XAO Technical Analysis

[stoxclimber]

Re: XAO Analysis

Not so much of a criticism here, more of a suggestion- the last couple of weeks have been a dream for anyone trading the index off support and resistance.

not for anyone trading following this threads predictions though!

 

[lamborghini]

Re: XAO Analysis

MAY correction is of course just an est. Crashes have never happened directly from a high or all time high. So I choose May as that will give enough time for the buyers to drive it up again with a false sense of security.

look at 1929 or 1987 or even 2000 there was steady weakness (sometimes for months before) like a warning, then bang one day the sellers consistantly tip over the buyers and down she comes.

In a 20year period the Top 20 worst months were:
Feb - 4 times
Jan,Mar,May,Sep,Oct,Nov - 2 times
Apr,Jun,Jul,Aug - 1 time
December - 0 times

Top 20 best months(surprisingly)
Oct,March,July - appeared most often in top 20

Stats can be misleading and I don't think the market cares what month it is.
Oct has historically been a good uptrending month. - But it has had 2 of the biggest falls in history too. Over time Oct would be down 1%

End of history lesson.

PS: My first ever share trade was in sept 1987 shortly after starting my first job at a stock broker. I'll never forget the frenzy of activity. The brokerage made heaps of money but knew the good times were over for a while.

There are some similar feelings around the market now.

A tip I was given then by a wise old broker: "The time to get out is when stocks make front page news and the average person is talking about stocks around the water cooler or coffee machine!"

 

[Uncle Festivus]

Re: XAO Analysis

I agree lambhorgini, although I don't take any notice of what month it is, the market will always do it's thing irrespective. There are only 2 things that will crack the bull run in the Australian market, that is, reduction of super money or a US recession. With no compelling reasons to sell, the XAO will just keep rising due solely to super inflows and private equity takeovers.

I'm just wondering what effect the introduction of new super rules after June will have on super inflows. Up till then there will be an almost tidal wave of people salary sacrificing into super to be able to withdraw it tax free after 1 July. Now if a lot of baby boomers decide to spend the kids inheritance this could be the first real drawdown in funds avaiable for equity purchases which up till now has ensured the bull market just keeps on keeping on.

Of course, if there is a US recession then there will be reduced demand for raw materials for China, and a downturn in the commodities bull, which could feed into employment directly, further reducing super inflows.

 

[lamborghini]

Re: XAO Analysis

I agree with you too Uncle.
Can you explain if there is a US recession, how Demand of resources from China would be affected though?

The superauation thing is the real deal! Baby boomers will bring the market down. Simple reason, super (and 401k in US) are mostly invested in the stock market. So if someone wants to access their well deserved super, the fund manager must sell to pay them out!

Even if 10% of super funds are drawn down, it would equate to 10% extra sellers in the market, pushing the prices lower.

 

[CanOz]

Re: XAO Analysis

The superauation thing is the real deal! Baby boomers will bring the market down. Simple reason, super (and 401k in US) are mostly invested in the stock market. So if someone wants to access their well deserved super, the fund manager must sell to pay them out!

Even if 10% of super funds are drawn down, it would equate to 10% extra sellers in the market, pushing the prices lower.

Sounds like Kiyosaki's "prophecy". He refers to it as a crash of huge proportions...maybe it will be just a long bear market.... Until the next generation does something "equitable" with thier savings....errr, sorry i mean credit.

Cheers,

 

[tech/a]

Re: XAO Analysis

Hmm lets think about this logically.

Super in this country is compulsary.
There is a higher ratio of people contributing to super than liquidating Super.
Those who retire generally wont liquidate all their Super preferring some form of Annuity.

Think this Self fullfilling Super thingy is another Doomsday falacy.(Thats a personal view).

 

[Uncle Festivus]

Re: XAO Analysis

I agree with you too Uncle.
Can you explain if there is a US recession, how Demand of resources from China would be affected though?

This topic has probably been debated thoroughly on other threads, but, as I see it, the effects of a slowdown in the US will incur a direct reduction in exports from China due to lower demand. And, I'm not conviced by the BRIC argument being able to 'carry' the world economy in a US downturn, as their respective economies are not robust enough to function autonomously.

Taking China as the pinup example, there are too many 'extremes' eg extremes of growth, extremes of corruption driving this growth, extremes of overinvestment, extremes of environmental degredation, and eventually as seen recently, an extreme of market correction(s?)

The only question for me is how will our market handle bad news external to it, while still flushed with cash looking for a home?. There is another possible negative to the stockmarket recently with some funds expanding into real estate. The stockmarket may have a competitor for super funds at last?.

 

[CanOz]

Re: XAO Analysis

Hmm lets think about this logically.

Super in this country is compulsary.
There is a higher ratio of people contributing to super than liquidating Super.
Those who retire generally wont liquidate all their Super preferring some form of Annuity.

Think this Self fullfilling Super thingy is another Doomsday falacy.(Thats a personal view).

Kiyosaki only refers to the 401k plans in the US and overweight bias towards equities. His view is very "doomish", agree.


Cheers,

 

[Uncle Festivus]

Re: XAO Analysis

Hmm lets think about this logically.

Super in this country is compulsary.
There is a higher ratio of people contributing to super than liquidating Super.
Those who retire generally wont liquidate all their Super preferring some form of Annuity.

Think this Self fullfilling Super thingy is another Doomsday falacy.(Thats a personal view).

tech/a, if we are talking about oz, then I think it's pretty solid as far as continued inflows to super, but you would have to think there would be some percentage who would take lump sum withdrawals, due to the tax free status, is that correct?. As for the US, their super is basket case status, too little too late.

