severely affected for much longer. I suspect that many "experts" are assuming a best case here (they could be right but there's no firm basis for the assumption at this stage).

Starting to look interesting...


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## rembrandt (5 September 2005)

Failure at the double top at 4500 (resistance R2) was expected and triggered the SHORT entry coupled with the negative lead from US.






Cheers ...


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## DTM (6 September 2005)

rembrandt said:
			
		

> Failure at the double top at 4500 (resistance R2) was expected and triggered the SHORT entry coupled with the negative lead from US.
> 
> 
> 
> ...




And with no lead from the US market, the XJO is moving up in line with a bull market although it won't get to 4500.  I think that it will drop tomorrow because I think the US market is heading for a drop.


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## rembrandt (6 September 2005)

Hi DTM,

You could well be right.

Every trading system needs to be thought of as a 'continuum' of LONG/SHORT positions rather than being able to project with deadly accuracy at any given point in time ... with PROBABILITY in our favour we can stay in profit more often than not.

Currently, we see consolidation/distribution phase and price ranging between resistance(R2) at 4500 and support(S2) at 4400 and this will need to be played out ... at the expense of some 'churning' till the next trend develops.

Cheers ...


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## RichKid (13 September 2005)

Looks like it's taking aim at the new highs again, let's see if it can follow through. This market keeps getting stronger just as you think it has run out of puff. Wonder if that means anything? Can we even remember the doom and gloom after the last correction? Seems years ago. So technically the xjo is getting ready to hit blue sky.


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## dutchie (1 October 2005)

Q1. 
Does anyone know how much the XJO fell in the crash of Oct 1987?

Q2.
The quotes for XJO options - each point is worth $10?
so a quote for 27 would require a payment of $270?

Q3.
If a call option can be exercised ITM then it is worth current XJO value minus the strike price times $10?

Q4.
XJO options are European style - is there another way to tade it so you can exercise when you want?

Thanks in advance


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## rembrandt (1 October 2005)

Another nice LONG run-up with the Market profit-taking Friday arvo ... sitting on our SHORT stop but not technically triggered although may do come Monday ... the churning at the Fib(161.8%) 4475 was expected and a reminder that our 'black-box' system can only trade the Market as it occurs.






Dutchie ... the XJO didn't exist in Oct 1987 and the XAO dropped over the month from a high of 2253 to a low of 1295 or a drop of 42% over four weeks.

Index Options such as XJO are quoted in points x $10/point. Quoted prices are determined using BSOPM modeling.

The 4700 Dec05 Call (XJORR) was quoted Friday at 79 points x $10 = $790 per contract.

Index Options are European style which means Exercise (cash settlement only) can only occur at Expiry. If you held an (bought) Index Option Contract that say moved 'in-the-money' and you wanted to realise your profit, you would not wait until Expiry (losing the residual time-premium) to Exercise but would simply sell your Contract.

Cheers ...


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## dutchie (1 October 2005)

Thanks for the info, Rembrandt

42% ouch!! - Quite a fall.


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## bonkers (1 October 2005)

Hi to Rembrandt--I had some contact with you if you remember at Hotcopper in 2002--I note you were long on BHP--back when it was half the price it is today. Sadly for me I bought some at around the 10 dollar level (overleveraged)--went down to around I think 8.30---from that point though--it's never looked back!.
Anyway regards to you and other forum members.
BK.


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## rembrandt (5 October 2005)

Finger on the trigger for several days waiting for the stop and SHORT entry to be triggered.

Seems old habits die hard ... amid a sea of red this morning as the Market has climbed the 'wall of worry' and currently in a quandary ... so why not follow the DOW ... dah !!!







Bonkers ... from $10 to $8.30 is nearly 20% !!! You must use a stop-loss. 95% of investors lose because human beings shun rational behaviour when faced with the prospect of risk. They avoid risk when offered the chance of a sure gain: even if the risky move has a higher payoff than the sure one. On the other hand, when faced with a sure loss, they will do the exact opposite: they will court more risk, even if it is likely to leave them worse off than the sure move.

