Australian (ASX) Stock Market Forum

XAO Technical Analysis

Jump to new
Re: XAO Analysis

Snakey said:
Failed to break lows ...condolences to those short. Anyway.. shorties got enough cash now ....its time for longies to have some.
Click to expand...
Yes, today, so far.

Tomorrow the US may go up 5% and then down 15%....

The rollercoaster continues.
 
Re: XAO Analysis

kennas said:
Yes, today, so far.

Tomorrow the US may go up 5% and then down 15%....

The rollercoaster continues.
Click to expand...

Yes, today important day...though commodity and bank stocks pulling us down hard... lucky i not invested in those has beens.
have to sit and watch it all unfold.
Maybe Australia has not found the bottom yet?
 
Re: XAO Analysis

What a weird close for the financials. Most major banks down 4-5% but most small regional banks up around 5%? What gives there?
 
Re: XAO Analysis

Aussiejeff said:
What a weird close for the financials. Most major banks down 4-5% but most small regional banks up around 5%? What gives there?
Click to expand...

Most major banks? What are you smoking?

NAB -4.85%
ANZ -2.77%
WBC -2.36%
CBA -2.33%,

BEN +3.18%
BOQ +3.70
 
Re: XAO Analysis

The AUS gov't says apparenlty there is 2% growth next year, yet they have decided to substantailly prime the economy at substantial cost to the surplus. If we genuinely are to have 2% growth next year then there is no need to prime the spending like he has.

The gov't has clearly known/suspected for some time that the indications are that the whole world is going into recession, including us, but they keep talking it up. Can't blame them I suppose becasue whilst we would all like to know the real depth of their concern, it would devestate the markets with the psychological swings it causes on peoples minds.
Click to expand...

In all my life, I think I can only ever recall one politician saying " yes, I think we will have a recession"

That was George W Bush a few weeks ago, and look were that got him.

They just wont do it.

Paul Keating, bless his socks, still gets bagged out for his "recession we had to have remarks"

If anyone ever expects a politician or paid media commentator to give a leading indicator, or decent heads up, they are kidding themselves.

In fact, you could almost take the exact opposite of their statements, and use that to make fin decisions and i reckon you would be miles ahead!

like FPs...paid optimists!

First half is a quote from another users post, dont know why it didnt show up as a full quote?
 
Re: XAO Analysis

Trembling Hand said:
Pretty disappointing morning but not all that unexpected with the shorts holding the upper hand this week. They have now pushed back below where we started the week.

Will be looking for the Friday afternoon unwind. In this case a rally into the close??
Click to expand...

Good call! On that note, do you actually often trade the 4-4:30 timeframe on the futs?
 
Re: XAO Analysis

OzWaveGuy said:
Well, it's certainly raining at the moment. The DJI and S&P500 are unwinding aggressively in wave 3 of 3's. As for the XAO, it's working impulsively in 5 waves lower. As previously discussed, there was a chance that the XAO could have been an expanded flat correction on the hourly chart to complete wave II circle, as of the close yesterday an expanded flat was out of the picture.

In any case, as previously discussed, the market action after the completion of wave II circle meant aggressive downside momentum in wave III circle (or to possibly subdivide further - most likely). The financial sector has been holding up in a sideways wave 2 and should now start to break down to push the XAO lower.

Sunder came thru unscathed, and is probably going to be in for awhile? - so some good news for some.

The S&P500 should start to hit a series of wave 4 corrections very shortly...more about the impact to the XAO wave count later...
Click to expand...

On Friday the 10th Oct, the Elliottwave count strongly indicated further downside on the XAO before we would start to see some wave 4 bounces before heading to new lows. The bounces appear to be happening now, but there needs to be further downside before the larger wave iv up commences.

Where could the wave count take us? I've added a rough structure on the 15min chart of how the market could unfold over the coming week(s). I've taken a estimate of where wave iii down will end. I've used a mid-call of 138% the length of wave i (not shown) which is around 3400 on the XAO (as shown), before wave iv up starts.

Of course, the usual caveats apply with forecasting in this forum, but the EW counts seem to be unfolding in roughly the sequence that has been discussed previously.

