XAO Technical Analysis

Nyden · 19 January 2008

Re: XAO Analysis

M34N said:
Think about this:

US market Thursday down 3%, our market Friday down 3% then rallies back to only 1% down on 100+ point US futures (+1% gain), US Friday finishes -50 points (instead of being positive) with banks leading the way down again on average -2%, and futures here pointing to falls of at least 1% (-75 points).

What positive is there for people to invest Monday? If anything, it is almost guaranteed we will have a worse day Monday than Friday! The only bright spots on our market could be oil stocks and other basic resources. Should see the sucker rally on Friday that we had with the banks quickly evaporate, will be interesting to see the falls the financials have.

But you know what, the more I type this out, the more I realise that in this market environment, anything can happen. But it looks like an 11th down day in a row is certain, and surely there has to be an up day SOMEWHERE on the horizon? A technical bounce was tipped by a few here this week and that never eventuated. Looking at the SPI chart over the last month is quiet scary indeed, but IMO, things are starting to look ridiculously cheap again, irrespective of a US recession.

So, we need to balance out from losses we should have had? That's assuming too much logic. If we're going to say that we follow the Dow to exact lengths, why didn't we rally last week on days when they did? The US has not had 11 days of losses.

We usually seem to follow the FTSE, yet they're about 100 pts ahead of us, & I submit that we are relatively oversold as a whole.

Maybe we've hit something close to the bottom? I just cannot see another 5 days of losses. Next week we start kicking off some earnings reports, & I've got a feeling people may be buying in ahead of those.

I think there's a chance (slim) for a green day Monday, but of course I'm sure many will be able to claim future foresight which begs to differ, bears only seem to embrace decoupling when it suits them, go figure! :

Everyone keeps saying this time is different, credit is ruined, bla-bla..., & comparing it to the major crashes we've had. Yes, this time is different! The markets will never recover! Sell! Sell your house, buy a bunch of canned food, gold, & a bunker in the woods. The world is not coming to an end. You see these absolutely ridiculous articles popping up everywhere now on how the world is essentially over, & it's utter garbage.

The US economy will flare up again, with or without inflation; it will. Do you think the people there are just going to give up on home-ownership? Car ownership? A life devoid of any luxury / stability? When I go outside, & leave these forums / the stock market, guess what? The world looks the same as it did 2 years ago. I still see people in the shop, I still see cars on the road, I still see houses being bought / sold, & I still see what I constitute as life going on.

The point is, people have become accustomed to a way of life. One way or another, the US is going to be forced to continue giving it to them.

Side note; I'm sure many things are fundamentally lacking in my argument, but this is me just fighting back for my own sentiment. I'm just a little tired of perma-bears & their end-of-world mentality, is all.

M34N · 19 January 2008

Re: XAO Analysis

Nyden said:
So, we need to balance out from losses we should have had? That's assuming too much logic. If we're going to say that we follow the Dow to exact lengths, why didn't we rally last week on days when they did? The US has not had 11 days of losses.

We usually seem to follow the FTSE, yet they're about 100 pts ahead of us, & I submit that we are relatively oversold as a whole.

Maybe we've hit something close to the bottom? I just cannot see another 5 days of losses. Next week we start kicking off some earnings reports, & I've got a feeling people may be buying in ahead of those.

I think there's a chance (slim) for a green day Monday, but of course I'm sure many will be able to claim future foresight which begs to differ, bears only seem to embrace decoupling when it suits them, go figure! :

...

Side note; I'm sure many things are fundamentally lacking in my argument, but this is me just fighting back for my own sentiment. I'm just a little tired of perma-bears & their end-of-world mentality, is all.

Nyden,

First things, I'm not a bear, far from it : But lets be realistic, the US economy is in shambles, even the Fed chairman Bernanke has admitted that FOMC intervention is not enough! What other alarm bells need to be rung on how serious the US downturn is?

