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XAO Technical Analysis

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Re: XAO Analysis

dhukka said:
Employment has contracted for five straight months and the unemployment rate has risen more than 1% from the trough. Both of those metrics have never happened outside of a recession. Yes employment losses are small on a comparative basis, but these numbers will be revised downwards over the next 12 months which is always convenient for the no recession camp because the recession is usually done by that time.
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This is the one that get's me.

Unemployment is one of the ultimate determinants for recession and it doesn't look to be recovering anytime soon. As is the nature of the economic loop.

Add to that the sub-prime debarcle is far from over with long lags involved, high oil causing trouble implementing any further IR cuts, and you have a HUGE mess.

No matter what any other economist tells me, I see the US having an extremelly hard time getting out of an official recession, despite any Bernake propeganda.
 
Re: XAO Analysis

Ok,ok, ok... it's an a, b, c... but only a little one (lower case), but I'm penciling in a big 1 and 2 for now also. :p:

I'm gonna have another dig about that over-lap rule.

I've read in a couple of places that in diagonal triangles wave 1 and wave 4 should come within 10%, generally, or nearly always overlap. This extract isn't what I'm relying on atm, but makes my point.

Leading Diagonal

When diagonal triangles occur in the fifth or C wave position, they take the 3-3-3-3-3 shape that Elliott described. However, it has recently come to light that a variation on this pattern occasionally appears in the first wave position of impulses and in the A wave position of zigzags. The characteristic overlapping of waves one and four and the convergence of boundary lines into a wedge shape remain as in the ending diagonal triangle. However, the subdivisions are different, tracing out a 5-3-5, or 5-3-5-3-5 pattern. The structure of this formation (see Figure 10) does fit the spirit of the Wave Principle in that the five-wave subdivisions in the direction of the larger trend communicate a "continuation" message as opposed to the "termination" implication of the three-wave subdivisions in the ending diagonal. This pattern must be noted because the analyst could mistake it for a far more common development, a series of first and second waves, as illustrated in Figure 5.

http://www.elliottwave.net/educational/basictenets/basics2.htm
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Re: XAO Analysis

Leading Diagonal

When diagonal triangles occur in the fifth or C wave position, they take the 3-3-3-3-3 shape that Elliott described. However, it has recently come to light that a variation on this pattern occasionally appears in the first wave position of impulses and in the A wave position of zigzags. The characteristic overlapping of waves one and four and the convergence of boundary lines into a wedge shape remain as in the ending diagonal triangle. However, the subdivisions are different, tracing out a 5-3-5, or 5-3-5-3-5 pattern. The structure of this formation (see Figure 10) does fit the spirit of the Wave Principle in that the five-wave subdivisions in the direction of the larger trend communicate a "continuation" message as opposed to the "termination" implication of the three-wave subdivisions in the ending diagonal. This pattern must be noted because the analyst could mistake it for a far more common development, a series of first and second waves, as illustrated in Figure 5.

http://www.elliottwave.net/educational/basictenets/basics2.htm
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;):)
 
Re: XAO Analysis

Hello Whiskers,

Good to see you are having a crack at this and it's great to have another opinion on this thread.

Not trying to criticize in any way but I feel I can add to what you have already posted.

IMO the main emphasis with EW is not counting, it's pattern recognition just like with traditional pattern analysis. Everything should focus around the expected or recognized pattern tracing out.

If you can imagine the price action as an IC engine, then the pattern of the trend is the foundation or the engine block. Everything else such as indicators, wave counts, time Cycles and Cyclic Analysis and trendlines to name a few are what bolts onto the block. Understanding types of trends and patterns of trends is crucial.

In terms of EW one crucial aspect that I always keep in the back of my mind:
The larger patterns control the smaller patterns.
The EW patterns in question need to have the right look. If at first glance they don't, it's easy, forget them and move on and find or for something that does.

