XAO Technical Analysis

nizar · 6 May 2007

Re: XAO Analysis

UraniumLover said:
Correction due in a week or so looking at the MACD and slow stocchastic indicators which are near peaks in my opinion. Will be very surprised if it doesn't hit soon.

Yeh??
Well i will be very suprised if we have a correction soon because rather than focussing on (lagging) indicators, i usually focus on price.

And if you look at the previous 4 or 5 corrections, the XAO had gone very verticle just prior to the correction, on this occasion we have been doing sideways for about 3 weeks prior to the big candle on wednesday. Just shows how much money was on the sidelines bracing themselves for the correction.

If we have say 2 more weeks of straight upwards movement then maybe but as it stands, i dont believe we are about to have a correction.

In my opinion..

wavepicker · 6 May 2007

Re: XAO Analysis

nizar said:
Yeh??

And if you look at the previous 4 or 5 corrections, the XAO had gone very verticle just prior to the correction, on this occasion we have been doing sideways for about 3 weeks prior to the big candle on wednesday. Just shows how much money was on the sidelines bracing themselves for the correction.
If we have say 2 more weeks of straight upwards movement then maybe but as it stands, i dont believe we are about to have a correction.

In my opinion..

It's quite true that markets often "climax" before a reversal, but other times they may exhibit distribution before a reversal, so just because the previous corrections ended with a climax, does not necessarily mean this will be the case. Quite often after a very long bull market there may be a top building process which takes quite some time to unwind. Look at the the DJIA for instance in 2000-2001.

We are quite fortunate to have had such a strong trend for so long, this is not your "normal" market as these sorts of rates of change of price will not last forever. Everyone who enters the market knows this, but the question is where and when? Anyone can enter the market, but knowing when to get out that, that is much harder and ultimately peoples hope and greed will be much greater than their common sense.

Remember your bullish comments just prior the last correction Nizar?? "Let the good time roll on", 2 days later the market tanked itin a big way. So given the bullishness by most people in the market at present, one would not be surprised to see quite another significant correction very soon. Thereafter the bull may continue and you will have pundits doubling up their positions and buying every pullback imaginable and from every rebound from another correction. Until one day we won't make a new high and they will get burned like most did in the dot com era and 87 era, but most pundits today are quite young and did not participate in those manias and as such have no fear. For them, the markets(all markets) have only one direction "up" because that is all that they that theyknow.

Every mania is unique in that it's different from the last, very few have been able to call a level and time when the psychology will start to shift and a major trend change will occur. Some have been fortunate enough when all the right patterns at various degrees of trend have come togther at the right time.
The only things that all manias have had in common throughout history is that the warning signs were there long before the market finally peaked, and they have ended in bust without exception.

Good Luck

nizar · 6 May 2007

Re: XAO Analysis

wavepicker said:
Remember your bullish comments just prior the last correction Nizar?? "Let the good time roll on", 2 days later the market tanked itin a big way.

Yeh i do remember that.
Corrections come at times when nobody expects, and since youve got time to read back through the posts of several months ago, how many people then correctly called for the correction before it happened, probably not many, except maybe you of course

As for your "bullishness by most people" comment??
From my observations, most people on here are bears calling for a correction - in the odd one out saying that this run will continue for some time...

wavepicker · 6 May 2007

Re: XAO Analysis

nizar said:
Yeh i do remember that.
Corrections come at times when nobody expects, and since youve got time to read back through the posts of several months ago, how many people then correctly called for the correction before it happened, probably not many, except maybe you of course

As for your "bullishness by most people" comment??
From my observations, most people on here are bears calling for a correction - in the odd one out saying that this run will continue for some time...