As for us following the US trends, well, obviously it's not a perfect synchronization, but it's a fairly good indicator. What I was pointing out was that the Dow was down 3% on Thursday, and we followed suit by being down less than 1% the next day in anticipation of a US rebound their Friday, which never eventuated. So that leaves us some 2.5% ahead/better off than the Dow. And thus, my point being, what rosy picture can be painted after those statistics? :

Either way, I agree, next week surely can't continue this ridiculous downtrend, maybe a small rally up later in the week, but again, too much uncertainty surrounds the markets at the moment and I want to see clear signs that it's safe to invest again rather than just gamble on it.

Nyden · 19 January 2008

Re: XAO Analysis

M34N said:
Nyden,

First things, I'm not a bear, far from it : But lets be realistic, the US economy is in shambles, even the Fed chairman Bernanke has admitted that FOMC intervention is not enough! What other alarm bells need to be rung on how serious the US downturn is?

As for us following the US trends, well, obviously it's not a perfect synchronization, but it's a fairly good indicator. What I was pointing out was that the Dow was down 3% on Thursday, and we followed suit by being down less than 1% the next day in anticipation of a US rebound their Friday, which never eventuated. So that leaves us some 2.5% ahead/better off than the Dow. And thus, my point being, what rosy picture can be painted after those statistics? :

Either way, I agree, next week surely can't continue this ridiculous downtrend, maybe a small rally up later in the week, but again, too much uncertainty surrounds the markets at the moment and I want to see clear signs that it's safe to invest again rather than just gamble on it.

& I do continue to appreciate how bad their economy is. But their economy is not going to suddenly reverse & cease buying anything. I wouldn't touch banks, & I wouldn't touch retailers - American, & Australian.

Meanwhile we have Asia which is still growing, we have our own country which is still growing, and I believe that our resources sector bull is alive & well, & will definitely assist our market in remaining afloat.

Well, my only stock market exposure is resources at the moment, & both of them (only 2 stocks, diversifying doesn't seem to do much lately, just gives you greater losses across even more sectors! ) announce their Q2 report on Wednesday. I cannot envision a drop either, if excellent profits are made.

Edit;
Furthermore, the FTSE only finished .01% down (in otherwords, completely flat), whilst the Hang Seng, & Nikkei finished in the green. I honestly believe we might follow them on Monday.

Gundini · 19 January 2008

Re: XAO Analysis

M34N said:
Think about this:

What positive is there for people to invest Monday? If anything, it is almost guaranteed we will have a worse day Monday than Friday! But you know what, the more I type this out, the more I realise that in this market environment, anything can happen. But it looks like an 11th down day in a row is certain.

May be the people are just sick of the run of red days and may bottom fish as there is likely to be little direction from OS markets.

Maybe the Insto's will manufacture a clasic pump and dump to allow an unweighting prior to the US resuming on Tuesday.

Either way, there will more than likely be opportunities to trade in the green on Monday and Tuesday IMO...

This is not to say the market won't finish in the red, just that you may see a little more green over those couple of days, due to:

"Dear Client,

We would like to advise that due to the Martin Luther King Holiday in the United States on Monday 21 January trading hours will be limited on some instruments".

M34N · 19 January 2008

Re: XAO Analysis

Nyden said:
& I do continue to appreciate how bad their economy is. But their economy is not going to suddenly reverse & cease buying anything. I wouldn't touch banks, & I wouldn't touch retailers - American, & Australian.

Meanwhile we have Asia which is still growing, we have our own country which is still growing, and I believe that our resources sector bull is alive & well, & will definitely assist our market in remaining afloat.

Well, my only stock market exposure is resources at the moment, & both of them (only 2 stocks, diversifying doesn't seem to do much lately, just gives you greater losses across even more sectors! ) announce their Q2 report on Wednesday. I cannot envision a drop either, if excellent profits are made.

