XAO Technical Analysis

[davo8]

Re: XAO Analysis

It does amaze me how people fall for the "cheap" thought. The shares are only "cheap" if you (not to anyone in specific, asking a rhetorical question here) expect last year's performance to continue into next year.

Please give me a little credit. I'm a value investor with a liking for dividends, so what I see is lots of cheap stocks, some of which are bound to be good value. The challenge is finding them, but even if I don't get them all right, the bias will be to the upside.

I don't plan to buy banks or other financials, because I think the business model is broken. I'll reconsider that, but not soon. Forget developers too, most of the REIT sector and infrastructure or anything heavily dependent on debt.

However, stocks with cash on hand, free cash flow, solid business model, at the right price will provide a much better return than cash over the next several years.

 

[davo8]

Re: XAO Analysis

Here is the 100yr chart from the ASX, which quite frankly makes the current drop on the XAO insignificant when compared to the previous 100 years of progress.

I don't buy long term trend lines like this that ignores CPI. We had a big bout of inflation in the 1970s-80s, which caused a big boost in the XAO. There is no realistic prospect of returning to that trend line, because the scale has changed.

If you can find a 100 yr XAO rebased on CPI you will find quite a different and more believable trend in recent years. I think you'll find we're quite close to that trend.

Adjusting for CPI doesn't affect waves, so if waves are your thing you'll get much the same results.

 

[tech/a]

Re: XAO Analysis

Oz Wave.

the count on the 100 yr chart cant be correct as Wave 3 is the shortest wave.
One of the laws of Elliott is that Wave 3 cannot be the shortest.

 

[theasxgorilla]

Re: XAO Analysis

I don't buy long term trend lines like this that ignores CPI. We had a big bout of inflation in the 1970s-80s, which caused a big boost in the XAO. There is no realistic prospect of returning to that trend line, because the scale has changed.

If you can find a 100 yr XAO rebased on CPI you will find quite a different and more believable trend in recent years. I think you'll find we're quite close to that trend.

Adjusting for CPI doesn't affect waves, so if waves are your thing you'll get much the same results.

Great point Davo. You'll get a more "believeable" trend, however even CPI is inconsistent and subjective.

 

[motorway]

Re: XAO Analysis

Great point Davo. You'll get a more "believeable" trend, however even CPI is inconsistent and subjective.

Yes Yes Yes

and even time is inconsistent

But a trend of meaningful action Vs reaction ?

Is a Constant

Yin and Yang

and the flow of prices ( the curvy line )

The difference between
The shape of clouds ( actual Supply and Demand )

and the shapes people think they see in clouds

( most what passes for TA )

The visble chart dates from 1990

2% x 1

Objective chart
of the waves of demand and supply

getting a bulge in volume

motorway

 

[MS+Tradesim]

Re: XAO Analysis

Also, what exactly is being mapped as the "XAO" in these charts prior to Jan.1980 when the XAO was established? Unless the historical data was compiled with the same methodology or 'normalised' in some significant way then throwing up a 100 yr chart of the "XAO" seems to lack meaning.

 

[motorway]

Re: XAO Analysis

Compare !

VOLUME
TREND
CONGESTION

motorway

 

[OzWaveGuy]

Re: XAO Analysis

Oz Wave.

the count on the 100 yr chart cant be correct as Wave 3 is the shortest wave.
One of the laws of Elliott is that Wave 3 cannot be the shortest.

Not sure I follow TA. Wave 3 is the longest on this log chart in terms of the adjusted log value. Can you elaborate.

 

[OzWaveGuy]

Re: XAO Analysis

You're starting to scare me OzWaveGuy, but thanks for the analysis, however depressing ;-) Would you happen to have a higher resolution image of that 100 year chart??

If so, maybe you could upload it to somewhere like http://transferbigfiles.com/
and paste the link here in this forum.

