Elliott Wave and the XAO

[Boggo]

with today's sell off it seems like wave 2 is over and that we are in the early stages of wave 3.

So we could then be looking at sub 4000 for W.3 ??

 

[tywo]

hi boggo,

i believe so... should the count change i will be sure to comment... but for now the 3800 area looks likely.

 

[OzWaveGuy]

In the last post here from the 24th, the assumption was for a decline to occur in 5 waves - which we saw, but the larger degree pattern ended up being a zig-zag correction (5-3-5). Once the XAO broke out from the downward channel and also retraced more than 38.2% of the small 'c' wave down, it signaled that wave (2) was not compete.

The development of the (c) wave of wave (2) appears to contain a number of triangles within it - signaling corrective behavior. Wave (c) has almost reached 61.8% of wave (a) as well as a slight breakout of the upwards channel. In addition, the MACD price oscillator on the 30min chart is divergent with the climb to new short term highs -an area of interest is certainly at hand.

It's possible that the (c) wave could end with a final triangle (sometime occurs as the last leg in more complex double and triple corrections) which is now almost complete, or with a slight push higher.

Once this (c) wave finishes, it still may complete only one leg in a much larger correction - hence, having 5 waves down (of 2 degrees of scale) will be important in determining the completeness of wave (2).

 

[OzWaveGuy]

In the previous post a possible end of wave (c) was discussed at around the 61.8% of wave (a) level. This didn't occur in addition to a lack of significant breakout of the wave (c) upwards channel.

Wave equality between (a) and (c) is now at hand, as well as a touch of the upper channel for the larger degree pattern.

With the above wave equality, the next point of significant interest is now at hand as well as:

• Today it appears 5 small waves down has unfolded (visible on a 5min chart) with a corresponding upwards correction.
• A break of the wave (c) channel has occurred
• The MACD Price Oscillator is divergent on two levels - for the overall correction and the last 3 days

If this small 5 waves down evolves into a larger degree 5 wave formation, then this will help validate an end to wave '2'. Also, as discussed in previous posts, wave 3's should draw out a strong level of aggressiveness (in this case, to the downside) - hence a strong break down passing the recent wave '1' low will need to occur under this count.

 

[brty]

I was just following this thread through a bit of history to see how the 'count' had changed over time. I always find it amusing.

I came across this post by Motorway....

Any LONG TERM analysis on Indexes is Suspect because of

"Permanence breakdown"

The stocks themselves change character
But the make up of indexes completely change character ALL TOGETHER

whether Empires come or go implode or Explode

Stock indexes in the long run will only GO UP

That is how they are designed
and Some like the DOW Actively managed..

Indexes end up with the stocks that will go up / are going up.

Even the ASX switches from being Financial heavy to resource heavy
The index is never a constant ..

If the only thing to make money was to be undertakers
The Index would become undertaker heavy

I know I have disagreed with you before, but this is a perfect description of indexes , well done, sorry for not replying before.

brty

 

[Sean K]

I was just following this thread through a bit of history to see how the 'count' had changed over time. I always find it amusing.

I came across this post by Motorway....



I know I have disagreed with you before, but this is a perfect description of indexes , well done, sorry for not replying before.

brty

I hadn't seen that comment by motorway before but he has something in regard to the longer term movement you'd think. Just what is 'long term' in this regard though? A 20 year outlook?

 

[brty]

Kennas, the longer term view can be anything as it is the constant changes that has the effect. During every 'hiccup' in the markets the indexes change the most. For example the changes in the bottom 100 of the ASX200 in the last year have been breath-taking.

Even looking at the ASX20 stocks, the changes over 20 years have had a remarkable effect. These were not in the index, AMP, CBA, CSL, FGL, MQG, ORG, SUN, TLS, WOW, WPL in the early '90's. A couple of others I have my doubts about also.

If EW, does not really work over the longer term because of the constant changes, surely the shorter term is greatly affected, to the point of skewing the count to make it less reliable than a constant basket of stocks.

The use of indexes as a measure of how well a portfolio of stocks should be performing is one of the great lies associated with investments, perpetuated by financial advisors and media alike, to the detriment of a gullible public.

brty

 

[Boggo]

Yesterday's chart, the next 30 points may be significant if today's low doesn't hold up tomorrow.
The "Typ W5" area is 30 points either side of the 4370.

