XAO Technical Analysis

Re: XAO Analysis

Buffettology said:

Like the US used to think debt was managable and not a bad thing if the economy kept growing. This is what was taught to me in Uni several years ago! Funny how most things taught are then re-written just a few years later!

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Uni', I wonder where I'd be if I went to Uni'.... I wonder where I'd be if I had started year 11... I suppose it reflects in my simplisticly worded posts.....

But finiancially it is another story.

Re: XAO Analysis

MR. said:

Whats with the increase with volumes over the last 8 years?

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That i can answer!

The internet and increased ease of communications

Re: XAO Analysis

Exactly, every armchair gambler on the planet can buy and sell in a flash

Re: XAO Analysis

numbercruncher said:

Exactly, every armchair gambler on the planet can buy and sell in a flash

Click to expand...

Also TREMBLING HAND & PAWN_86

OK. With these volumes and without the market increasing in price, what happens next? Stay tuned.........

Re: XAO Analysis

The chart does not look scary
note how the 87 peak emerged from a significant decline
and note how far above the trend (line )constant ,it rose..

look at the rally from 1983

note the action it arose from ( oversold .. so there was catch up as well as
a real story ...China )

At this stage it only looks like a correction of a bull market

and the chart will work it's way to the two trend lines ( APEX ? )

The bullish % ( which aggregates every P&F chart in the mkt )
Hit that low of 6.6%

THERE WAS NO SUPPORT

but the volume surged
and ( short covering accepted ) there was good buying..

B% continues to recover and ( IF you want to take it mechanically ( I wouldn't ) is close to BULL confirmed...

I think we are still in Winter ( but the shortest day comes in the first third of winter )

Minsky pattern refers to Hyman Minsky and the build up of bubbles from leverage

Hedged Borrowers ...( cover principle and interest out of real cashflow )
Speculative ( cover interest only )
Ponzi ( cover nothing .. rely on Phantom Capital Gains )

All of that even down to some of the hedged borrowers needs to unwind..
But mkts will ( they always do ) tend to mark the bottom quickly ( discounting the future while scared to death ) ( B%at 6.6% !!! )

look after 87 the first bottom was the bottom

The P&F is a digital computer in graphic form

The fluctuations are made by differences of opinion ( yes No, X O , 100101 )
There is only a limited random walk at work here
The P&F chart has an old name ... A manipulation detector..
By looking at price in dynamic time it reveals "Hidden Order"

The P&F chart says it is not how long that does the work
but how much ( How many times must opinion be tested by fluctuations until the "Hidden Order" is revealed...

test response, test response

Everyone might well be underwater ( ponzi & Speculative borrowers )
That point marks the lows...
The fluctuations will reveal how soon they stop holding their breath..



motorway

Re: XAO Analysis

^^^^^^^^^^^^^



English please?

So what is the outcome of that post? You think the bottom is near and then the bull run will continue?

Man, I really gotta start getting more into T/A even if its just so I can understand some of these posts on charting and trend analysis.

Re: XAO Analysis

MR. said:

OK. With these volumes and without the market increasing in price, what happens next? Stay tuned.........

Click to expand...

No increase in price?????

By the way that increase is to be expected as an Index grows. Company's grow, more shares are issued, & split and merged and funds raised etc etc.

More trading that is to be expected. Have a look at any long term volume figures of a company that has tripled in price. volume also increases.

Not sure what you are getting at here

Re: XAO Analysis

Buffettology said:

^^^^^^^^^^^^^



English please?

So what is the outcome of that post? You think the bottom is near and then the bull run will continue?

Man, I really gotta start getting more into T/A even if its just so I can understand some of these posts on charting and trend analysis.

Click to expand...

Bottoms come quicker than everyone expects

esp those who do not take the advice of the three monkeys ( see no news hear no news etc )

and so at a much higher price and much later "experts" will then say "now is the time to Buy"...

Bottoms come quicker .. because mkts very quickly get around to discounting the future... esp when panic produces an oversold state as well

It is only the bottom that is important
waiting for new highs so as to be able declare a new bull market is unimportant ( and costly )...

