XAO Technical Analysis

Whiskers · 20 October 2008

Re: XAO Analysis

treefrog said:
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.

Yeah, my literature calls the third candle the confirmation candle, which should extend at least half way into the real body of the first candle. The three candles make the pattern.

It's a bit unclear to me, but I got the impression he was tracking the candle after the formation is complete, ie in this case the one after the third in the formation (white candle confirmation).

Ah yes it's still possible for the XAO or even the US to go flat or marginally lower, but not a new low and the morning star still be in tact on a trend reversal, but all things considered and especially that the Dow and S&P seem to have completed a minor wave i and ii and the futures turning well green, I like the odds of the US up tonight and if thats the case, better than even bet we'll be up tomorrow.

PS:

tech/a said:
All it's saying is that the crowd suffers from exactly the same psychology world wide.

Yes indeed... and I'm thinking with gusto.

Still amazed that we now have a trifecta... incredible.

tech/a · 20 October 2008

Re: XAO Analysis

Porper said:
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.

Pete I'm of the opinion we need to have a rally before having the final drop.

It seems to be setting up that way.
Id like to see a slow down in volatility with a change in consecutive up days from down.For a long while its been 3 or 4 down and one or two up.
If this reverses we could see the rally back towards 5000 I'm expecting.
But this current low is not likely to be the lowest---at this point in time.

In my opinion.

Trembling Hand · 20 October 2008

Re: XAO Analysis

Whiskers said:
especially that the Dow and S&P seem to have completed a minor wave i and ii and the futures turning well green, I like the odds of the US up tonight and if thats the case, better than even bet we'll be up tomorrow.

Opens counter to the trend have very bad stats whiskers. That's trading 101.

You are better off wishing for down opens than green ones.

Ageo · 20 October 2008

Re: XAO Analysis

tech/a said:
Pete I'm of the opinion we need to have a rally before having the final drop.

It seems to be setting up that way.
Id like to see a slow down in volatility with a change in consecutive up days from down.For a long while its been 3 or 4 down and one or two up.
If this reverses we could see the rally back towards 5000 I'm expecting.
But this current low is not likely to be the lowest---at this point in time.

In my opinion.

Interesting you say that Tech as the only short position i will place is if the XJO hits 5000..... (im not into short term trades as such)

All this money being pumped in surely will have to rally the markets in some way

Porper · 21 October 2008

Re: XAO Analysis

tech/a said:
Pete I'm of the opinion we need to have a rally before having the final drop.

More than possible John.

My count has us as now in a possible sub wave 4.Wave 2 was sharp so I am expecting this wave 4 to be longer in time but also sideways and choppy.

If we rally above 4575.20 then my lower time frame count is wrong and will re-evaluate then.

Also Elliot Wave apart, we haven't had a rally really since March, we can't go on like this for ever.

Also, not being able to short ASX stocks has investors on the sidelines itching to get back in.Once the herd start buying we could get a massive rally.Trying to time it will be a skill few have.

mrgroundwork · 21 October 2008

Re: XAO Analysis

short selling ban on non-financials set to continue to late november...

short selling ban on financials set to continue to late january...

stoner · 21 October 2008

Re: XAO Analysis

OzWaveGuy said:
On Friday the 10th Oct, the Elliottwave count strongly indicated further downside on the XAO before we would start to see some wave 4 bounces before heading to new lows. The bounces appear to be happening now, but there needs to be further downside before the larger wave iv up commences.

Where could the wave count take us? I've added a rough structure on the 15min chart of how the market could unfold over the coming week(s). I've taken a estimate of where wave iii down will end. I've used a mid-call of 138% the length of wave i (not shown) which is around 3400 on the XAO (as shown), before wave iv up starts.

Of course, the usual caveats apply with forecasting in this forum, but the EW counts seem to be unfolding in roughly the sequence that has been discussed previously.

I've changed the wave labeling slightly to cater for further subdivisions that have unfolded - but basically the overall higher level counts remain intact. More or less subdivisions of the current wave structure will affect the termination points as discussed here. Time will eventually show us these answers.

I haven't included any alternate counts (and there are other scenarios), but the count below is the preferred.

I'm traveling OS at the moment so I'm getting to see plenty of CNN, MSNBC financial news (which I've turned off) and the information is overwhelming, conflicting and sometimes desperate in trying provide the viewer an answer on why the market is reacting the way it is (This will only get worse as the bear market wears on).

The poll CNNMoney ran recently hit the nail on the head, CNNMoney asked what will cause the market to recover, and the answer a high % (80% from memory) of people responded with was "time" - which is very clear to me and is indicated in the longer term EW wave counts (4-6+ year correction of the bull run from the mid 70s)

Hello OZG.

I am new to Elliott Wave Theory(as well as these boards). Have been looking at EWT on and off for the last 2 years.

I am wondering if you can explain your numbering of this chart as you have the upward swing marked as (II) smaller in size than II. Please correct me if I am wrong, but should waves of larger degree not be bigger in length than those of smaller degrees? Also after circled wave 4 you have not labelled the small upward move just prior (1).

It seems there are quite a few wave count variations possible here. I notice that you (your count) calls for further downside. The market reached an extreme on Black Friday with large volume and a capitulation move down. These are the types of moves that usually end bear markets or at least halt the downside for quite a few months. The VXO, (the predecessor to the VIX) in the USA reached an extreme FEAR level recently. These sorts of levels have not been seen since the 1987 crash. I find this a better tool to use to gauge a bear market rather than wave counts. As such I have been adding to my longs on pullbacks.

