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XAO Technical Analysis

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Re: XAO Analysis

Trembling Hand said:
Whiskers god help you if you ever decide to trade leverage. Let me spell it out very clearly. Traders do not trade on minimum margin. Read it again PLEASE. Traders do not trade on minimum margin. and AGAIN Traders do not trade on minimum margin.

The only ones that look at minimum margin as to how many contracts they can buy are IDIOTS. For god sake think about it. :mad:
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:banghead: :banghead:
Why are people focusing on the wrong things.

For heavens sake TH where did I ever use the word minimium in the context that traders only pay the minimium?

I didn't. I actually agree with what you and Wayne say about trading on the minimium margin. It's flirting with disaster.

The point is that if margins are raised then all other things being equal speculators won't be able to buy the same amount of contracts.

But that aside you still are obviously lacking a fundamental understanding of how futures function. And why they are the BEST tool capitalism has at pricing a commodity. But this is way off topic.
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On the contrary, I have a perfectly good knowledge of futures and how they can potentially be abused in this specific case, but you guys are obsessed with trying to relate everything to the 'conventional' market.

Again I repeat, I'm not passing judgement on the system because it's a waste of time because I can't change it. You can get as emotional as you like about changing the system, but don't take it out on me... I'm just the messenger.

I'm simply pointing out that in the eyes of Americans who consume more than twice the oil of China, the second biggest consumer, that they are seeing oil as a vital resource and I'm betting they will do as much as they can to keep the price of oil as low as possible.

REPEAT. The oil industry is the worlds largest commodity market.. it's huge, $12 to 13 trillion, the US is by far the worlds largest consumer of oil... it is hurting them... they feel speculators should not control such a large stake and will do what it takes to relieve that pain.
 
Re: XAO Analysis

wayneL said:
Whiskers,

The point you are missing is that for speculators to be able to actually "control" the market, requires them to take physical delivery. Otherwise the arbitrageurs will simply pull it back into line with the price of physical.

The spot futures price only tracks the physical price, plus cost of carry, plus or less other minor factors. It wouldn't matter if speculators are 90% of the futures markets, unless they take physical delivery, they cannot manipulate price, beyond minor swings.
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Wow didn't this topic stir up a hornets nest. :eek:

Wayne, thats the original point of the example I quoted earlier (maybe on the other thread). Man have we been side tracked since then.

Can you categorically say that for example, oil producers haven't been bidding on and buying back some of their own contracts 'under the counter' so to speak, to force up the bids of refiners?

If prices come down, it will be due to other factors, not related to speculation.
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There are a lot of people in congress in particular that would dissagree with that.

I personally think it will depend on how tight the US regulates down the oil market.

Hi davo8.

No I'm actually not a perma bull, just always looking for a bullin oppertunity ;)...but I reckon the US reckons they can see a way to 'fix' the oil price hike by september or so.
 
Re: XAO Analysis

Temjin said:
Like WayneL was saying, you only seem to think every players out there are using 100:1 CFD contracts. But they only account for an insignificant portion of the volume traded out there.
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Aren't CFDs purely a synthetic market, so they only mirror the underlying, therefore, they actually don't account for any of the volume traded..........

:confused:
 
Re: XAO Analysis

They may, but if the producers did that, they would be reported in the COT as "commercials" and not as "speculators".

So what you are postulating, is not manipulation by speculators AT ALL, but manipulation by "commercials".

This is an insurmountable hurdle to your hypothesis that "speculators" are to blame for high oil prices. They are not.
 
Re: XAO Analysis

Whiskers said:
Wayne, thats the original point of the example I quoted earlier (maybe on the other thread). Man have we been side tracked since then.

Can you categorically say that for example, oil producers haven't been bidding on and buying back some of their own contracts 'under the counter' so to speak, to force up the bids of refiners?
Click to expand...
They may, but if the producers did that, they would be reported in the COT as "commercials" and not as "speculators".

So what you are postulating, is not manipulation by speculators AT ALL, but manipulation by "commercials".

This is an insurmountable hurdle to your hypothesis that "speculators" are to blame for high oil prices. They are not.


There are a lot of people in congress in particular that would dissagree with that.

I personally think it will depend on how tight the US regulates down the oil market.
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You think congressmen know anything? Surely you jest!