Nizar, I don't have much time to look at the old posts. In fact I have made but 2-3 posts here in the last few months. I just remember your comment because it was in direct opposition to certain other posters here( I can't remember who ATM) back then. No disrespect to you though intended

Sure there are bears calling for a correction this site, but let's face it, most of the talk has been on individual stock threads here, with the odd posts on systems and international markets etc. Obviously a large proportion of this community is specualting on individual stocks. You see when we have a correction and the holders of these intruments find their investments retreating, I have noticed more talk shifts to systems and analysis. Quite normal I would say, because in a strong bull market most have the impression they can make $$ doing nothing, whereas nothing can be further from the truth. When the bear comes, then some turn to TA, and realise that this business takes work and effort and is not as easy as they first thought it was.

As for calling a peak on this site 2 months back. I publically did not. There was only one person who did and that was Magdoran, the price level and the day. An excellent call

Will be interesting to see what the market does from here on end.

Cheers

chops_a_must · 6 May 2007

Re: XAO Analysis

WP,

Just wondering how you can personally reconcile the cautious tone here whilst proclaiming such an aggressive outcome for a blue chip such as OXR?

Up or down, I'll trade the market on what's in front of me. If you are more cautious now than ever, or if your caution changes during different times, to me it says you aren't in the right frame of mind to be trading anyway (not directed at you WP, but making a general point). At the moment you should have plans in place for any outcome, but that is the same as at anytime IMO.

Cheers,
Chops.

constable · 6 May 2007

Re: XAO Analysis

chops_a_must said:
WP,

At the moment you should have plans in place for any outcome, but that is the same as at anytime IMO.

Cheers,
Chops.

Chops what is your plan when the day rolls around when the market, on open smashes thru your stop loss?
Unless you are that far in the black you couldnt give a toss (and im sure there are quite a few out there), to have plans in place for any outcome is a bit of a trading utopia!

chops_a_must · 6 May 2007

Re: XAO Analysis

constable said:
Chops what is your plan when the day rolls around when the market, on open smashes thru your stop loss?
Unless you are that far in the black you couldnt give a toss (and im sure there are quite a few out there), to have plans in place for any outcome is a bit of a trading utopia!

Well yeah, I'm happy with my returns for the year already, so it isn't a big deal for me. Even a 10-20% correction/ crash which would annoy me wouldn't be the end of the world for me. I'm not holding any losses at the moment, and most stops are at breakeven, and if stocks do gap through my stops, I would look at getting out at the original (previous) stop.

But you can bet your bottom dollar, if this did happen, I'd be at the Perth Mint in short time. Lol!

wavepicker · 6 May 2007

Re: XAO Analysis

chops_a_must said:
WP,

Just wondering how you can personally reconcile the cautious tone here whilst proclaiming such an aggressive outcome for a blue chip such as OXR?

Up or down, I'll trade the market on what's in front of me. If you are more cautious now than ever, or if your caution changes during different times, to me it says you aren't in the right frame of mind to be trading anyway (not directed at you WP, but making a general point). At the moment you should have plans in place for any outcome, but that is the same as at anytime IMO.

Cheers,
Chops.

Hi Chops,

My opinion/expectation for something like OXR is for a move over the next 12 months. I expect this move up to the terminal move. I could also be very wrong as we are dealing with probabilities here.

My responses are just general observations I see to the hyper bulishness at times. As far as caution goes, it does not exist in my trading but only patience. The only things that exists in the markets are possibilities/probabilities and no certainties both bullish and bearish. At the moment in the market all I see is recklesness speculation with $$ being thrown on anything that is moving up.

In so far as being in the right/wrong frame of mind to trade, that is governed ones circumstances ( ie psychology, time contraints, distractions among othings). Just because you trade anything that moves, does not mean you are in the right frame of mind. Anyone can put on a trade. For me certain criteria have to be met with regard to:
-price
-pattern of the trend
-cycles
-time

before a trade is to be considered.

At the moment the main thing on most pundits minds is where prices are going. Which means there just following everyone else.

As for as having plans in place for any outcome, ask the rabbits who speculated in 87 and 2000 what happened to their contigency plans. I'll tell you what happended, that got gapped right through very quickly.