Now have a good look at the last chart you posted. You have labelled this circled wave 1. What do you know about a wave 1? Well firstly it has to be be an impulse, 12345. These can either be a normal impulse(with no overlaps) OR a leading diagonal triangle wherbeby the wave 4 low overlaps the top of wave 1.(The minor waves of a leading diagional count as 5's not 3's)

To me at first glance this wave structure looks like a (abc). Therefore this leg up from 5130 to to 6060 is most likely not a wave 1 but rather something else. Remember 3 waves always unfold against the one larger trend, the one larger trend is down. Now have a good look at the minor subdivisions of this leg up I have talking about. Do they look like your standard impulse waves? Absolutely not, to me they they look more like 3's. This is especially the case where you are trying to count an impulse and you come accross overlaps. Remember overlaps mean the price action is corrective in nature. Ending diagonals do crop up, but leading diagonals are very rare. So remeber a struggling, choppy overlapping trend = corrective.

The pattern/count you have indentified on the current leg down is spot on IMO but I would label it as wave a of another abc move down not wave 2 for the reason stated earlier. So currently the market should rally into a minor b wave up and retrace 38.2 to 50% of the last leg down before heading south again to complete wave c of the larger abc pattern.

There is nothing difficult here. Too many people unecessarily condemn EW as too difficult when in fact it's actually quite easy. All it requires is time and effort to understand the types of pattern you are dealing with and learn to trade around them.

Because EW is very graphical in nature, it can trake a while to grasp what is presented in books and courses. EWI has the best resources for learning EW. If you invest in their 10Hr DVD tutorial, it's probably much easier and quicker to grasp.



Cheers
 
Re: XAO Analysis

Along these lines Wavepicker ?
 

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Re: XAO Analysis

Wavepicker, yeah I actually looked at the wave count your talking about, but I liked the look of the present way for the moment based on the asumption that it's about to turn and I reckon there's a bit of positive divergance going on.

So I'll be watching closely how high this next leg takes us.

Btw wavepicker, actually tech/a, porper, any ew'ers for that matter... whats your view of increased leverage in the markets distorting EW analysis?
 

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Re: XAO Analysis

Another cross check for me was the P&F chart showing that this little correction is still a long way of coming back to the down trend line. Motorway, your the expert there. What say you?
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clarity clarity clarity :)

Thus the 3 point ( reversal ;) ) chart brings out a condition that is not always
immediately apparent from a casual glance at the 1 point ( reversal )chart. It
is important to observe and remember in this connection that the
inability of a stock to reverse its trend three full points or more,
or to rally emphatically from former supporting levels, is often
highly significant, and should seldom be ignored, but should be
carefully considered in connection with other contemporary technical
manifestations.
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DO NOT fritter away your time reading the financial news and
gossip columns. The less you know of this stuff the better off you
will be. Much of this material may be colored by the opinions and
prejudices of the writers whose business is journalism, not
forecasting.

The financial reporter's function is to gather news of
current happenings; you cannot expect him always to know when a bit
of news or gossip may be inspired by someone with an axe to grind.
Furthermore, he strives to give the public what it wants, namely,
the best explanation he can concoct for any given rise or fall in
the market. That satisfies the majority, but it is of no value to
you.

You want to be in or out before the apologies and explanations
start. Anyhow, did you ever stop to think how many thousands of
other people are reading the same news item at the same time, and
reacting to it in the same way? You do not want to go with that
crowd, but against it.
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The chart give it's own interpretation
consider it with the B% chart

notice how wide the mkt is ?

Whereas bear markets generally terminate in narrow price movements
to the accompaniment of low volume and listless trading, bull
markets terminate in relatively wide price swings accompanied by
high volume and more or less feverish activity, although volume may
be less in the later than in the earlier stages.