Anyway, half of congress are oil-men and have no interest in lower prices.

I would be surprised if there was any effective regulation beyond a bit of window dressing.
 
Re: XAO Analysis

If you like looking at charts (history), then take a look back at what happened in the 70's...the story is not that dissimilar,if you do look at what happened in the 70's, then please scratch bellow the obvious to find out who realy made money out of that situation.
Fundamentaly, you've got Iraq in a mess and possibly Iran being attacked, that translates to instability in the hubb of the oil producing region in the world.
Do you realy think that a lot of the US pollies (oil lobby)care about their own people or the rest of the world ?
We're running out of oil (or so they say), perfect reason to allow drilling in all
the regions they were not allowed to drill into previously, like Alaska?
Apologies if all this has been covered previously, i have not read all of the thread.
 
Re: XAO Analysis

Geez, aren't we all getting off topic a little? :)

Whisker, here is something that might interest you. Tell us what you think. I don't pretend to know everything about the future markets.

http://www.investmentrarities.com/06-10-08.html
The unprecedented price volatility in crude oil, grain and other commodities, has focused our attention and galvanized a collective opinion. "Too much speculation" is the cry of the day. There appears to be much truth in that statement, since few can point to supply and demand factors that account for the shocking price moves. But maybe we are not looking closely enough at the speculation angle.

The most visible culprit for the excessive speculation is said to be the index funds. These are huge institutional funds that hold significant long positions in many commodity futures markets (but not in COMEX gold or silver futures). I have previously written about index funds. This is an important topic, although I have been clear to state that I have no vested interest in whether they continue to hold their big long positions or not.

http://www.investmentrarities.com/01-16-07.html
http://www.investmentrarities.com/03-04-08.html
http://www.investmentrarities.com/04-01-08.html

Presently, there is a political frenzy developing to more closely regulate the index funds, and perhaps even force them to sell their long positions, thereby lowering the price of oil and other commodities. While I question whether these index funds should have been allowed to amass such a large position they were permitted to amass their positions legally and openly.

Should the index funds be forced to dump their long positions, that would likely pressure, at least temporarily, oil and other commodity prices. Perhaps a temporary lowering of prices is all the politicians are interested in. That way they could declare victory over the evil speculators and go back to their business of efficiently running (ruining?) the country.

But before the index funds are tarred and feathered and run out of town on a rail, let’s clear up a common misperception that it has been a sudden influx of index fund buying that has caused the recent dramatic increase in the price of crude oil. That is simply not true. The index funds are holding the same size, or smaller, long position in crude oil than they held 10 months ago, when crude oil was $70/barrel. Ditto for the large long speculators and smaller (unreported) traders on the NYMEX, according to CFTC data in the Commitment of Traders Report (COT). The data clearly shows that long traders on the NYMEX have not been buying aggressively and running up the price of crude. Well, if speculators are behind the recent sharp run-up in oil prices and the long-side traders haven‘t been buying, then who has been buying oil?

The answer is painfully obvious - the speculative shorts have been doing the buying. Public COT data proves this. The buying back of previously sold short futures contracts, primarily in the commercial category, account for the bulk of the buying over the past eight months or so, when oil was trading at $70.
There is always a short for every long position in every commodity futures contract. When enough longs panic and sell aggressively, prices plummet.

When enough shorts panic and buy back their short positions aggressively, prices soar. Oil prices didn’t jump sharply because many new longs came into the market. They jumped because, at the margin, enough shorts panicked and bought back contracts they previously sold short, to prevent their losses from getting larger.

So while I agree that speculation caused oil prices to jump sharply, at least we should correctly identify which speculators did the buying. It was the shorts, not the longs. In fact, the data shows that the longs were selling. That’s not to say that oil prices won’t plunge in the future. They will, when enough longs panic and sell. To a large extent, this is the trading pattern of most markets.
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And to be back on the topic, it looks like the 5050 is holding. With energy start going through a corrective phase, we might see a new uptrend again, for a short time anyway.
 
Re: XAO Analysis

Whiskers said:
:banghead:

Why are people focusing on the wrong things.

It's pretty clear that none of you are of a 'legalistic' mind. :(

No, no , noooo Temjin, Wayne and TH. I said I've seen up to 100:1 leverage offered.