I've changed the wave labeling slightly to cater for further subdivisions that have unfolded - but basically the overall higher level counts remain intact. More or less subdivisions of the current wave structure will affect the termination points as discussed here. Time will eventually show us these answers.

I haven't included any alternate counts (and there are other scenarios), but the count below is the preferred.

I'm traveling OS at the moment so I'm getting to see plenty of CNN, MSNBC financial news (which I've turned off) and the information is overwhelming, conflicting and sometimes desperate in trying provide the viewer an answer on why the market is reacting the way it is (This will only get worse as the bear market wears on).

The poll CNNMoney ran recently hit the nail on the head, CNNMoney asked what will cause the market to recover, and the answer a high % (80% from memory) of people responded with was "time" - which is very clear to me and is indicated in the longer term EW wave counts (4-6+ year correction of the bull run from the mid 70s)
 

Attachments

  • 17 Oct 08 XAO.jpg
    17 Oct 08 XAO.jpg
    70.2 KB · Views: 8
Re: XAO Analysis

The S&P500 is forming a diamond bottom. The Dow is pausing within a pennant formation (could it reverse in the short term?). Both indices are showing the first signs of contraction, though it is too early to call this confidently. The XAO is looking more gloomy than both the US indices right now...I'm not suggesting we're not going immediately lower. But there is a weight of evidence that gives me reason to pause.
 

Attachments

  • Panorama.jpg
    Panorama.jpg
    58.4 KB · Views: 272
Re: XAO Analysis

OzWaveGuy said:
...which is around 3400 on the XAO (as shown), before wave iv up starts.
Click to expand...

That looked like a pretty complicated way to forecast a simple 50% pullback from the peak. The all time high was 6854 intra-day. Half that is 3427. Done.

I'm still kind of expecting either the 3900 or 3500 support levels to hold, but the speed of the drop suggests it will go lower. I can't wait! All those lovely cheap stocks!
 
Re: XAO Analysis

All those lovely cheap stocks!
Click to expand...

Which will be at a value which is more realistic in these climates.
Don't expect a reversal in trend to be meteoric.
 
Re: XAO Analysis

davo8 said:
I can't wait! All those lovely cheap stocks!
Click to expand...

Not cheap just revalued down, that's their real value now..... understand ?, not cheap. If they were cheap we'd all be buying them and we're not, get it ?

(people just don't seem to get it)
 
Re: XAO Analysis

MrBurns said:
Not cheap just revalued down, that's their real value now..... understand ?, not cheap. If they were cheap we'd all be buying them and we're not, get it ?

(people just don't seem to get it)
Click to expand...

It does amaze me how people fall for the "cheap" thought. It's like a house in a mining boom might be worth $500k, and a seller lists it up for that. Over a period of a year, mine engineers warn that there's not much more 6 to 12 months left of minerals in this mine.

The owner of the house figuring it won't be worth that much any more in 6 to 12 months time, cuts the price to 400k to sell it faster.

Now... Knowing that the population of this town will be 0 in 18 months, when the mine is dry and everyone has moved out, is the house at 400k cheap, or not?

That's what's happening to shares, yet mass media is saying we should all be buying into shares which are now at bargain prices. Yet, I'd say a share making $2 per share at $10 during an economic boom time, is better value than a $5 share making $50c per share during a recession.

The shares are only "cheap" if you (not to anyone in specific, asking a rhetorical question here) expect last year's performance to continue into next year. Do you expect BHP to be selling as much iron ore into China? Do you expect CBA to continue with the low rate of default, and handing out massive mortgages? If not, upon what basis do you call these shares cheap?

These aren't bargains. They're a fire sale for damaged (but still functioning - except maybe Centro... And MFS... And.. Never mind) assets.
 
Re: XAO Analysis

davo8 said:
That looked like a pretty complicated way to forecast a simple 50% pullback from the peak. The all time high was 6854 intra-day. Half that is 3427. Done.

I'm still kind of expecting either the 3900 or 3500 support levels to hold, but the speed of the drop suggests it will go lower. I can't wait! All those lovely cheap stocks!
Click to expand...

Just to clarify - this chart is a snapshot of one 'small' leg down (wave iii) on a massive correction the XAO is currently enduring. The chart does not show or imply 50% drop from the high before the low is in place.