(click to expand)

 

[Boggo]

Yesterday's chart, the next 30 points may be significant if today's low doesn't hold up tomorrow.

That didn't hold so we are now looking at a different picture of what is occurring since last nights butterfly effect.
Looking at this complete down leg as an ABC, typical target for C hit today, next area is 3800 if the area around today's low doesn't hold up next week.

C = A at 4156.

(click to expand)

 

[Boggo]

Today's low was a significant area as at that point C = A (within 5 points).
The open this morning did leave a gap which the market may take a few days to fill, that should be wave 4, possibly another (hopefully short) down leg should then complete the 5 waves of C.

Hopefully that should see this corrective sequence out if not we are looking at a way to go to the next support/potential turning point.

(click to expand)

 

[OzWaveGuy]

Today's low was a significant area as at that point C = A (within 5 points).
The open this morning did leave a gap which the market may take a few days to fill, that should be wave 4, possibly another (hopefully short) down leg should then complete the 5 waves of C.

Hopefully that should see this corrective sequence out if not we are looking at a way to go to the next support/potential turning point.

(click to expand)

Boggo, Do you think the push lower is still corrective?

 

[tech/a]

Boggo, Do you think the push lower is still corrective?

What do you think?

 

[Boggo]

Boggo, Do you think the push lower is still corrective?

Just a quick look at the correction in isolation is still possibly an ABC with the Wave.4 and then the Wave.5 of C possibly dragging on well into next month.

Potential final low will likely be below 3800 but I suspect there may be a lot of posturing between now and then.

As an ABC this overall pattern is not that convincing either, the B just made it up to the min ret of 38.2% of A.

A scary view could be that we may be looking at W.3 of a 5 wave sequence playing out at the moment and if that is the case we could be looking at 3200 to 3000 for starters.

What do you and tech/a see ?

(click to expand)

 

[Garpal Gumnut]

It looks impulsive to me, on Joh Bjelke criteria,

"If it looks like a ......."

I'd be looking at a 3 of a 5

gg

 

[tech/a]

TECHNICAL UPDATE

The very very strong support from the lows in face of negative strength (at the time) from overseas markets has me seeing a low in place for the immediate future.
However I dont think one needs to rush out and buy everything before it races back up towards 4500.
In my view there will be quite some consolidation between 3900 and 4500 while the market sorts itself out.

Boggo's levels match the (4)s on my chart.

 

[OzWaveGuy]

Just a quick look at the correction in isolation is still possibly an ABC with the Wave.4 and then the Wave.5 of C possibly dragging on well into next month.

Potential final low will likely be below 3800 but I suspect there may be a lot of posturing between now and then.

As an ABC this overall pattern is not that convincing either, the B just made it up to the min ret of 38.2% of A.

A scary view could be that we may be looking at W.3 of a 5 wave sequence playing out at the moment and if that is the case we could be looking at 3200 to 3000 for starters.

What do you and tech/a see ?

(click to expand)

Thx Boggo, yes the 'C' leg may certainly play out in a 5 down, the next few trading days will clarify this point since the XAO is now at the touching the top channel line - so this will be wave '4'.

However, I'm not certain it's a wave 'C' down, but instead, may be a trend of larger things to come.

 

[Boggo]

However, I'm not certain it's a wave 'C' down, but instead, may be a trend of larger things to come.

Tend to agree, tech/a's chart above is the likely scenario that I am leaning towards at the moment.
Will be interesting to see what happens when the gap (circled) closes and 4500 is definitely the brick wall.

(tech/a, your chart doesn't seem to have that gap ? )

(click to expand)

 

[tech/a]

(tech/a, your chart doesn't seem to have that gap ? )

Hmmm.
Dentistry perhaps.

I use data from Just data for Metastock/Aget
and Esignal for Tradguider.

All dont have your gap.
Maybe Im on a higher medical plan--no gaps!

 

[Boggo]

Hmmm.
Dentistry perhaps.

Maybe Im on a higher medical plan--no gaps!

That could be it

 

[captain black]

(tech/a, your chart doesn't seem to have that gap ? )

Justdata use the previous days close as the opening price for indices.