Also USA is not like JAPAN.. ( I see a large difference )

A Bullish percent ( earlier posts , Google ) of 6.6%
either IS the bottom , or is the start of a severe bear mkt ( can not see that atm )... How can everything be a sell with no support ? ( and the make up of that 6.6% would contain a number of "dead horses" eg if a stock was delisted , it could still be above the "last point of support")

In a Acc/Diss cycle... There is the distance travelled ( a lot of basic TA only looks at this and tries to follow along often at the wrong time )...There is acceleration and deceleration as cycles start and begin to end ( measuring thrusts and reactions of the buying and selling waves)
Then there is the "Position" that action and reactions spring from

ie: There is the trend , but also the position in the trend
Position is contrary to trend ... ( a better word maybe is complimentary to trend )

a trend builds an oversold or an overbought "position"

It is common for the "public" to be fooled here too..

B% is an aggregated chart of every stocks position on a P&F chart

( a P&F chart is a chart of technical positions.. among other things )

It moves contrary to trend.............

(over 80% it is flashing amber and red
under 30% it will soon be flashing green)

and as I said it does not remain at panic levels long
It is just too exhausting to remain in a panic mode.

Then there is Volume,, where it comes in and what it does
Volume confirms that the oversold position is an oversold position etc
Volume also reveals junctures of starting and stopping etc

What ( or who ? ) makes the columns change on the P&F chart ?..
Realizing that , is the key to understanding them and making use of them.

The S-shaped curve is a visualization of the natural law
that governs growth . This curve depicts the
how far you have gone. The second visualization of the same law is the
the rate of growth, the life cycle.
This curve is linked to how much momentum you have
acquired: how difficult it will be to stop you. The third visualization
is the up-and-down-and-up curve. It is linked to the
force that drives the growth process: the promise for the future.
The predictive power associated with these curves comes
from their symmetry.
T. modis

Click to expand...

P&F charts display nice acc/dis cycle ( S curve )

( pattern and symmetry of price ( demand and supply ) in Dynamic Time )

The how far
The how much
and "promise for the future"

B% is one measure of that promise
as are the horizontal congestion zones on the individual charts

( a cause that will have an effect )

( again what or who makes a P&F chart move sideways ? )

B% is often combined with option strategies ( I note your interest in options )



motorway

Re: XAO Analysis

Trembling Hand said:

IFocus, I like your work. You don't need a chart out to 1987 to read this market, your comments on that day action is spot on IMO. Lots of people are pulling up weekly and long term charts back to 1987!. When I bet they don't normally trade off them. (if you do fine)

People often talk about lack of discipline in trading in relation to not sticking to their plans. Wonder what people think about making a major shift from one time frame to another. Part of normal analysis or lack of confidence in their normal system?

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Hi Th just trying to stay on the right side of the market (aren't we all) the candle on the 4th at the top of the ABC correction is as good as it gets allowing to get set short and take the next couple of bars.

The other is time frame, I am looking to trade the market time frame, currently a one to two bar proposition IMHO.

Focus

Re: XAO Analysis

MR. said:

................So the over all market was flat for 20 years, then raised for 15 years, then went flat for 15 years and raised again for 25 years.

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nice chart Mr.
Hmmmmmmm, not hard to adjust those slopes and flats to:
flat til 1950 (20yrs)
rising next 15 ('50-'65)
then flat '65-'83 (18yrs)
rising '83-2000 (17yrs)
flat 2000-2018??

bottom line - are we just in consolitation which of course includes a few bears - its just that they don't show up on the larger scale

Re: XAO Analysis

The S-shaped curve is a visualization of the natural law
that governs growth .

Click to expand...

This is the Acc/Dis cycle that occurs on all magnitudes
On the largest scales .leverage is an important factor

This curve depicts the
how far you have gone.

Click to expand...

2003 to 2007 ....The price range of the chart...

The second visualization of the same law is the
the rate of growth, the life cycle.
This curve is linked to how much momentum you have
acquired: how difficult it will be to stop you.

Click to expand...

These are the blue lines marking the lengthening and shortening of the thrust
of momentum also the depth of reactions back
But with the P&F also the horizontal Vs the vertical movement

less thrust more fluctuations ( order giving way to chaos )

The third visualization
is the up-and-down-and-up curve. It is linked to the
force that drives the growth process: the promise for the future.

Click to expand...

Because mkts are about following ( and are not random )
Technical positions are built that are counter to the trend itself

So trend creates position and position creates trend

The B% is one version of the up down and up curve

trend and position .... lead and follow each other..