When your BHP pozzie dropped to $9.50 (you should have exited with say a 5% stop) you were faced with a sure loss and chose to hold effectively courting more risk which caused a 20% loss.

Traders understand our tendency to be irrational at times and create mechanical safe-guards such as stop-losses and with discipline can balance our risk by letting our profits run and cutting our losses.

Cheers ... tight stops.


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## bonkers (6 October 2005)

*Re: XJO - Does anyone trade it?Rembrandt*

Hi Rembrandt--yes I sure learn't my lesson!--I had quite irrational trading behaviour at the time--chopping and changing all over the place--I had a debt gearing problem also and an opportunity cost of capital problem--today I'm back in the workforce and have money going into my account each week--so I'm starting afresh--as you know a good trader forgets about past losses and moves on--that I've done.
All the best--nice conversing.
BK.


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## DTM (6 October 2005)

OK, XJO on long term support of 4464 or there abouts.  It did bounce off it this morning and looks like support is holding.  Yesterday was also a major gann date and this week leads into the Yom Kippur festival which I think goes like 70% of times it is a down week.  Don't ask me how I just read it somewhere.  The gann date was drawn in a few weeks ago and I had forgotten about it until now when I checked on one of the XJO charts.

A lot of volatility ahead with the trading range between the top and todays bottom I think.  It might be a good time to get out of equities when the market starts nearing the top again or protect them with options.  

Apologies for the delay in my charts, it doesn't get updated until mid-day so I only have yesterday's up.


----------



## DTM (6 October 2005)

And my elliot wave count.


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## rembrandt (6 October 2005)

Still slavishly in sympathy with the DOW despite our strong fundamentals.

Mid morning support at important 4500 level has since failed ... adding to SHORT profits. Trailing stop at 4490.






Cheers ...


----------



## rembrandt (7 October 2005)

Next test support at 4400 ... although late rally at close today.






Cheers ... tight stops.


----------



## RichKid (7 October 2005)

rembrandt said:
			
		

> Next test support at 4400 ... although late rally at close today.
> 
> Cheers ... tight stops.




Great charts as usual Rembrandt.

Yep, and hope you get filled at the stop level without too much slippage. I'm looking at going long once good support is established but this high volatility means that eto's will be expensive- does that sound right to the experts? What do you folk do in that case, do you just start writing lots of options?


----------



## rembrandt (10 October 2005)

Taking SHORT profits.






RichKid ... this is a big subject in it's own right and a lot depends on individual trading style. As I trade larger parcels LIQUIDITY is important to me and I try to EXIT as close to the money as possible.

Cheers ...


----------



## RichKid (11 October 2005)

rembrandt said:
			
		

> Taking SHORT profits.
> 
> RichKid ... this is a big subject in it's own right and a lot depends on individual trading style. As I trade larger parcels LIQUIDITY is important to me and I try to EXIT as close to the money as possible.
> 
> Cheers ...




Thanks Rembrandt, will do more research and reread the options threads in the Derivative forum, my concern is that the market may go higher or lower but when volatility drops (as it should after last week's fall, unless we have an even bigger hike in volatility) I may get a very small or no profit.

It looks like a minor support level there around 4415 so far with some rejection of lower prices, still to early to see where it'll head, especially with that big round figure of 4400 just below todays low you'd think it'll at least retest 4400.

BTW, what do you mean by 'exit _close to the_ money'?


----------



## rembrandt (13 October 2005)

Sometimes this Market just gives me the sh*tes ... grrr

Tested 4400 today and is just as liable to bounce again tomorrow.






RichKid ... yes, the best ETO profit scenario is 1-2 clicks OTM and exit ATM where liquidity is highest.

Cheers ... tight stops.