Edit;
Furthermore, the FTSE only finished .01% down (in otherwords, completely flat), whilst the Hang Seng, & Nikkei finished in the green. I honestly believe we might follow them on Monday.

FTSE is more weighted towards resources, which with BHP, Rio, Xstrata, Anglo American etc all closed 2%+ higher minimum (some 6-8%!), so to see the heavyweights make massive gains like that and the general market close .01% down suggests there must of been much larger falls in other sectors of the market *cough* financials *cough*. Look at the DAX, down 1.3%. Our market is 40% weighted in financials, so there's going to be some big bleeding there. But on the flip side, resources doing well will help significantly to limit our losses, but to be green? That's a bold bet to be making in this market.

Japan and Hong Kong finishing in the green was mostly to do with the Bush $150B US package, which did what to invigorate the US market? Look at the Nikkei futures, down 1%. Same with Hang Seng. The fact still remains, the US is still the largest economy in the world, and any slow down there will affect China, and that is what will cause us to slow down, but not go into a recession.

Anyway, like you, I am only invested in resources, and again, like yourself, only in two stocks. Financials used to be a part of my portfolio, but not since October, and looking at the downtrend they've had, I am glad I made that decision.

M34N · 19 January 2008

Re: XAO Analysis

Gundini said:
May be the people are just sick of the run of red days and may bottom fish as there is likely to be little direction from OS markets.

Maybe the Insto's will manufacture a clasic pump and dump to allow an unweighting prior to the US resuming on Tuesday.

Either way, there will more than likely be opportunities to trade in the green on Monday and Tuesday IMO...

This is not to say the market won't finish in the red, just that you may see a little more green over those couple of days, due to:

"Dear Client,

We would like to advise that due to the Martin Luther King Holiday in the United States on Monday 21 January trading hours will be limited on some instruments".

Yes I agree, there will be pockets of green, but to suggest the whole market will be green? Based on a public holiday in the US on Monday? That's the most optimistic thing you can say about this market?

Dear god, thinking about that has made me more worried about the market on Monday, lol... :

But anyway, I do hope you're right, but lets be realistic, "maybe's" aren't enough to boost the market at the moment. We need solid, clear actions by reserve banks, governments and even corporations on solving the credit crisis and stopping the never-ending stories of mega record-breaking losses.

Kauri · 19 January 2008

Re: XAO Analysis

Nyden said:
& I do continue to appreciate how bad their economy is. But their economy is not going to suddenly reverse & cease buying anything. I wouldn't touch banks, & I wouldn't touch retailers - American, & Australian.

Meanwhile we have Asia which is still growing, we have our own country which is still growing, and I believe that our resources sector bull is alive & well, & will definitely assist our market in remaining afloat.

Well, my only stock market exposure is resources at the moment, & both of them (only 2 stocks, diversifying doesn't seem to do much lately, just gives you greater losses across even more sectors! ) announce their Q2 report on Wednesday. I cannot envision a drop either, if excellent profits are made.

Edit;
Furthermore, the FTSE only finished .01% down (in otherwords, completely flat), whilst the Hang Seng, & Nikkei finished in the green. I honestly believe we might follow them on Monday.

I think we tend to follow the Nikkei during the day, particularly when the U.S is off... below are what IG are showing for,,
Dow..
Nikkei..
FTSE100..
German30..
Also realise that the Nikkei had a good day in part to the (rumoured) activity of the PKO..
Soc Gen in Europe rumoured to be writing off a few more Bln.. showing possibly more sub-pain shocks yet to come from Europe..
It may be raining on Monday..
Cheers
..........Kauri

IFocus · 19 January 2008

Re: XAO Analysis

A couple of thoughts

XAO has reached down 17% during this current move, the run down to 2003 was 23% total.

Current market valuations are I though about the risk in 6 to 9 months not the profits about to be reported

A USA recession and flow on to Asian economies, substantial risk to earnings I would think. Note no certainties here just talking about risk and uncertainty markets hate supposed unknown risk if that’s makes sense.