The predictive power associated with these curves comes
from their symmetry.

Click to expand...

The 1 box reversal chart is the foundation.. The box size of 1.25% has been chosen because it has defined the action very well...

The 3 box rev chart qualifies and informs the 1 box..it helps clarify..

The B% chart made extreme lows in Aug 2007 and just recently...
It quickly has moved to Bull alert , to Bull confirmed and is currently at bull correction

I note the width of the current congestion and it's shape
differences of opinion are being sorted
unlike in Aug

I also note the high, low ,higher high, lower low, pattern
This current congestion is an exhaustion of that pattern
Congestion is a sign of new factors that will create new followings..

CHAOS IS SEASONAL
Certain events appear to occur in an irregular sequence of
nonrepeating patterns. Such a picture, which corresponds to
the scientific notion of chaos, may seem to be useless in preparing
for the future. But chaos in the stock market, as in
business and many other areas, appears to be seasonal. In
particular, chaos is associated with periods of stagnation.
Once a trend enters a high-growth season, fluctuations become
less significant. Moreover, rapid-change seasons
alternate with stagnating seasons, implying that chaos eventually
leads to order, and vice versa. There is symmetry in this swing
from chaos to order and back, which can be utilized in making
investment decisions.

Click to expand...

Look at 2004 to 2006

Once a trend enters a high-growth season, fluctuations become
less significant.

Click to expand...

look at 2006 to 2007 on to 2008

In
particular, chaos is associated with periods of stagnation.

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because markets are about "following"

They can make bottoms very quickly
when all are selling and no one is buying
bottoms can come almost instantly

That We will find out.
I would like to see the congestion zone narrow
and the B % to move towards 50% ( because it is an aggregation of non linear charts it is extremely quick in responding a pull back can lead to a large move in sentiment .. The point of resistance moves lower.. unlike a moving average that is ensnared in time )

This “critical” model builds on the idea that the volatility, or variation, of price changes can quantitatively measure how much the market may fluctuate.

Click to expand...

motorway

Re: XAO Analysis

For Comparison
Here is the DOW

Bubble ? What Bubble !

Not in this stock market

this market is in an entirely different position to the XAO

Both Because of where it has come from and what the consensus of those future prospects are... ( consensus often is wrong )

The chart is full of inertia and differences of opinion

It is a chart ( compared to the XAO ) of stagnation

one long winter ? ( so far )



Motorway

Re: XAO Analysis

From last weekend:

Whiskers said:

Just for illustration purposes I see the XAO trending something similar to mid 2006 for the next few months, ie we have found bottom and will tend fairly flat around the long term trend line (yellow) for a few weeks until we establish where to go from there, which I am still inclined to think slightly bullish.

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Good support established about 5,665.

There is now higher highs and higher lows pointing to another higher high this week.

If I understand motorway correctly he is looking for/expecting a bit more bullish sentiment and momentem... and I think we will get it.

The bold black down trend line needs to be broken through this week and I think it will be and probably reach 6,100 or so.

Push a bit further and we're starting to seriously turn this little down trend off and settle into a sideways consolidation.

Re: XAO Analysis

Whiskers said:

From last weekend:


Good support established about 5,665.

There is now higher highs and higher lows pointing to another higher high this week.

If I understand motorway correctly he is looking for/expecting a bit more bullish sentiment and momentem... and I think we will get it.

The bold black down trend line needs to be broken through this week and I think it will be and probably reach 6,100 or so.

Push a bit further and we're starting to seriously turn this little down trend off and settle into a sideways consolidation.

Click to expand...

Totally agree with motorway and yourself, in the near term the market will move sideways to up. In fact I am looking for a target of 6244pts by the 10 to 11th March. For me based on the EW,Time cycles, and Fibonacci relationship studies I am doing this is a high probability target. Part of the reasoning for this was made in the following post:-

https://www.aussiestockforums.com/forums/showpost.php?p=254258&postcount=2745

Now this analysis is not cast in stone as there are no guarantees or certainties in the market, but the evidence is overwhelming to me anyway that the date of 10-11 March will be very important.

However this is not the end of the bear campaign just yet, and this rally will be eventually fully retraced starting after the 11th March.