Predicting the future is always complicated as the road can always take less or more winding curves, higher or lower declines even though the destination is relatively the same. Understanding the wave detail in shorter term charts helps understand the bigger picture and thus understanding the psychology of the herd at various degrees of trend. This will help a trader/investor to know when to get in or out, esp if your an option trader that is exposed to time decay.

As for the bigger picture FC, the 100 year chart of the XAO shows detail that doesn't support the XAO hitting the lows that many have discussed here in the forum. This is one area that EW is very good at - looking at all degrees of trend from 100+ yrs down to the minute.

On a 100yr scale the current declines are tiny (at the moment) compared to the previous 100yr market action. Although one should be very aware that at some point in time almost all stocks/indexes return to or break their respective long term trend lines. Has anyone seen where this trend line hit would be in terms of a number of the XAO index - scary indeed.
 
Re: XAO Analysis

As briefly covered here...

https://www.aussiestockforums.com/forums/showpost.php?p=351515&postcount=5213

Here is the 100yr chart from the ASX, which quite frankly makes the current drop on the XAO insignificant when compared to the previous 100 years of progress.

For the purposes of this discussion, I'm focusing more on the market action since 1975.

For those who are unfamiliar with Elliottwave, once 5 waves up (denoted as 3 waves up and 2 corrections) is complete, a 3 wave correction will usually occur and land the market back down in the vicinity of the previous 4th wave (there are a few rules on how all this works).

This can be seen on the minute, 15min, 1hr, 1 day, weekly, monthly and yearly charts. It's simply a fundamental way that progress works. You've all heard the phrase 2 steps fwd, 1 step back - this is actually close to how the sum of all progress is measured - but instead it's roughly considered as 5 steps fwd, 3 steps back.

On the chart below, 5 waves from the mid 70s appears to be complete. A 3 wave correction to return to the 1987 market range is definitely on the cards and is supported in the current wave structures unfolding on indexes around the globe.

As mentioned in the post above, hitting of the 100yr long term trend line is also something that should be considered in the analysis. I haven't paid too much attention to it here as the last 30yrs of market action is plenty to look at. Today's unfolding bust of the credit boom that started from the 70's era certainly supports a correction of some kind whether one cares about EW wave structures or not.

One thing's for certain - the mainstream media and very few financial advisers are barely giving anyone this type of view and I cringe when i hear "the market will always recover - hold for the long term". The questions that need asking are: what do you define as the long term? How long will it take to get back to the levels we had in November 2007? The response I've heard recently from one of the news channels is: "well it's good for the economy to work a few more years after your expected retirement".

The market will recover whether it hits the 100 yr trend line or not, but does that recovery fit into your timeframe for a successful future? For most people I know who have/are retiring - i doubt it.
 

Attachments

  • XAO 100 year bull run.jpg
    XAO 100 year bull run.jpg
    83.7 KB · Views: 69
Re: XAO Analysis

$20shoes said:
The S&P500 is forming a diamond bottom. The Dow is pausing within a pennant formation (could it reverse in the short term?). Both indices are showing the first signs of contraction, though it is too early to call this confidently. The XAO is looking more gloomy than both the US indices right now...I'm not suggesting we're not going immediately lower. But there is a weight of evidence that gives me reason to pause.
Click to expand...

If I may add to your chart $20shoes, there is also a very good morning star formation there (three candles underlined in blue).

I have literally banked money on the evening star at the top of extreme bull runs and am quietly confident that this correction is well overdone too, as indicated by the morning stars... and in EW terms it looks like a minor wave i and ii are in with iii (which typically extends), ready to launch.
 

Attachments

  • $20 shoes.JPG
    $20 shoes.JPG
    72 KB · Views: 168
Re: XAO Analysis

OzWaveGuy said:
As briefly covered here...

Here is the 100yr chart from the ASX, which quite frankly makes the current drop on the XAO insignificant when compared to the previous 100 years of progress.
Click to expand...

You're starting to scare me OzWaveGuy, but thanks for the analysis, however depressing ;-) Would you happen to have a higher resolution image of that 100 year chart??

If so, maybe you could upload it to somewhere like http://transferbigfiles.com/
and paste the link here in this forum.
 
Top