Australian (ASX) Stock Market Forum

How Far Will The Market Fall?

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aus_trader said:
Something is suspicious about the attached graph you posted. Does the indicators re-paint ? Surely they cannot predict the future ? !

View attachment 101521
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To answer your question I have run the charts on the day after the peak in the market. Do they repaint? In this instance: NO. Do they ever repaint: YES but not by much, and I have done a statistical analysis and they repaint approx 14% of the time. As you said, no one can predict the future. Thes indicators are cycles based, and I have used the lowest lag filter I can find for ther Trend Indicator the Hull. Having said that, the Hull is not actually a zero lag filter and I used an 8 period offset to centre it. That's still 8 periods of lag which is much better than 43 periods when using a simple MA for an 86 period average. From the remaining 8 data points I have created an estimate by way of an algorithm.
The signal FT I am using a weighted MA but it's offset by only 3 bars, so it's even better. Both these are not the holy grail, and they don't always time the market as well, but in this intance the maket had reached +3 standard deviation from the nominal pink line which is statistically an extreme point on the daily chart and coupled with the signals it was obviously as sell, especially when the same conditions where apparent on the weekly chart. The trend indicator suggests the trend, the signal FT is for entries and exits within that trend. So I just follow the buys and sells that are generated...
 

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gartley said:
To answer your question I have run the charts on the day after the peak in the market. Do they repaint? In this instance: NO. Do they ever repaint: YES but not by much, and I have done a statistical analysis and they repaint approx 14% of the time. As you said, no one can predict the future. Thes indicators are cycles based, and I have used the lowest lag filter I can find for ther Trend Indicator the Hull. Having said that, the Hull is not actually a zero lag filter and I used an 8 period offset to centre it. That's still 8 periods of lag which is much better than 43 periods when using a simple MA for an 86 period average. From the remaining 8 data points I have created an estimate by way of an algorithm.
The signal FT I am using a weighted MA but it's offset by only 3 bars, so it's even better. Both these are not the holy grail, and they don't always time the market as well, but in this intance the maket had reached +3 standard deviation from the nominal pink line which is statistically an extreme point on the daily chart and coupled with the signals it was obviously as sell, especially when the same conditions where apparent on the weekly chart. The trend indicator suggests the trend, the signal FT is for entries and exits within that trend. So I just follow the buys and sells that are generated...
Click to expand...

I think it's the offsets you use with the indicators that seems to give the illusion that the indicator is ahead of the price. Nevertheless I am impressed by how you have constructed those indicators :watching:
 
aus_trader said:
I think it's the offsets you use with the indicators that seems to give the illusion that the indicator is ahead of the price. Nevertheless I am impressed by how you have constructed those indicators :watching:
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It's not always ahead of price, it can lag by in sync or be ahead. The weakness in the approach is in slow grinding markets. It's also very important to run the data 15 to 20 mins before the daily bar closes. You will notice on the frst chart I posted the Trend indicator has not given a trend change signal yet, but the signal FT is on a buy. This suggests the downtrend still persists, and that is not to say it will not change next week, but for now I am under the assumption the current rally is a counter trend until proven otherwise. The MM strategy for this is take 50% profit when the price moves to what the ATR value was when I took the trade, and then move the SL to break even for the remainder.
 
Hi gartley I am new to the game and gathering an understanding. Assuming your watching the American markets, do you believe we will hit 5400+ on the all ords come Monday mirroring off the day they have today?
 
VIX is down sharply (18.5%) in US session so it looks like this rally is for now but let's see how the rest of the session pans out. I hope we get some follow through in the rally that started yesterday in the ASX. As said in earlier posts it looks like we completed an impulse wave down, but not 100 % sure on that because my biggest weakness with EW was 3rd and 5th waves terminus. In actual fact I hope this rally is only a wave 4 and we get one last push lower because it will set up really nicely on some gold stocks which I have been eyeing.
 