Cheers

Re: XAO Analysis

wavepicker said:

Totally agree with motorway and yourself, in the near term the market will move sideways to up. In fact I am looking for a target of 6244pts by the 10 to 11th March. For me based on the EW,Time cycles, and Fibonacci relationship studies I am doing this is a high probability target. Part of the reasoning for this was made in the following post:-

https://www.aussiestockforums.com/forums/showpost.php?p=254258&postcount=2745

Now this analysis is not cast in stone as there are no guarantees or certainties in the market, but the evidence is overwhelming to me anyway that the date of 10-11 March will be very important.

However this is not the end of the bear campaign just yet, and this rally will be eventually fully retraced starting after the 11th March.

Cheers

Click to expand...

The following I was going to post in the ‘Elliott wave Analysis “thread, but because it’s an analysis on the XAO I thought it might be better on this thread.

A word of warning though, this analysis is for those who are interested in EW, Time Cycle and Fibonacci Analysis relationships. If you are not interested in these Trading Strategies then ignore this post.

This analysis is NOT trading advice, merely my opinion and some interesting relationships in play at the moment in the market. There are no certainties in the market only possibilities and probabilities.

This is a study for the XAO in Elliott Wave Structure, Fixed Time Cycle Analysis, and Fibonacci relationships both in price and TIME.
I will start by looking at Elliott Wave Structure, firstly in the Long Term and working our way down to the short term. This will be necessary as first we need to see what the market is has done in the past (in terms of wave structure), where it is now, and where it might be going in the near term

XAO_ Elliott Wave Analysis
Firstly looking at the Long Term EW Monthly chart going back since 1984:

Wave 2 I have labelled as the 1987 crash, this was a very sharp sell off and under EWT if wave 2 is a sharp correction then chances are that wave 4 of the same degree of trend (what we are in now), will more than likely be a sideways affair i.e. a triangle or some variation thereof OR and flat or irregular flat. I have listed some of the probable scenarios below in terms of wave structure. What should be apparent here is that the market will most likely be range bound between it’s all time high and the final low of this leg down (when it complete) for quite a long time. This will be a multi year sideways or range bound market. As such it will be a traders market, not a buy and holders market and the days of high rate of change of price that we have had for the last 4 years is over. It’s going get much tougher for the fundies to make it.


A wave 4 usually retraces between 0.382 and 0.500 the price of the entire 3rd wave. A common place for wave 4 to complete is the lower point of the span of wave 4 of one less degree. So that would be a wave 4 within major red wave 3 in the above diagram. Pink wave 4 at 4694 pts looks like a good place for support. It also coincides with the 0.382 retrace of the entire red wave 3 advance.
If we were to make the assumption that red wave 4 is currently in the first leg decline of a contracting triangle (and I am not saying with confidence that is what is happening as it could be any of the patterns shown above), then the most likely place for that first leg of that contracting triangle would the 0.382 level or approximately 4694pts.


Now zooming in the chart into the present daily EW chart juncture(the chart that follows), my most probable count based on the long term chart is as follows in the 3rd attachment.



This chart is basically saying that the first leg down of the triangle or flat or whatever type of wave 4 we are in is not over. At the moment there are many bears saying we are going lower in the near term. I believe that will be the case eventually but the market needs to still unwind sideways to upward before the next leg start down. For various reasons in the pages to follow you will se why I believe that will be the case, but also remember the are no certainties in the market and I am also only evaluating probabilities here. We have an unfilled gap at 5835pts, IMO the market will go up and fill it before it comes down and we also have are currently in an uncompleted wave structure. The market will struggle sideways for a few weeks before blowing off to the 6243pt level(which is the 0.618 retrace level) before heading south again. My target date for this high is 10 or11th of March. The price level is based of the confluence of 3 things:

• Retrace of price from top to bottom
• Assuming we get a contracting triangle pattern blue wave b forming
the thrust upward will be the approximate height of the triangle.
• The squaring of both price and time

Some weeks ago on the XAO Analysis thread I had posted the chart below using fixed term cycles for repeating highs and lows over the medium term. The numbers on this chart represent possible points in TIME of when a change in trend and certain degree is due. The positioning of the numbers is only valid on the time scale, disregard their position relative to the price axis as it serves no purpose. This is purely a time study(refer 4th attachment)

Based on when the last time red point 6 occurred it should arrive again in approximately mid March. According to this strategy then because red point 5 has already made a low then the market is bullish till mid March. These cycle points are our termination points for our Elliott Wave Structures in TIME, so using this method we are now able to quantify our wave counts as being the most probable ones in the earlier charts.