----------



## wayneL (14 October 2005)

rembrandt said:
			
		

> Sometimes this Market just gives me the sh*tes ... grrr




What really gets to me is how I can pick the exact swing point so often...I mean the *exact* swing high or low....*AND PUT MY BLOODY STOP THERE*!

When I am blessed by this amazing forsight, the trade of course goes on to be a fantastic trade...sans my capital.

You just gotta laugh!!! ....thats trading


----------



## RichKid (20 October 2005)

Still in some sort of st channel downtrend, borders are flaring outwards. Will it be down again tomorrow? Price action is all over the place. Near some crucial support levels now. Oil and gold prices both down so the big resources co's are not really getting much help from those charts.


----------



## mit (20 October 2005)

wayneL said:
			
		

> What really gets to me is how I can pick the exact swing point so often...I mean the *exact* swing high or low....*AND PUT MY BLOODY STOP THERE*!
> 
> When I am blessed by this amazing forsight, the trade of course goes on to be a fantastic trade...sans my capital.
> 
> You just gotta laugh!!! ....thats trading




Wayne,

Maybe you can start a new thread called WayneL's stops and we can trade accordingly 

MIT


----------



## rembrandt (21 October 2005)

The XJO index is off nearly 8% and is an excellent portfolio hedging tool.






Cheers ...


----------



## RichKid (21 October 2005)

rembrandt said:
			
		

> The XJO index is off nearly 8% and is an excellent portfolio hedging tool.
> 
> 
> 
> ...




Excellent point, certainly it is a good tool, but how many people would study derivatives and how they work (delta, volatility etc) to protect themselves? Very few, and periodically monitoring it to make sure you're hedged correctly is beyong the reach of quite a few. I prefer stop losses and individual stock options but then my ac is tiny compared to most and not all my stocks are in the ASX200.

Looking at your chart the 50% retracement level is taking on added significance as it's near the previous highs, falls in gold and oil simultaneously has weakend our big resources stocks imo- they'd usually hold up the market. Still, sell volume seems to decrease so maybe some sideways movement soon, but stll a bit of room for a smaller move lower to support circa 4300.


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## rembrandt (26 October 2005)

Expecting continuing volatility in the 4400/4500 range ... LONG pozzie doing nicely ... trailing stop 4400.






RichKid: Yes ... trading(speculating) is very different to hedging and worthy of a thread of it's own. Those whose portfolio's have seen big increases since Mar03 will be sitting on a mountain of unrealised gains and any reversal includes tax issues aside from losses that are stopped.

Cheers ...


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## RichKid (12 November 2005)

Anyone expecting a pullback before the the jo hits the former high? I was until I saw the recent increase in the index with increasing volume, vol on up days was low until this week. Does anyone have an index chart with volume to compare the year's progress (my charts don't have xjo volume, alas!). I'm thinking of comparing the first correction this year with the current one.


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## sails (12 November 2005)

Hi RichKid,  here is an XJO Iress chart with volume, but predicting when a move might end is not one of my strengths so will leave that for more expert technicians!


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## DTM (13 November 2005)

XJO looks like its building to go up again.  At the moment, its starting to move into overbought area and could be a weak movement up.

Next few days will tell whether its a weak movement up but up it is in my opinion.


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## DTM (15 November 2005)

DTM said:
			
		

> XJO looks like its building to go up again.  At the moment, its starting to move into overbought area and could be a weak movement up.
> 
> Next few days will tell whether its a weak movement up but up it is in my opinion.





OK, XJO seems to be in overbought country now and todays signal looks sickly.

Resource stocks looks sickly too.  I'm in for BHP to go down short term ie next few days.  I've been wrong before.


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## RichKid (15 November 2005)

sails said:
			
		

> Hi RichKid,  here is an XJO Iress chart with volume, but predicting when a move might end is not one of my strengths so will leave that for more expert technicians!