Cheers

wintermute · 6 May 2007

Re: XAO Analysis

wavepicker said:
Hi Chops,

At the moment in the market all I see is recklesness speculation with $$ being thrown on anything that is moving up.

Absolutely!!! It astounds me at times just how high stocks are climbing based on nothing but speculation! This is I think actually one of the signs that the market is getting to the point where it will start to go parabolic and every man and his dog will be jossling to get a position.

I try to pick stocks that I think are undervalued and wait for them to be re-rated, It surprises me how often people say get off it and get onto something that is making money!! making 30% gains in a week is great if you can get them, but IMO it is far from normal!!

Just another reason why I don't think we are going to see a correction in the short term, I think we will see the market go nuts, followed by a crash... if it happens the scary part will be trying to ride it and deciding when to pull the pin, BUT hopefully if the right stocks have been picked, even if caught holding a few the effects wont be quite so drastic.

Tony.

chops_a_must · 6 May 2007

Re: XAO Analysis

wintermute said:
Absolutely!!! It astounds me at times just how high stocks are climbing based on nothing but speculation! This is I think actually one of the signs that the market is getting to the point where it will start to go parabolic and every man and his dog will be jossling to get a position.

Yes, it is happening, but at the moment it seems to be limited to U stocks mainly. Warning bells will ring when everything goes vertical, even stocks that are losing money. At that stage it will probably be worth while closing every trade at the end of the day. That way you can still get some return without risking any of your money...

It's probably just as well for me I have ethical problems with U stocks. Lol.

nizar · 6 May 2007

Re: XAO Analysis

wavepicker said:
As for as having plans in place for any outcome, ask the rabbits who speculated in 87 and 2000 what happened to their contigency plans. I'll tell you what happended, that got gapped right through very quickly.

Wave.
People so tend to focus on the negatives but i reckon there were professionals who wouldnt cleaned up during 1987 and also during the dot.com. Why cant we just be those guys instead of the rabbits?
I think if we had a 20% fall in one day most of us would still be ahead for the year. If every one of my stocks halved id be sitting on about breakeven. So lets keep things in perspective here, if we were to have a repeat of 1987, then please lets have 1986 first we are nowhere close to the spike that occured before that crash. October 1986 to October 1987 all ords return was 88%, we are sitting on about 24%. Long way to go. They say history repeats itself, so i say, please history, repeat yourself now!

Chops.
Stops should only move one way. And thats up.

chops_a_must · 6 May 2007

Re: XAO Analysis

nizar said:
Chops.
Stops should only move one way. And thats up.

Yes, I realise this, but that comment was in response to a "what if?" And as such, in an instance where my current stop was gapped past, I would be looking at getting out above the level I had previously considered acceptable.

nizar · 6 May 2007

Re: XAO Analysis

chops_a_must said:
Yes, I realise this, but that comment was in response to a "what if?" And as such, in an instance where my current stop was gapped past, I would be looking at getting out above the level I had previously considered acceptable.

Yeh well each to his own.
I dont change my trading plan to incorporate what ifs.
My stop never moves down.
I take it you assume that any big red day is the start of a "correction" and then we will be off an away again.
I dont make such assumptions.
How about if the next day is a gap down below your "new" stop

Remember you can always buy back. And yeh your average price may not be so good and you may have chopped a winner too early or whatever, but for me, im happy to pay the cost of insurance.

chops_a_must · 6 May 2007

Re: XAO Analysis

I shouldn't need to repost Niz... but, "I would be looking at getting out above the level I had previously considered acceptable."

But I'm confused... If it gapped past your stop... you wouldn't sell? I set rather wide stops... so if they do get hit, I see it as a pretty significant move, likely to move on the market/ stock longer than a day or 4.

