XAO Technical Analysis

[wintermute]

Re: XAO Analysis

hehehe you probably viewed whilst I was editing.... I changed the chart and added a few more words

Tony.

 

[Wysiwyg]

Re: XAO Analysis

hehehe you probably viewed whilst I was editing.... I changed the chart and added a few more words

Tony.

I hope you get what you see. I don`t think it is such a big deal because you only lose mo in the rush out. The markets always go up over time but nonetheless a healthy dose of pessimism is good to stay grounded. Thankyou to all pessos. Someone will pick it eventually.

 

[wintermute]

Re: XAO Analysis

ahhh ok, I missed the sarcasm thought the chart was missing....

I've posted a similar chart before this correction, and thought it would go one of two ways, either a decent correction and then onward (with RSI dropping back to a more normal level), or a woosy one and the RSI keep on rising, well guess what, the RSI has not come back under 80... If it goes on up to 87 and follows a similar pattern to 1987 (any numerologists out there ) and we see the parabolic rise in the index as well, then I think we will be looking at a crash rather than a correction next time. If you see RSI heading for 90 be on your guard!! If you hear analysts and every man and his dog saying it is different this time be doubly on your guard... by all means make the most of the rises but there is one thing about the markets, patterns repeat. No matter how many times people say it is different this time, reality wins out in the end

Have a look at the monthly chart over the last 5 years and look at what has generally happened when RSI edged over 80... It's not all smoke and mirrors

I'm not being pessimistic, just making observations, if those observations tell me to beware then I will act. Right now they are just observations

Tony.

 

[Wysiwyg]

Re: XAO Analysis

ahhh ok, I missed the sarcasm thought the chart was missing....

I've posted a similar chart before this correction, and thought it would go one of two ways, either a decent correction and then onward (with RSI dropping back to a more normal level), or a woosy one and the RSI keep on rising, well guess what, the RSI has not come back under 80... If it goes on up to 87 and follows a similar pattern to 1987 (any numerologists out there ) and we see the parabolic rise in the index as well, then I think we will be looking at a crash rather than a correction next time. If you see RSI heading for 90 be on your guard!! If you hear analysts and every man and his dog saying it is different this time be doubly on your guard... by all means make the most of the rises but there is one thing about the markets, patterns repeat. No matter how many times people say it is different this time, reality wins out in the end

Have a look at the monthly chart over the last 5 years and look at what has generally happened when RSI edged over 80... It's not all smoke and mirrors

I'm not being pessimistic, just making observations, if those observations tell me to beware then I will act. Right now they are just observations

Tony.

You want sarcasm.....I thought RSI was Repetitive Strain Injury.Thankyou for your "observations".I think they are pessimistic.

 

[timelord]

Re: XAO Analysis

You don't think China adds a new variable to the cycle? We do seem to be resource driven.

 

[Sean K]

Re: XAO Analysis

You don't think China adds a new variable to the cycle? We do seem to be resource driven.

China needs the US to keep buying their trinkets to keep growing at 10% + a year. The paradigm will shift in the next 5-10 ish years, when the Chinese middle class replace the US consumer as their no 1 customer. In the mean time the US-China-Australia relationship may produce a down turn but long term the future is very bright for our resource driven economy IMO.

 

[wintermute]

Re: XAO Analysis

yeah China does, but the thing I personally think is "going wrong" is unsustainable gains (capital gains that is) in certain areas, at the moment I think it is restricted to spec mining stocks, and starting to be biotech and IT, but these only make up a small percentage of the market overall. I think people will start to think that gains of 40% in a week are normal and to be expected. if the marketin general goes into a buying frenzy then we can see a massive rise in a short period of time, usually followed by a crash.

If the market continues on at it's current rate then I can't see this scenario happening, but if it takes off and goes nuts then that is a different story. As there is no evidence yet of it going completely crazy this is all just speculation based on a pattern on a chart, however if that pattern starts to repeat (especially the huge gains in a very short period) then one needs to stop and pay attention or risk being caught unaware.

One thing that may fuel this sudden rise is the amount of capital that will be looking for a new home as a result of private equity buyouts. If share prices are pushed up because of extra demand, and then that demand dries up (and so do the gains, and dividend yields are now low compared to the elevated sp's) then there is only one likely outcome, people cash up and look for greener pastures elsewhere... when that starts to happen the leveraged players HAVE to get out (as the sp drops due to lots of sellers and no buyers), all of a sudden you have a domino effect. I'm not trying to predict when it will happen (or even if) but it's happened before and it will no doubt happen again... keep an eye on the chart and specifically the RSI, and you might be able to work it to your advantage

A crash is only a bad thing if you get caught by surprise!

Tony.

 

[chops_a_must]

Re: XAO Analysis

I'm not trying to predict when it will happen (or even if) but it's happened before and it will no doubt happen again... keep an eye on the chart and specifically the RSI, and you might be able to work it to your advantage

A crash is only a bad thing if you get caught by surprise!

Tony.

The RSI is not a reliable indicator IMO. You have used it to try and predict movements of stocks in my time here that have turned out to be very very wrong.

The RSI is a relative indicator (as the name suggests) and it is not that much higher than the recent peaks. To me, it looks to be breaking out, so the RSI is likely to go a lot higher IMO than what you are suggesting.

Far from the bulls saying it is "different this time", the bears seem to be the one in this category. Crashes don't have a habit of happening in election years. Nothing fundamentally has changed. Commodities are starting another run, companies aren't overly in debt, PE ratios are nowhere near historic levels for crashes. The only sector that appears overpriced is the financial sector, and perhaps U stocks. The financial sector is the one likely to bring everything down, but we wont know the full impact of events for a year or more.