Thanks sails! I forgot about that platform, will do some work on it soon to compare the two corrections if someone doesn't do it first, not sure if there'll be anything in the comparision but worth it just in case.


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## RichKid (18 November 2005)

Well! Has anyone taken their eye off the chart or is this the previous highs we've stumbled on again? Approaching with full steam too at that angle, to bust straight through or a consolidation or a retracement first? Let's see.


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## markrmau (21 November 2005)

Traders nervously eyeing potential double top..... Todays drop was small (xjo,-.36%) however, almost half of that came from approx 3:55pm-close. Need to wait for confirmation before shorting.


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## DTM (23 November 2005)

I took a quick look at the market today and it just strikes me as an odd day.  No strong buying or selling.


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## Kauri (23 November 2005)

I don't understand the mechanics of it but the expiry date for options is due...  

*Stock option expiry dates to June 2006*

24 November 2005
22 December 2005
24 January 2006
23 February 2006
30 March 2006
27 April 2006
25 May 2006
29 June 2006


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## RichKid (24 November 2005)

I'd like to see what it does with that recent, steep trendline. Will it retest it and collapse in a heap or form a consolidation pattern just shy of the highs before going through again? If it doesn't reverse in the next few days then I'm betting it goes up as that's the general direction overall.


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## RichKid (29 November 2005)

That double top is almost exactly at the same figure but it's still holding up just below resistance, not sure if it's accumulation or distribution yet. Overall uptrend still intact. Both charts below are dailies.

Apologies for the messy volume lines (I couldn't get an ema in there for vol) and the blurry candles but you'll get the gist of it. If this breaks topside I'm saying it'll be one powerful trend to be able to get on with it like that.
Also, the lines are just lines (what I imagine in my head, the thicker ones mean I'm more convinced of their significance- "all lines; lines, damn lines")....


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## RichKid (30 November 2005)

RichKid said:
			
		

> That double top is almost exactly at the same figure but it's still holding up just below resistance, not sure if it's accumulation or distribution yet.




Again rejecting higher prices today and again very near the prevous high, looks like distribution now, especially with that lower top (see the SPI thread for comments on the lower swing top) and todays bearish bar. Maybe our markets are following the US, similar bar on the S&P500....


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## RichKid (21 December 2005)

I haven't seen the volume figures for today but I'm guessing it'll be solid. Will post a chart of this recent run up if I get a chance; the moves lower were rejected around the minor support lines in the chart above and then the buyers slowly came through, so we didn't see the downward momentum you would have expected after the weakness in November.

Rembrandt, still with us or on hols?


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## willow (10 February 2006)

*XJO and the RSI*

Hope this is the right place for this thread. This chart is a weekly of the XJO from 1999 onwards. I was able to establish two trendlines catching the tops of the 39 wk RSI from the beginning of this period, the vertical bars are the points where the RSI and trendlines meet, on the right side of the chart the RSI tops can now be connected with a trendline also and the vertical bars are where the two meet also, as you can see the RSI has bounced off the trendline recently and all prior times before it were a mixture of minor and serious declines not long after. I know the only evidence here is momentum at the moment but my trading has taken a precautionary stance all the same. Daily chart and the RSI coming soon. Cheers.


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## willow (10 February 2006)

*Re: XJO and the RSI*

Here is the way I'm viewing the daily chart using the 65 day RSI. The last couple of times since mid 2004 the 30 day ema, trendline on price and trendline on the RSI were all breached near enough at the same time and the followed by a decline, now we have a similar scenario shaping up. Notice that prices are stepping up since this period and the RSI is stepping down. No confirmation yet but just something to keep in mind. Cheers


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## RichKid (3 April 2006)

Nothing wrong with this trend if you're long, it'll take a lot of fire power to end the trend. A solid run and doesn't look over-stretched, the odd correction every now and again isn't going to affect long term holders for awhile yet imo. It does look like it'll either break that upper channel boundary or move towards the 200 EMA as it has done before.
Wonder why this thread has died a bit, Rembrandt, where are you?! Have the times been so good that you have retired!??