It is the change from dullness to activity (regardless of the
absolute, i. e., the actual volume), or the reverse, which is
important; and the manner in which the change occurs. These changes
put us on guard to watch for further indications which will either
confirm or deny the direction of the trend in which
the change occurs.
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Look for where the behavior changes IMPORTANT

length of columns . follow through
highs lows

A bit busy atm

over to you :)

Some quotes from Richard D Wyckoff , who was a prolific user of P&F or

"Figure Charts"

Also consider what Livermore's Market Key ( A chart in Tabular form )
Would look like as a chart :cool:


motorway
 

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Re: XAO Analysis

One Box Reversal

You want to look at the relationship
of the vertical "thrust" to the Horizontal

The 45 degree trend ( secret P&F business )
( relates to information flow ...manipulation )

And ( among other things ) helps define "legs"

notice the change from vertical to the horizontal
How the thrusts shortened
How the reactions deepened

SUPPLY.....

on the ( one box reversal )
figure chart we find the greatest aid: (a) in determining how
far a stock should go; (b) when it meets opposition, viz., when it
has about reached the end of its move; and with the help of the
vertical chart (c) determining the trend, and (d) when a stock is on
the springboard.
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Reduced the size to fit some context

45 degree movement is essential to understand.


motorway
 

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Re: XAO Analysis

I think what Motorway is saying is that the P&F chart suggests there will be a test of the previous down bar. If the test comes with high volume panic and frenzy, a reversal is likely. Otherwise there will be a double bottom break down.
 
Re: XAO Analysis

Whiskers.
How much of the market is controlled by domestic "leveraged funds".
Id say very little.
The big end of town use more than 1000s of domestic punters in all the big caps which move the market.

Even so leveraged or not--Elliott principal in my view isn't altered.

Like all analysis Elliot,Support Resistance,P&F
its simply a technical landscape which supplies the analyst points of reference which in time will be proven OR disproven.

The benifit of Elliott is that as the market morphs so to does the analysis,when its both proven and disproven.
When practitioners get their head around this they can truely understand the "complexity--simplicity " of Elliott.


only difference is that if the count isn't simple, Miner will move on,
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A very important point for traders.
There are plenty of counts which just scream at you.
 
Re: XAO Analysis

whats your view of increased leverage in the markets distorting EW analysis?
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I do not use EW.

But leverage has a large effect on reactions

High levels of margin ( cfds margin loans etc ) act like stop loss cascades..
So when a shakeout or profit taking occurs

reactions can be deep and violent
look how wide the market is
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But Emerging from a bear market

when margin levels are lower (look at the breakout from 2003 on the P&F )

Stocks pause but cash continually flows into the market
and reactions can be very shallow..

Wait for the pullback WHAT pullback :)

Guess When margin use is at it's highest ?

( JUST LOOK AT THE CHART )

The identification of changes in margin as altering the depth of reactions.
Was made at least as early as the late 1920s



motorway
 
Re: XAO Analysis

M/W

Along the same lines.
Ive noticed aggressive shock moves from auto stop placement software.
If you look at a logical technical stop---and I'll use CUE as an example as this was discussed on Radges site.
115 traders were at the same stop level--I was a couple of cents above the "logical level".I was filled with no slippage however others which were at the logical level suffered enormous slippage as the 115 trades were filled from the depth of buyers.
This all took a few seconds.

Even so i still dont think this alters the longterm analysis.
 

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Re: XAO Analysis

tech/a said:
How much of the market is controlled by domestic "leveraged funds".
Id say very little.
The big end of town use more than 1000s of domestic punters in all the big caps which move the market.
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You are forgetting or don't realize the XAO is controlled buy the SPI swingers (leveraged). And they have most definitely been in control of our little Aussie market ALL of this year.
 
Re: XAO Analysis

Nick apologies.
I will be more careful when mentioning your site.
I only did as some here who were involved in the discussion would remember the discussion.
Never meant to imply it was a recommendation of yours.

But can see clearly how this could be misconstrewed.

So I'll make it as clear as possible that you had NO recommendation on CUE.
It was purely an observation of mine.
 
Re: XAO Analysis

juw177 said:
I think what Motorway is saying is that the P&F chart suggests there will be a test of the previous down bar. If the test comes with high volume panic and frenzy, a reversal is likely. Otherwise there will be a double bottom break down.
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So in other words, the market will go up, or down.

Is there anything in that complicated wave stuff to disagree with or improve on the simple view that the primary trend is down and we're headed for a re-test of support at 5170-ish?:confused:
 
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