The MAIN point is firstly that the speculative part of the oil market is huge about equal to the US GDP and secondly that there is POTENTIAL there for small amounts of money to control and manipulate a big chunk of a (rising) market.

Struth, for the sake of some maths 100:1 was a nominal number as part of the worst case scenerio.



Well I suppose you could call it blame, they seem to be the culprit of the moment, but as I've often pointed out I take an observational position looking for the sentiment and action that is driving the market.

Repeat, the main point... who would feel comfortable with speculative interests controlling 70% of a 12 to 13 TRILLION DOLLAR industry, a vital industry at that?

Stupid or otherwise I'm not judging because I can't change it... just trying to pre-empt the mob and the market.

Wayne the main question being asked is can you or anyone categorically, I mean categorically say there is no market manipulation happening?

For example if an oil producer or related entity was buying back their own contracts to force up the price for refiners.



:confused:

Nothing at all!

Well if higher margins were required in the largest commodity market in the world it would take more money to get the same size position for a start.

And isn't it a fact as I mentioned last post?



Isn't leverage and the 'speculatice' portion of the market the core issue of what all this oil speculation business and legislation is about?

Again repeating myself, but rightly or wrongly, it doesn't affect me, but given the world wide outrage about the price of oil and the political will to minimise the adverse effects on the economy and that tighter regulation and accountability is happening as well as higher margins and limits on the number of contracts held... are you seriously trying to tell me that oil won't become less attractive to speculators and fall in price as they leave the market?

PS: Getting a little off topic, but just clarifiny the original point about the potentional impact of oil market regulations on the economy and stock market.
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Is there a smiley for back-pedaling? In your initial post there was no mention that your figures were for a worse case scenario. The fact is, you can't be sure if the leverage is 10:1 or 100:1. To keep throwing out figures of $88 billion controlling an oil market the size of US GDP is just pure speculation (pardon the pun). The 70% speculative interest is also not a given. In short you are using very rubbery figures to come to your conclusion.
 
Re: XAO Analysis

There's a video interview here, http://money.cnn.com/ called Loose rules govern commodities which highlights the current issues in the oil market.

I'll get back to discuss the implications to the Aus market later when I have more time.
 
Re: XAO Analysis

Whiskers two things,
1. If you want to discuss this further why don't you start another thread rather than recking this good one.

2. I cannot believe that that is what you are using to back up your argument. If you want to act on this crap from CNNNNNNNNN knock yourself out. But just goes to show how lost you are in your argument. Why don't you learn how the futures markets work first. Before long you will be citing investment advice from your local football club newsletter. :D:D
 
Re: XAO Analysis

Can some tell us when Commsuc and EasyTrade crashes. Would have to be getting close to to long on retail overload system trade.
 
Re: XAO Analysis

OK my turn to throw darts at Whiskers:D:D:D

Buffet the other day said he didn't believe the current oil price run up was because of speculators........... I believe him
 
Re: XAO Analysis

The rest of Asia is giving a big Yawn to the US "Bear Market Lows".

Korea and Japa's about to turn Kermit.

 
Re: XAO Analysis

IFocus said:
OK my turn to throw darts at Whiskers:D:D:D

Buffet the other day said he didn't believe the current oil price run up was because of speculators........... I believe him
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:couch... missed too. ;)
 
Re: XAO Analysis

Just a quick post of my musings for the XAO.

The monthly EW chart wave count I have been working with since late last year and since then have maintained a target of 4600-4700 for this first leg (green wave a ) of red wave 4. This is the 0.382 fibonacci retrace from the low of 1987 to the high of 2008 red wave 3. Wave 4's usually find support at approx 0.50 retrace of wave 3's. Another common support level is the "span of previous 4th wave of one less degree" This is pink wave 4 within red wave 3 and also lines up with the 0.382 retrace level.

The cycles analysis chart below that price has fluctuated within the bounds of the 48 month cycle. (ths chart is using data from last month and not current). The long term lows have traditionally found support at the second band below the nominal level. The second band below for this current leg down coincides with 4700 and the loweely with the last band 4200. This gels nicely with the EW fibonacci red wave 4 target for green wave a.