I doubt the chances of a crash in October are very high. People will be so conscious of it happening, that it wont. Instead, I'm guessing that it will be next year (after elections) and after the full impact of the financial disasters will start to have a real impact.

 

[wintermute]

Re: XAO Analysis

Hi Chops, which stocks?? The only time I use RSI is to try and predict a pullback.. the only time I recall doing this here was on MCR which did pull back.... it didn't pull back as far as I would have liked it to but that was because I was hoping for a gap to be filled, which had nothing to do with whether the pull back occurred when RSI was showing overbought.....

Have a look at the RSI for the last four corrections and if you still think it is unreliable then fair enough... it won't tell you down to the day, but will give a fair indication a few weeks in advance IMO... 87 was an anomaly, and from what I can see another anomaly may be starting to form..... Note that RSI is only reliable if there is a correlation with past events for a particular stock or index.. in this case I think there is.

Tony.

 

[constable]

Re: XAO Analysis

As with most indicators they can be taken out of context and are evidence after the fact. Furthermore, relevant only to certain trading time frames!
Which trading time frame is a more relevant question?? Depends how you trade and what your entry/exits point require I suppose.

 

[Sean K]

Re: XAO Analysis

I'd be interested to see how EW ers have adjusted their count since we didn't get an ABC corrective move? Are we into wave 5 now? Cheers.

 

[>Apocalypto<]

Re: XAO Analysis

Some great points made on this page.

On the monthly chart of this trend, there is no real correction yet.

A retracement of 33-38% is roughly 1500 points and a healthy pull back.

So I hope it happens.

Agree that RSI can move into overbought territory and stay there quite a while before it moves back.

 

[GreatPig]

Re: XAO Analysis

Back in the danger zone for another pullback?

It hasn't managed to stay above the yellow line for long so far.

Cheers,
GP

 

[tech/a]

Re: XAO Analysis

I'd be interested to see how EW ers have adjusted their count since we didn't get an ABC corrective move? Are we into wave 5 now? Cheers.

Here is Advanced Gets Count with wave 5 still open (dynamic).
The internal wave count isnt correct (This happens as the software works on algorithms) its not a problem once you know.

The second chart is my own dynamic wave count as of april 4th my view is that this is still a wave 3 in the internal structure building the final 5 wave up move.

 

[x2rider]

Re: XAO Analysis

Hi folks
For what my opinion is worth, I agree with tech. I still have some distance between the closing today and my 21 day bollinger bands.
The entry for me was on the break about the previous high and I have increased my position every 20 points. I am not sure on the 6400 range but would certainly see me with a tight stop at anything over 6300.

Cheers martin

 

[wavepicker]

Re: XAO Analysis

Here is Advanced Gets Count with wave 5 still open (dynamic).
The internal wave count isnt correct (This happens as the software works on algorithms) its not a problem once you know.

The second chart is my own dynamic wave count as of april 4th my view is that this is still a wave 3 in the internal structure building the final 5 wave up move.

Tech,

Not sure how you/AGET have numbered your weekly chart. But the way my version of AGET numbers the weekly chart, the swings are grossly out of proportion and it lacks the "right look". Numbering the weekly chart in the context of a typical EW structure, will show that this index cannot rally past 6361, otherwise it would mean an invalidation and thus a more bullish scenario is playing out.

Although AGET was proven to be correct in this instance with it's rather primitive wave count, this is quite often NOT the case, and the wavecounts it generates are simply not good enough to trade from consistantly. Just my thoughts after a number of years of experimentation. Also these wave counts are too simplified. This is for a reason, because it was designed to be used in conjunction with other tools withing AGET for a semi mechanical trading system. ie Type 1 abd 2 trades alongside with trend channels, PTI, and displaced moving averages.

I have the May correction last year as "sideways" wave 4. These usually precede the last actionary wave in a sequence. My own wave count and cycles work picked the last correction (Late feb) to within 1-2 days before it actually happened. Unfortunately got the timing of the current rally wrong. Nevertheless the warning short has been fired accross the bow already with the last correction.
The picture in the DJIA is much clearer at present(a clear impulse down and abc countertrend up) and that is what I am using as a benchmark at present. Not to mention the CRB Index in the US which has clearly impulsed down and is now finishing wave C of it's abc countertrend.

Cheers

 

[tech/a]

Re: XAO Analysis

Waves.
I cant agree more re your comments on GET.
As you know these are daily charts. You could well be right.
Your experience with Elliot is well beyond mine.

 

[mmmmining]

Re: XAO Analysis

My God, It's Friday, the 13th!

 

[Sean K]

Re: XAO Analysis

I've just been comparing the current situation with the previous positions of the XAO just prior to a correction, and it looks to me like it could be soon. Notice similarites in MACD, Stoch and RSI before the worst corrections and the smaller ones. Looks like a smaller one is due now. If the market keeps flying then it will turn into a larger one IMO. Not a call to bears, just an observation.

 

[>Apocalypto<]

Re: XAO Analysis

I've just been comparing the current situation with the previous positions of the XAO just prior to a correction, and it looks to me like it could be soon. Notice similarites in MACD, Stoch and RSI before the worst corrections and the smaller ones. Looks like a smaller one is due now. If the market keeps flying then it will turn into a larger one IMO. Not a call to bears, just an observation.

Kennas,

Been waiting for you to return to this topic with your analysis. Much enjoyed.

I agree with you I am sitting out of the xjo at the moment as I am leaning towards a fall coming soon as well.