 

[theasxgorilla]

Re: XAO Analysis

I'm just wondering what effect the introduction of new super rules after June will have on super inflows. Up till then there will be an almost tidal wave of people salary sacrificing into super to be able to withdraw it tax free after 1 July. Now if a lot of baby boomers decide to spend the kids inheritance this could be the first real drawdown in funds avaiable for equity purchases which up till now has ensured the bull market just keeps on keeping on.

I think that the baby boomers spending the kids inheritance MAY occur in some instances. But that just means that the kids have to be clever and understand where that money will be spent and preposition their investments eg. health care sector, beachside property, retiree capital management to name a few. Wealth will not be destroyed, it will change hands.

In anycase, I don't think that the retirees are going to really start retiring en masse and drawing down benefits for up to another five years.

 

[Uncle Festivus]

Re: XAO Analysis

In anycase, I don't think that the retirees are going to really start retiring en masse and drawing down benefits for up to another five years.

Yes, most probably. I thought the baby boomer gen were starting to retire now/2008?. On balance though, all things being equal, up till July lot's of super money going in, after 1 July may revert to normal inflows so maybe have affect on market/XAO. Just one of those things to look out for, only 3 months away?. A bullish bias till then, flat/down after??

Talking about super, one of the rules of investing is to diversify. If everyone in Australia relies on super for their retirement, and nearly all of that is in equities, what happens if the market crashes, ie a fair dinkum one?. Talk about having all your eggs in the one basket! I notice a couple of funds diversifying into real estate trusts now; have they woken up already or just the smart money at work?

 

[theasxgorilla]

Re: XAO Analysis

Yes, most probably. I thought the baby boomer gen were starting to retire now/2008?. On balance though, all things being equal, up till July lot's of super money going in, after 1 July may revert to normal inflows so maybe have affect on market/XAO. Just one of those things to look out for, only 3 months away?. A bullish bias till then, flat/down after??

What you describe is a key reason why I don't believe that this pullback is the beginning of a bear market. It may be sharper and possibly deeper than other pullbacks since March '03, but the underlying reality of increasing super contributions and the 'once-off' will resume bullish price action soon enough. As for baby boomers retiring now. A quick trip to the financial planner is all that many need to remind them that they can't afford to retire yet. Boomers will work until 65 (at least), even if it's part-time. That puts us at 2012(ish) before the oldest actually retire.

Talking about super, one of the rules of investing is to diversify. If everyone in Australia relies on super for their retirement, and nearly all of that is in equities, what happens if the market crashes, ie a fair dinkum one?. Talk about having all your eggs in the one basket! I notice a couple of funds diversifying into real estate trusts now; have they woken up already or just the smart money at work?

This is one of the key reasons why the US does not have compulsory super and instead has voluntary 401ks. The conservatives thought exactly as you describe. Thank God for Paul Keating.

 

[CanOz]

Re: XAO Analysis

Its interesting to note how many buyers came in the week following the sell off. In other minor corrections, its taken longer to see the buying return.

To me this looks postive, at least in the short term....any other comments on this?

This is a weekly of the xao.

Cheers,

 

[Wysiwyg]

Re: XAO Analysis

Its interesting to note how many buyers came in the week following the sell off. In other minor corrections, its taken longer to see the buying return.

To me this looks postive, at least in the short term....any other comments on this?

This is a weekly of the xao.

Cheers,

The circled corrections show an initial drop and then a further decline of various degrees.The further decline is yet to appear this time.Although past performance is no indication of future perfomance.

 

[CanOz]

Re: XAO Analysis

The circled corrections show an initial drop and then a further decline of various degrees.The further decline is yet to appear this time.Although past performance is no indication of future perfomance.

I realise that its early, but it just looked to me that buyers returned in force, as the close was way way off the low for last week. As opposed to the second weeks of the other corrective moves.

I can't show the volume, but i can see it on Power Etrade and the volumes are close, but less on the week after the big fall, in all of the instances including the most recent.

Maybe its still distribution. Just seems different this time.

Cheers,

 

[Kauri]

Re: XAO Analysis

If she makes it through here it looks like the next resistance may be the 61.8% fib??

 

[Uncle Festivus]

Re: XAO Analysis

This is all well & good, but is 1% per day making anybody else nervous? The lead from wall st was absent (15 points?) Japan looks to be down, so what's driving this? Is it too high too fast again, and getting ahead of itself?

It will flush out the shorts at least? Interesting day tomorrow

 

[Porper]

Re: XAO Analysis

This is all well & good, but is 1% per day making anybody else nervous? The lead from wall st was absent (15 points?) Japan looks to be down, so what's driving this? Is it too high too fast again, and getting ahead of itself?

It will flush out the shorts at least? Interesting day tomorrow

I wonder how much of the bounce we are having is due to closing out short positions.

I agree with Kauri, we are through the 50% fib retaracement and heading towards 61.8%, and I would expect the next leg down any time now.

It should be similar in length to to wave A, which would take us under 5500.

I just can't see that we can bounce straight into new highs after the very sharp drop.I think the crowd will get more nervous as we approach old highs and away we go.....................down again.

 

[Uncle Festivus]

Re: XAO Analysis

300 points in 5 days! Do we take a breather or charge ahead?.

 

[theasxgorilla]

Re: XAO Analysis

I'm not sure about tomorrow, but 5650 seems like a rather critical support level. Breach that again anytime soon and we've got a deeper correction on our hands. Although another day like today and you'd have to start to become ever so bullish, wouldn't you?