Fibonacci Price and Time relationships-Putting it all Together

Many traders are aware of the importance of Fibonacci relationships in price retracements and price extensions. These relationships not only manifest themselves in price but more importantly in time. The Fibonacci number sequence is as follows:-

• 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377………

Very often from price pivot to pivot i.e. a high to high, low to a low, low to a high or high to a low end up being one of the numbers of this sequence in terms of time in traded bars OR calendar days. The key is to find if the sequence occurs in either of these formats historically and then project forward. Other times the market may show these Fibonacci relationships in Traded Bars and then continue the sequence in calendar days or vice versa.

The reasons for this is that TIME has more than one “dimension”

I should note here that in addition to the above number sequence being active in TIME , the twin numbers of the above are also active:-

• 2, 4, 6, 10, 16, 26, 42, 68, 110, 178, 288, 466, 754………

A great example of Fibonacci Time relationships is apparent at the current juncture in the XAO, refer to chart on 5th attachment:

As can be seen from this chart, Fibonacci number counts starting from 4 different points in time (which are actually high or low pivots) all cluster at the 11/3/08 date when counting Trading days forward. What is fascinating about these relationships is that each count hits a high or low in order of the Fibonacci sequence:-

• Blue Numbers: 55, 89, 144.
• Red Numbers: 34, 55, 89.
• Pink Numbers: 21, 34, 55.
• Green Numbers: 34.


Squaring Of Price and Time
We are now in a position square both price and time to obtain both a price level and time point (date) that the market should turn on.
We are looking for precision here, so phi relationship in time should also be apparent in price. In this case the 01/11/07 high to the 22/01/08 low in terms of time extended forward from the 22/01/08 date by 0.618 gives date of 10/11 March.(see 6th attachment in the next post)

At the same time 0.618 retracement of price high to low gives us a price point of where the market should turn at on the 10/11 March of 6244 pts. Time will tell if this will be proven correct. Now if price falls into this date then the market will be bullish thereafter or if price rises into this date it should be bearish. Our fixed Time Cycles Analysis (as does EW) says it will rise into this date.

Conclusion
The market is not random, it moves up and down in patterned way, and has order in terms of TIME. It also at times exhibits accuracy as shown with these Fibonacci relationships.

As WD Gann once said, it is Natural Law that binds the market together. Every top and bottom is related mathematically both in TIME and Price. It’s all there staring at you in the face, but you just have to know where to look for it. Sometimes it’s very hard to find, other times it’s easily seen but it is there.

The Fixed Time Cycle Analysis tells you approximately were a pivot should be. Together with Elliott Wave Analysis and pattern analysis it is the guide because the Fixed Time Cycle points are the termination points of Elliott Waves at various degrees of trend. The accuracy here is up to 8 traded bars, Fibonacci ratios and counts can then be used to help one determine with more accuracy when a time point will occur and at what level (price).

Re: XAO Analysis

6th attachment for post 2842:

Re: XAO Analysis

Thanks WP, some great info there. kennas

Re: XAO Analysis

kennas said:

Thanks WP, some great info there. kennas

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I second kennas' comments.
Some great work there.

WP, maybe you mentioned it, and I just missed it, but when in your opinion roughly will the final 4600-4700 target be reached?

Do the probabilities point to the bottom being in 2008 or further down the track?

Re: XAO Analysis

nizar said:

I second kennas' comments.
Some great work there.

WP, maybe you mentioned it, and I just missed it, but when in your opinion roughly will the final 4600-4700 target be reached?

Do the probabilities point to the bottom being in 2008 or further down the track?

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Hello Nizar, just remember 11th March might only turn out to be a minor point and I could be wrong too. The post was primarily to show the relationships in play at the moment.

I am only taking it one step at a time ATM and have not thought about what happens after the Fib date for the timing of the next cycle point. However I would say approximately mid May based on earlier cycle points.

Mid May will be a major cycle point of the same degree we had in November, and as such I would be looking to be bullish the market till 2009 after that point.

Cheers

Re: XAO Analysis

kennas said:

Thanks WP, some great info there. kennas

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Not if you are long, lol. Where is the bull? Time to return to the paddock.