Focus

PS Rich Kid understand your point about Nick but I would reaffirm Techs sentiment also make the point there are plenty of links from Chartist pointing to this site which can only be a good thing for Joe.

tech/a · 19 January 2008

Re: XAO Analysis

While I feel we have reached the bottom of this move.
The retracement will not reach old highs.
Do not expect 6310 to be taken out.
Nor yesterdays low.

I'll be looking at some longs.

Real1ty · 19 January 2008

Re: XAO Analysis

Something that seems to have slipped under the radar in amongst all the carnage is the CPI figures are released on Wednesday.

The RBA has it's own version where they take out volatile items and that is the version they will make an interest rate judgment on.

For those considering buying back in early this week, you would want to hope the figure is lower or as expected, although they would probably be leaning towards keeping things unchanged in these times of economic uncertainty and can claim the banks have done part of their job for them....

>Apocalypto< · 19 January 2008

Re: XAO Analysis

mfp said:
I would say 11 straight is a certainty. We only rallied Friday on talk of a Bush rescue plan which people presumed would drive the DOW much higher. Instead, it sank again. You'd have to say a 100+ point drop is on the cards Monday.

got to love positive thinking!

chops_a_must · 19 January 2008

Re: XAO Analysis

tech/a said:
Saw it at 10 am!
Thats whats going on!

I posted similiar sentiments at 10.01am on the SPI thread, and I'm just a noob. : Closed out all my shorts on the Friday open, and took a long in one thing. Would have done with more but work and not being able to be in front of the comp etc etc. Monday might be better though.

To those who want to sell/ short, be my guests. Chances are, over the next few days you will have to cover anyway. No markets I trade or watch give up lows without even the smallest fight.

I have some lengthy thoughts on the XAO, but am too exhausted to write them up at the moment. Here is some:

I'm looking at a suck up into about 6000 on the XAO, forming a bearish pennant/ bear flag, Wave iv, whatever. Which is probably similar to what Kauri is seeing.

Any break of Friday's lows and close below will be a clear sell. Any closes above (generally) the lows and below 6000, will be a buy for me.

My basic short term trade strategy on this:

The easiest (and closest) stops, are for longs. All of the "DEFINED" risk is with stops for longs. Indicating all the best R/R is with the longs for the very short term.

Fading stocks with breaks of support back to support, or preferably buying stocks on support which have not broken support.

Not wanting to hold for longer than perhaps 2 weeks at most here. Unless something unexpectedly positive happens.

Basic short term analysis:

Had an exhaustion capitulation onto support, with a sharp rally, on stopping and exceptional volume. Couple that with the philosophy of never shorting on support, you have easy conclusions from basic analysis.

Doesn't change my medium term, 12-18 month, view of this market however.

P.S. - I don't think the SPI has ever closed 11 days down in its history. I will wager it will close positive. Don't read too much into Friday night SPI trading. It's notoriously negative so far as I can see. Calls for a 100+ point fall on Monday are complete nonsense, considering there is no US trading Monday night. And it would mean a doubling of percentage losses from Friday night's US trading.

nizar · 19 January 2008

Re: XAO Analysis

Im expecting some sort of rally next week.

XAO the RSI is sitting on 25. The last time that happened was the August low just before the rebound. The last time before that was in 2003.

The rally may take us back to 6400/6450 at the most, but I can't see a new all time high for some time (years??).

nizar · 19 January 2008

Re: XAO Analysis

chops_a_must said:
Doesn't change my medium term, 12-18 month, view of this market however.

Which is?

chops_a_must · 20 January 2008

Re: XAO Analysis

nizar said:
Which is?

A bear market that will take us down to about 4400 or just below in 3 movements.