Here you go, it looks like the ASX has updated it so it's now current. http://www.asx.com.au/products/pdf/share_price_movements.pdf

Don't be scared or depressed (i overcame that some time ago) about this possible scenario unfolding. Be prepared, there will be opportunities that unfold in the gloom, and as usual when the gloom is the darkest you will know that a bottom is at hand. Contrarian indicators apply in both bull and bear markets.

 

[Wysiwyg]

Re: XAO Analysis

Here is a closer up shot.(click on image to expand)

Wave ... what do you mean by "Contrarian indicators apply in both bull and bear markets"?

 

[Whiskers]

Re: XAO Analysis

Motorway your P&F chart seems to suggest the XAO has about bottomed bottomed out on the trend line... and talking of trend lines it seems the XAO has about bottomed out on the post 87 trendline.

The Dow seems to have broken the post 87 crash uptrend twice. Does that mean an extraordinary rebound will occur?

The trends since the 2007 high seems to show considerable convergance. Does that mean some sort of equilibrium... to turnaround?

 

[OzWaveGuy]

Re: XAO Analysis

Here is a closer up shot.(click on image to expand)

Wave ... what do you mean by "Contrarian indicators apply in both bull and bear markets"?

Contrarian indicators are a reasonable identifier that the opposite will or is about to happen.

In 1969, the Boeing 747 was introduced into service and the BAC Concorde's first flight was in March the same year. This was a signal that the prior excesses had run their course and thus a correction was at hand - and so it was, pushing into a aggressive 5yr bear market.

Today, the A380's first flight was in 2005, with an in-services date of 25th Oct 2007 with Singapore Airlines - this was a signal to me 3yrs ago that a the top was at hand. Sure enough, exactly 7 days after the in-service date of the A380, the XAO topped - a correction of the prior excesses had begun.

In 1999/2000, the mood was so optimistic there were a series of investment books published - Dow 36000: Published Nov 2000, Dow 40000: Published Jun 1999 and Dow 100000: Published Sep 1999. All were contrarian indicators to indicate that a top was at hand, and so it was.

The same is true in a bear market, when the gloom is at it's worst, along will come opportunity. Winning with Dow Losers: Published Dec 2003 and
Divorcing the Dow: Published Jan 2003, again were contrarian indicators that shone the light on those that could see a bottom was in place.

The contrarian can drive people crazy, as they are literally the only one sitting in a crowd with an opposing view. This is where many leaders in companies or government show the crowd the way forward out of the gloom and into a new era, but there is usually a cost in doing this.

Interestingly Kevin Rudd was voted in at the top of a magnificent bull market run - a contrarian indicator? Will he be the right person to lead in hard times - time will certainly tell.

 

[Whiskers]

Re: XAO Analysis

If I may add to your chart $20shoes, there is also a very good morning star formation there (three candles underlined in blue).

I have literally banked money on the evening star at the top of extreme bull runs and am quietly confident that this correction is well overdone too, as indicated by the morning stars... and in EW terms it looks like a minor wave i and ii are in with iii (which typically extends), ready to launch.

XAO climbing steadily.

The $64 question is will it close above 4097.35... to qualify for a trifecta of morning stars... Dow, S&P 500 and XAO?

 

[Whiskers]

Re: XAO Analysis

I do believe we have the morning star trifecta.

Pretty reliable sign of a bullish trend reversal.

Oh, and the US indicies have turned to green, about 2%.

Wouldn't wanna be a bear tonight or tomorrow I don't think.

 

[Frank D]

Re: XAO Analysis

SPI Daily and 5-day pattern

This was the pattern from Friday :- 4063.

Once above 4063 the expectation is a rotating back into the 50%
levels.

This price action doesn't tell me much other than it's rotated back into
the 50% levels:- it was going to occur on Friday or today.

Personally I would like the see market continue back towards the October breakouts @ 4434, so I can get out of my resource stocks from Friday's
lows :- BHP and RIO.