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## Boggo (4 April 2006)

Certainly do Rich Kid.

Puts on the XJO are my insurance policy. Bought 50000 XJOWMV at 26c today.

Mike


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## RichKid (4 April 2006)

Boggo said:
			
		

> Certainly do Rich Kid.
> 
> Puts on the XJO are my insurance policy. Bought 50000 XJOWMV at 26c today.
> 
> Mike




Yikes, that's a fair few....this thread used to get more attention, maybe that tells you something, everyones just happy to go along for the ride now, soon as the next correction occurs this thread will get busy.....


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## Dutchy3 (30 August 2006)

*XJO -*

Thought this might be of interest ...

Here's the XJO in a daily, not my preferred time frame, however ...

A break below 4950 or above 5100 will be a pointer for where we will be through to Xmas 2006.

I'll update and follow as time unfolds


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## Dutchy3 (12 September 2006)

*Re: XJO Analysis*

Twice now at 5150.

How does flat returns sound for the ASX for the year ended 06/07?

Our market simply reacting to the beat of its own drum now. Little lead from overseas - not needed. Needs to look very strong at 4950 for me to be swapping super out of Aust property trusts at this point.


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## GreatPig (12 September 2006)

*Re: XJO Analysis*

Possibly forming a large head and shoulders pattern, with a target downside of around 4200-4300.

I think it would need to push down below 4900 to be seriously looking at that though.

GP


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## Luke6450 (12 September 2006)

*Re: XJO Analysis*

ahhh crap lets hope that doesnt happen aye!


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## Porper (21 September 2006)

*Re: All Ords - Do you feel Bullish or Bearish?*



			
				RichKid said:
			
		

> Update time: 51% bullish, 15% bearish so things have settled. Please vote if you haven't already, aiming for at least 100 genuine voters.




Looks bearish now.If my charts are correct regarding volume today, then I think we are in trouble, at least short term.

The facts don't lie.The Dow is within a whisker of all time highs, and where is the ASX ? If the Dow corrects I get the feeling we could tank fairly heavily.

The contrary opinion of course is that we are waiting for the Dow to make new highs and the ASX will play catch up.Doesn't seem that way to me.


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## Sean K (21 September 2006)

*Re: All Ords - Do you feel Bullish or Bearish?*



			
				Porper said:
			
		

> The facts don't lie.The Dow is within a whisker of all time highs, and where is the ASX ? If the Dow corrects I get the feeling we could tank fairly heavily.
> 
> The contrary opinion of course is that we are waiting for the Dow to make new highs and the ASX will play catch up.Doesn't seem that way to me.




Yeah, but the ASX has gone up over 20% each year for the past three. What's the DJ done? Sideways I think? I'm actually happy with sideways atm. If it went up another 20% this FY, then we'd be looking at crash material.


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## wayneL (21 September 2006)

*Re: All Ords - Do you feel Bullish or Bearish?*

The ASX is now virtually a proxy for the energy/metals sectors in the commodities market... it is certainly viewed that way overseas.

You could trade Energy and Metal futures and you would be almost 100% correlated to the ASX. (Well pretty close anyway)

The flip side, is that is that an analysis of said commodities is necessary to get a window into the ASX as a whole.

There is much talk of the commodity boom being over (actually the boom was only ever in the two sectors above plus sugar) I think it's over for a while yet, but would not be surpised to see it pick up again *after* the imminent recession.

So my view(guess) is a deep retracement after some sideways fluffing around for a few months.


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## ice (21 September 2006)

*Re: All Ords - Do you feel Bullish or Bearish?*



			
				Porper said:
			
		

> Looks bearish now.If my charts are correct regarding volume today, then I think we are in trouble, at least short term.




Volume was artiificially punped today by men in black trying to manipulate SPI expiry.  Happens every quarter.


ice


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