The 3 cycles I have extraced are the 4 year, 2 year, and 1 year cycle. The 1 and 2 year cycles have almost bottomed but the 4 year cycle still has a fair ways to go and should make up the bulk of the component when the low at 4600-4700 happens but will monitor closely in case it looks like falling further.

Good trading to all

Wavepicker
 

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Re: XAO Analysis

caribean said:
If you like looking at charts (history), then take a look back at what happened in the 70's...the story is not that dissimilar,if you do look at what happened in the 70's, then please scratch bellow the obvious to find out who realy made money out of that situation.
Fundamentaly, you've got Iraq in a mess and possibly Iran being attacked, that translates to instability in the hubb of the oil producing region in the world.
Click to expand...

Yes, but also a lot of things are different this time, not the least of which is substantial changes in the dynamics of the markets and the tools used and the regulations that haven't changed much in half a decade.

Do you realy think that a lot of the US pollies (oil lobby)care about their own people or the rest of the world ?
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While they are in the run-up to their elections they certainly care about the perception of their constituents whose main concern is oil prices.

We're running out of oil (or so they say), perfect reason to allow drilling in all
the regions they were not allowed to drill into previously, like Alaska?
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Right or wrong, it's the perception that matters and consequently a lot of resources are being thrown into alternative fuels and energy and opening up additional energy resources. If OPEC is in fact not running out of oil soon they face substantial demand destruction and share of world market occuring over the next couple of years... and I don't think they would like that.

wayneL said:
They may, but if the producers did that, they would be reported in the COT as "commercials" and not as "speculators".

So what you are postulating, is not manipulation by speculators AT ALL, but manipulation by "commercials".

This is an insurmountable hurdle to your hypothesis that "speculators" are to blame for high oil prices. They are not.
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Ok, you may have got me on a technicallity on the double meaning of speculator.

But the point is the overwhelming perception of people enpowered to change the dynamics of the oil industry is that they just don't have enough information to know exactly who is doing what... Hence their urgency to find out whether the market place is being manipulated and in any case close loop holes anyway.

Temjin said:
Whisker, here is something that might interest you. Tell us what you think. I don't pretend to know everything about the future markets.

http://www.investmentrarities.com/06-10-08.html
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Good article Temjin. One of many out there.

Shorts may be turning long, but the rather obvious example I mentioned earlier potentially could cause that to happen, and there may well be other untoward things happening.

That author is being pretty presumptious because he does not know what he cannot know, because the current system apparently doesn not provide enough information about who is doing what, especially in the satelite markets that feed into the US.

Trembling Hand said:
Whiskers two things,

2. I cannot believe that that is what you are using to back up your argument. If you want to act on this crap from CNNNNNNNNN knock yourself out. But just goes to show how lost you are in your argument. Why don't you learn how the futures markets work first. Before long you will be citing investment advice from your local football club newsletter. :D:D
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Ok TH, I'll give you the same scaulding I gave WayneL on another thread for the same thing.

You obviously detest this particular news service, but the message is the same all over the US and the world. It's important to get over your emotional attachments and concentrate on the content and context.

The content of that video is foremost on peoples minds in the US and coming into election season it's also foremost on political minds of all persuasions trying desperately to appease their constituents well before the November elections. Hence the probable biggest overhaul of the oil market in half a century by November on top of the similar currently engaging regulatory shake-up of Wall st, the financial sector and mortgage sector in half a century.

It's perception that matters most and 'fixing' the oil price problem is the problem foremost on most US minds at the moment. So whoever can make a dent in the oil price by November is going to have a handsome advantage.

If nothing changes our resource boom and economy will suffer exponentiolly more than most if nothing changes.

The bottom line for the Aus market ... I think the likely scenerio is substantial change probably in half a century in the regulation of the oil markets on top of the biggest overhaul in the same time of Wall st, the financial and mortgage sectors will result in a stronger USD and lower oil having an exponentially better effect for the Aus economy in terms of continuing strong demand for our resources and lower production costs.

Ok, end of class. TH and WayneL, stay behind and write out 100 times ' I promise to pay attention and not to be silly buggers in class'. :p:

Oh, I nearly forgot... dhukka, :blbl:
 
Re: XAO Analysis

No, unfortunately i think nothing has changed, if anything it's worst....
Don't take this as an attack to your views, Whiskers.
Good luck with your trading.
 
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