And no, I don't see any big red day as the beginning of a correction Lol. Just take a look at the piss takes on the market commentary thread...

wavepicker · 6 May 2007

Re: XAO Analysis

nizar said:
Wave.
People so tend to focus on the negatives but i reckon there were professionals who wouldnt cleaned up during 1987 and also during the dot.com. Why cant we just be those guys instead of the rabbits?
I think if we had a 20% fall in one day most of us would still be ahead for the year. If every one of my stocks halved id be sitting on about breakeven. So lets keep things in perspective here, if we were to have a repeat of 1987, then please lets have 1986 first we are nowhere close to the spike that occured before that crash. October 1986 to October 1987 all ords return was 88%, we are sitting on about 24%. Long way to go. They say history repeats itself, so i say, please history, repeat yourself now!

Chops.
Stops should only move one way. And thats up.

Chops I think if we had a 20% fall many would see that as a buying opportunity. It probably would be too, but what if a retest failed, just like it did in the dot com era?? This is where psychology comes into play. So pretty soon you are sitting on 40% loss instead of the original 20%. Ohh, and beleive you me most will buy back in!!! You can bet on it. What you say about 86 is quite true, but also if you look at the long term history of the index, this last few years has sent the index parabolic with rate of change ever increasing. When markets go almost vertical they don't stay that way long. Almost like a capitulation move in reverse. If anything a move in the opposite direction will at least pause the trend for a while. Don't get us wrong, I am trying to be a doomsday merchant here, just realistic. Sure the market may be bullish for a while to come, but descent correction would be more healthy for it to use a "springboard" to send prices higher, don't you think?? Continuing with this sort of rate of change of price will almost certainly cause catastrophe.

UraniumLover · 6 May 2007

Re: XAO Analysis

wavepicker said:
Remember your bullish comments just prior the last correction Nizar?? "Let the good time roll on", 2 days later the market tanked itin a big way. So given the bullishness by most people in the market at present, one would not be surprised to see quite another significant correction very soon.
Good Luck

I agree wiith this analysis WavePicker. . I think you should listen to what the indicators are saying Nizar as you may get your pants wet once again..

I'd rather pull out earlier than latter when it's too late.
So i still stand by my statement of 1-2 weeks of upward movement before a correction may occur.
It's impossible to know exactly when but that's my estimate.
WavePicker maybe able to enlighten us when it may occur.

>Apocalypto< · 7 May 2007

Re: XAO Analysis

I have seen a RSI indicator sit in over bought for about 2 weeks while the price kept on rising in RIO Tinto.

I take over bought signels as nothing more then a maybe what could happen.

I am in China right now so can't post any charts but like the night a correction will come then as long as there is still hunger there will be another rise.

Historicaly we are in shakey months right now but that does not mean anything. trends and prices are random and are never exactly the same. all we can do is watch and take the nessercy action to profit from the situation.

I must say China is a amazing place the city I am in now was half as small 2 years ago! The economy here is just unbelievable.

Some of the chinese are really living it up. but for a chinese the cost of living is as high to slightly higher then in Australia!

mildew79 · 7 May 2007

Re: XAO Analysis

there are to many mugs making money at the moment. no trading plans, no exit strategies, no profit targets, and no risk management. it is usually when these mugs feel they are onto a good thing the market dishes a wake up call in my experience.

ill be waiting on the sidelines until it happens (i shall still trade intra day). for me to change my mind i shall need to see many indicators return to an oversold position.

steven1234 · 7 May 2007

Re: XAO Analysis

I don't think a major correction is imminent as there is too much money sitting on the sidelines waiting to jump in at the moment (including all the super money).

As for after June... anything can happen.

nizar · 8 May 2007

Re: XAO Analysis

With BHP in the M&A spotlight and its share price about to break all time highs of $32.00, this could carry the market higher.

RIO also has just broken its May 2006 high.

Its been banks, financials, and industrials carrying our market the last year or so. Maybe time for resource and oil stocks to join them?

I was going to say resources and oil stocks take over the lead, but too much super money pouring into banks, financials and industrials. Last month banks were 4.6% which is heaps going by historical measures i read somewher...

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