Positive divergence from the Financial sector??

[Trembling Hand]

Have a look at this. With bank and other financials imploding all over Europe and the US guess what is happening in the little Aussie market. The Banks (and other fins) are showing the first signs of positive divergence. They have been going pretty much nowhere since March. Up a bit then back down a bit and really just flat lined it since July. Now as the XJO/XAO makes lows not seen since November 05 the XXJ (fin sector ex property) & XFJ (with property) has fallen to late 05 levels at the start of the year and stuck. Something to keep an eye on

This is the Financials-ex-property (Candles) compared to the XJO(Red line)

 

[awg]

Re: Positive divergence from the Fin sector??

In the SMH, there is a column by a dude, ( I think he calls himself James Bone, Day Trader).

I noticed on Saturday he had sold his previous portfolio and bought only the big 4 banks. He was up around 10% for the week.

I dont know if he actually trades the portfolio he publishes, I dont properly read the column as it seems to be mainly waffle.

In another weekend paper, they also have a stock picking comp.

Leader was "The Dartboard"...2nd place was the Astrologer!

 

[theasxgorilla]

Yeah, a mate brought ANZ to my attention this morning.

Significant support zone at 50% retracement of the all time high, broken downtrend...just waiting for confirmation of a higher low, higher high.

Fundamentally could be something to do with Aust having 4 of the 18 AA or higher rated banks in the world...that being the big four.

 

[tech/a]

Cant see it myself the blue is the XJO

 

[Trembling Hand]

Compare it to when the market STARTED to turn last Oct.

Why would you compare it from April after the main falls

 

[chops_a_must]

It's largely been the banks keeping our market from completely capitulating.

I really don't know what to make of it.

The problem is, even if the bottom for fins is in, the sentiment is so badly rooted, it may be years before you get a decent return.

Waiting to see some of these guys start fiddling with their divvies... and then see what happens.

 

[tech/a]

It depends on how you overlay it and which scale you merge it to.
If it is there then its pretty minor.
But hey maybe its just me.

 

[OzWaveGuy]

It depends on how you overlay it and which scale you merge it to.
If it is there then its pretty minor.
But hey maybe its just me.

Got a wave count?

 

[tech/a]

Weekly XFJ both (XJO) pretty well the same.
Todays data not in the chart.

 

[motorway]

on using relative strength ranking

There is certainly no question that a diligent investor can outperform the market. By outperforming the market we mean that he will achieve a greater average rate of return than the market, while limiting the maximum drawdown (or percentage equity decline) to less than that experienced by the market. But the average investor is generally not up to the diligence or persistence required.

HOWEVER---------->

Another important consideration is the "lookback" period. Above we used the example of our savvy investor ranking assets on the basis of their quarterly growth. Not surprisingly, the choice of a lookback period can have an effect on profitability. Since markets tend to fall more abruptly than they rise, lookback periods that perform best during rising markets are markedly different from those that perform best during falling markets.

Determining whether a market is rising or falling can be problematic, as it can only be done with certainty in retrospect. However, another key factor influencing the choice of a lookback period is volatility, which can be determined concurrently. Thus an optimal lookback period can be automatically determined based on volatility.

http://www.mathinvestdecisions.com/index.htm

So use moved base ranking -------------->P&F relative strength will decide the optimal look back period because the movements themselves will determine the reference points

volatility of the XXJ = box size of 2%

1 or 3 box reversal

here is the 3 box
for clarity

XXJ Vs XAO


first time since 2002/2003
banks have been a buy ?
on RS considerations ALONE

I hold NO banks

motorway

 

[lusk]

I don't think you could smash any of the big four down with a sledgehammer at this stage they are holding up extremely well, fits with the divergence suggested.

 

[white_crane]

I noticed this with NAB about a week ago, because for some reason, I held onto it . It looks like it's trying to form a breakout.