I think Garpal's scenario in post #17 above is very possible.
I think sub-5,000, it's starting to be very attractive to the big investment houses and fundies.
LT chart with my edits - between 5,000 and 4,000 it's a much stickier TA zone, as GG hints:
XAO_21Mar2020_mark_30.jpg
 
Some of these lines on these charts go back 33 years. If we slice through them next week we are well and truly in unchartered territory.
q6woy
 

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Matching US GDP losses to Stock losses:

Year: GDP Loss = Stock Loss
1929: 26% = 86%
1937: 18% = 54%
1945: 12% = 26%
2008: 5% = 56%
1973: 3% = 48%
1958: 3% = 20%
1980: 2% = 17%
1953: 2% = 14%
1981: 1% = 27%
1949: 1% = 20%
1990: 1% = 20%
1960: 1% = 13%
2001: 0% = 49% (But valuation at highest Shiller PE ever)
1969: 0% = 36% (But valuation at highest Shiller PE since 1929 at the time)

So 1 main factor with 1 secondary to explain outliers.
 
Last edited:
MrChow said:
Matching US GDP losses to Stock losses:

Year: GDP Loss = Stock Loss
1929: 26% = 86%
1937: 18% = 54%
1945: 12% = 26%
2008: 5% = 56%
1973: 3% = 48%
1958: 3% = 20%
1980: 2% = 17%
1953: 2% = 14%
1981: 1% = 27%
1949: 1% = 20%
1990: 1% = 20%
1960: 1% = 13%
2001: 0% = 49% (But valuation at highest Shiller PE ever)
1969: 0% = 36% (But valuation at highest Shiller PE since 1929 at the time)

So 1 main factor with 1 secondary to explain outliers.
Click to expand...
What is the forecast of gdp fall for this one??
What is a good PE/ CAPE to buy at, given rates are also basically 0 ?
 
gartley said:
Some of these lines on these charts go back 33 years. If we slice through them next week we are well and truly in unchartered territory.
Click to expand...
Looking at the Australian market I note the low on an intraday basis in early 2016 was just under the low seen on Thursday this week.

XJO - 4706.7 in 2016 versus 4741 on Thursday.
XAO - 4762.1 in 2016 versus 4768.7 on Thursday.

Anything below that previously requires going back to 2013 with a low on the XAO of 4632.30 in June of that year. Next one back is 4334.3 in 2012.

I'm not convinced from a fundamental perspective that the actual bottom would be at this point, the real economy in 2020 is going to be drastically worse than anything experienced in 2016 or even 2008-09 during the GFC, but possibly a rally from there?

All figures are intraday lows for the XJO. :2twocents
 
Smurf1976 said:
At the risk of causing some alarm, if the 24% GDP loss forecast is correct then looking at 1929 and 1937 suggests an S&P500 bottom of about 745. That's 745, three digits there's nothing in front of it.

Incidentally that isn't far from the lows seen post-GFC. :2twocents
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As far as I can see traditional market based GDP will collapse to Depression levels have have States of Emergency with all non essential business closed down. The difference between then and now is Governments intention to keep busineses and people surviving the crisis and capable of restarting without a complete crash.

I think this is the best option but I can't quite grasp how financial markets an in particular debt market are going to cope with this. I can see thousands of debts and rollovers unable to be paid. Perhaps a suspension of these payments for the time of the crisis ?
 
basilio said:
I think this is the best option but I can't quite grasp how financial markets an in particular debt market are going to cope with this. I can see thousands of debts and rollovers unable to be paid. Perhaps a suspension of these payments for the time of the crisis ?
Click to expand...

They can't cope, taxpayers will be picking up the bill. I really hope governments take equity as part of their bailout packages. But I doubt it.
 
J1eyed said:
They can't cope, taxpayers will be picking up the bill. I really hope governments take equity as part of their bailout packages. But I doubt it.
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J1eyed said:
They can't cope, taxpayers will be picking up the bill. I really hope governments take equity as part of their bailout packages. But I doubt it.
Click to expand...
Can you explain why this will happen?

1) Aus gov stimulus is now at 10% of gdp
2) why cant stimulus be 20,30,40% gdp
3) The aim is not to bail out but to keep the economy going around
4) why will policy makers let this happen?
 
OmegaTrader said:
Can you explain why this will happen?

1) Aus gov stimulus is now at 10% of gdp
2) why cant stimulus be 20,30,40% gdp
3) The aim is not to bail out but to keep the economy going around
4) why will policy makers let this happen?
Click to expand...
Maybe it is designed to keep those businesses that are viable going, while those that are not viable, do not reappear after this is over. :(
 

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