Lines up with fib numbers, a H&S target if it forms above, and breaks the support at 5650 ish, and perhaps even a wave count if this ends up being a W1 of 5. Would mean about an average total move for a bear market as well...

nizar · 20 January 2008

Re: XAO Analysis

chops_a_must said:
A bear market that will take us down to about 4400 or just below in 3 movements.

Lines up with fib numbers, a H&S target if it forms above, and breaks the support at 5650 ish, and perhaps even a wave count if this ends up being a W1 of 5. Would mean about an average total move for a bear market as well...

I'd be happy with that.
So the bottom in about 18 months?
Nice.

mfp · 20 January 2008

Re: XAO Analysis

Trade_It said:
got to love positive thinking!

I'm completely out of the market and loving watching this slaughter unfold, so for me this is not only positive thinking, but I would say realistic thinking.

mfp · 20 January 2008

Re: XAO Analysis

chops_a_must said:
P.S. - I don't think the SPI has ever closed 11 days down in its history. I will wager it will close positive. Don't read too much into Friday night SPI trading. It's notoriously negative so far as I can see. Calls for a 100+ point fall on Monday are complete nonsense, considering there is no US trading Monday night. And it would mean a doubling of percentage losses from Friday night's US trading.

Complete nonsense? How you can say that astounds me. We rallied 120 points from Friday's low based on an expected big rally that night on the DOW, which not only did not eventuate (meaning we could/should give that rally back), but it actually fell a further 0.5%. Based on these figures, saying the possibility of a 100+ point drop on our market Monday is complete nonsense is ridiculous. Also, I don't understand how your comment about no US trading Monday night will prevent our market from having the losses it should have (based on what happened Friday night) on Monday. If anything it may temporarily prevent any further losses Tuesday.

Sean K · 20 January 2008

Re: XAO Analysis

mfp said:
Complete nonsense? How you can say that astounds me. We rallied 120 points from Friday's low based on an expected big rally that night on the DOW, which not only did not eventuate (meaning we could/should give that rally back), but it actually fell a further 0.5%. Based on these figures, saying the possibility of a 100+ point drop on our market Monday is complete nonsense is ridiculous. Also, I don't understand how your comment about no US trading Monday will prevent our market from having the losses (I believe) it should have on Monday. If anything it may temporarily prevent any further losses Tuesday.

Well, we'll see on Monday mfp. You putting a dollar on a 170 point loss? I think that's what you're saying?

I think we may touch around 5650 (-150) and bounce. The cat will be unconscious and maybe climb to around between 6000-6200 in the coming weeks until it settles into a stuper for the following 12 months ish.

On the other hand, the market will do anything it damn well likes!!

Nyden · 20 January 2008

Re: XAO Analysis

mfp said:
Complete nonsense? How you can say that astounds me. We rallied 120 points from Friday's low based on an expected big rally that night on the DOW, which not only did not eventuate (meaning we could/should give that rally back), but it actually fell a further 0.5%. Based on these figures, saying the possibility of a 100+ point drop on our market Monday is complete nonsense is ridiculous. Also, I don't understand how your comment about no US trading Monday night will prevent our market from having the losses it should have (based on what happened Friday night) on Monday. If anything it may temporarily prevent any further losses Tuesday.

Yes, but as I stated before MFP; that is far too logical. You are placing intellect on the market itself, as if it is an entity that needs to now 'make up' for losses...

(Once again, to repeat myself; this is nonsensical logic. By that argument, we're due in for some gains from the rallies we missed over the last 11 days!)

It does not work that way, selling is not some kind of exact science, where suddenly people sell because they should have on Friday. They aren't going to suddenly stop selling because we've now equalized with the Dow, either. They sell from their own interpretations of news, & their own fears of what the dow will do next.

As stated; these buyers / sellers, do not need to worry about what the Dow will do Monday night, because it's closed. This means there will be a lot less fear in the markets; & we may see some fundamental buying, or technical buying based on some expected rally : - especially on the resources front.

XAO Technical Analysis

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