And it wouldn't surprise me to see the market down around the Weekly lows either.

 

[treefrog]

Re: XAO Analysis

I do believe we have the morning star trifecta.

Pretty reliable sign of a bullish trend reversal.

Oh, and the US indicies have turned to green, about 2%.

Wouldn't wanna be a bear tonight or tomorrow I don't think.

not so sure of the candles reliability whisk.
http://premium.working-money.com/wm/display.asp?art=329
"I analyzed 575 American stocks/bonds over a period of 15*20 years, from the early 1980s to the present. Using MetaStock's definition for candlestick patterns, those being international standards, I identified each candlestick formation and observed the trend starting from the day after the formation occurred. I looked for about 40 patterns and tabulated each trend's subsequent rise, decline, or neutral movement. My goal was to get statistical percentages on the most reliable candlestick formations". Giovanni Maiani

 

[Porper]

Re: XAO Analysis

Wouldn't wanna be a bear tonight or tomorrow I don't think.

I would rather be short than long.In fact my only positions are short.

A lot of talk about the bottom being in.So it probably isn't.

Plenty of time to go before I become a bull.Of course we will get the short sharp bounces.Very difficult to pick them, a lot easier to short after the corrections to the main trend.

 

[Whiskers]

Re: XAO Analysis

not so sure of the candles reliability whisk.
http://premium.working-money.com/wm/display.asp?art=329
"I analyzed 575 American stocks/bonds over a period of 15*20 years, from the early 1980s to the present. Using MetaStock's definition for candlestick patterns, those being international standards, I identified each candlestick formation and observed the trend starting from the day after the formation occurred. I looked for about 40 patterns and tabulated each trend's subsequent rise, decline, or neutral movement. My goal was to get statistical percentages on the most reliable candlestick formations". Giovanni Maiani

That's interesting treefrog, but I can see a serious flaw with this guy's research method straight off.

He says he is tracking the trend movement... on the basis of one candle the day after the formation of the pattern. One candle, especially the immediate one after the formation isn't a trend.

The second column shows the percentage of the total found, and the last column shows the percentage that preceded a rise, fall, or sideways movement on the following day

It is not uncommon for the candle the day after to close lower than the last candle making the pattern... the DJIA morning star for example is lower the following few days but not a new low, so the trend reversal, uptrend is still intact.

PS: Porper, I really like the evening and morning star patterns... especially a trifecta of them. That's one hell-of-a-coincidence eh.

 

[treefrog]

Re: XAO Analysis

That's interesting treefrog, but I can see a serious flaw with this guy's research method straight off.

He says he is tracking the trend movement... on the basis of one candle the day after the formation of the pattern. One candle, especially the immediate one after the formation isn't a trend.

Wouldn't wanna be a bear tonight or tomorrow I don't think.

1) sorry, thought you were referring to tonight's/tomorrows candles:
2) you might have to get a lot of candle pattern texts changed too - most state the completion of the pattern is the signal, with the following candle confirming - not waiting for an uptrend to be confirmed (a higher low) - what I understood the researcher to be on about, but do agree there is also a lot of reference to trend reversals along with the hocus pocus

this is the criteria from americanbulls.com
Definition:Bullish Morning Star
This is a three-candlestick formation that signals a major bottom. It is composed of a first long black body, a second small real body, white or black, gapping lower to form a star. These two candlesticks define a basic star pattern. The third is a white candlestick that closes well into the first session’s black real body. Third candlestick shows that the market turned bullish now.

 

[tech/a]

Re: XAO Analysis

I do believe we have the morning star trifecta.

Pretty reliable sign of a bullish trend reversal.

.

All it's saying is that the crowd suffers from exactly the same psychology world wide.

Like all patterns they are indications.
All can and do fail.
All you can and should do is have a trade plan to take advantage of them and how to mitigate your risk if they go wrong.
Most of all wait for trades to come to you.