The current decline from the peak was a 47% drop here and the DJI. If we follow the model that this move down was wave A(which I am), then wave B is usually approximately 50% rally of the decline.
If you look back in history… crash of 29and the NASDAQ crash, you will notice these moves all started with a 47% -50% decline initially. I am using these moves as an analog for the current move down. Thereafter 50% upward rallies(Wave B) followed which lasted almost as long as the duration of the declines.

The killer punch in all these cases was the nasty wave C’s that followed which were at least 1.618 times as long as wave A. So if we are headed for a longer term deflationary depression that Prechter talks about in his book “Conquer the Crash” that may actually eventuate

All the Best

Stoner

OzWaveGuy · 22 October 2008

Re: XAO Analysis

stoner said:
Hello OZG.

I am new to Elliott Wave Theory(as well as these boards). Have been looking at EWT on and off for the last 2 years...

Good questions Stone. Some quick answers...

There is a chance that wave iv is now underway and is forming a triangle and the wave count would fit into this scenario perfectly (eg less subdivisions have actually occurred as originally proposed under the wave iii = 138% of wave i scenario). If the triangle scenario is in fact correct there is further downside to come (perhaps 75% - 138% or more of the width of the triangle to the downside)

In terms of the VIX and other indicators (eg MACD, RSI bullish divergence) that are in extreme conditions, they certainly represent possible bounces at hand but ultimately it's the wave structure that determines the next moves.

Once clarity is present (eg a triangle represents good clarity in most wave structures) then the remaining wave 5 with a-b-c correction can be estimated reasonably well.

So far we've seen 5 waves down from the high with a 3 wave correction - so at least 5 more waves down are required to complete a zig-zag correction (at a minimum). This appears to be completing with further downside to finish the 2nd set of 5 waves. However, i don't think it'll stop there, there is simply too much that needs to unwind from previous excesses to turn around now - but a bounce is needed shortly.

Ultimately there are events that will soon unfold (probably later this year or early next) that will kick the bear market into high gear. This is simply a matter of negative social mood that is becoming more evident. Plenty of conspiracy theory web sites are pointing to a range of "events" that will occur or have been pre-planned to take advantage of the current situations - either way it's a factor of negative social mood

chops_a_must · 22 October 2008

Re: XAO Analysis

OzWaveGuy said:
Good questions Stone. Some quick answers...

There is a chance that wave iv is now underway and is forming a triangle

Lol...

nice finish again this morning.

But we are forming a nice pennant of some kind by the looks...

We are at least going to test the lows in quick time, and breakout from it sometime fairly soon IMO.

stoner · 22 October 2008

Re: XAO Analysis

OzWaveGuy said:
So far we've seen 5 waves down from the high with a 3 wave correction - so at least 5 more waves down are required to complete a zig-zag correction (at a minimum). This appears to be completing with further downside to finish the 2nd set of 5 waves. However, i don't think it'll stop there, there is simply too much that needs to unwind from previous excesses to turn around now - but a bounce is needed shortly.

Thanks for your reply Ozwave,

I am pretty much a EW novice compared to yourself and others in this forum, as still learning the wave counting ropes

In my "green as grass" opinion though after sifting Elliott Wave Principle (Frost and Prechter)repeatedly, the current decline from the October 2007 high looks more corrective than impulsive. Would be interested to hear the thoughts of other more experienced wavers?

I wonder if it is possible to determine if this actually in the next few days or does much more time have to pass.

chops_a_must · 22 October 2008

Re: XAO Analysis

hello,

lots of sellers out, not many buyers, great time to be a buyer, prices crashing, interest rates going down

the sun is shining, couldn't think of a better place to be buying shares

interest rates going down, inflation going through the roof, price of debt getting cheaper

imagine the profit when interest rates go to 1%

thankyou,

chopbots

MS+Tradesim · 22 October 2008

Re: XAO Analysis

chops_a_must said:
hello,

lots of sellers out, not many buyers, great time to be a buyer, prices crashing, interest rates going down

the sun is shining, couldn't think of a better place to be buying shares

interest rates going down, inflation going through the roof, price of debt getting cheaper

imagine the profit when interest rates go to 1%

thankyou,

chopbots

Bwahahahhahah!!! Snicker. Chortle! Can I play too?

roland · 22 October 2008

Re: XAO Analysis

chops_a_must said:
hello,

lots of sellers out, not many buyers, great time to be a buyer, prices crashing, interest rates going down

chopbots

This to me always seems to be a paradox, how can there be lots of sellers in relation to buyers? For every seller, there has to be a buyer to pick it up - so buyers versus sellers must balance otherwise there would be no share trading.

Of course I understand the term really menas that the holders are willing to take less for their holdings which drives the price down.

$20shoes · 22 October 2008

Re: XAO Analysis

stoner said:
Thanks for your reply Ozwave,

I am pretty much a EW novice compared to yourself and others in this forum, as still learning the wave counting ropes

Stoner, if you can stand some Gold bias, David Petch does some interesting long term analysis on the US indices and HUI, using a mixture of Stochastics, Fibs and Elliot wave counts.

http://www.321gold.com/archives/archives_authors.php?author=David+Petch

Nick Radge · 22 October 2008

Re: XAO Analysis

This to me always seems to be a paradox, how can there be lots of sellers in relation to buyers? For every seller, there has to be a buyer to pick it up - so buyers versus sellers must balance otherwise there would be no share trading.

Think of it in terms of 'desperation' of sellers vs. buyers. A desperate seller is more willing to sell at a lower price to exit. The reverse is also true - just not in this environment. If more sellers are desperate then they will force prices lower just to exit.

roland · 22 October 2008

Re: XAO Analysis

Nick Radge said:
Think of it in terms of 'desperation' of sellers vs. buyers. A desperate seller is more willing to sell at a lower price to exit. The reverse is also true - just not in this environment. If more sellers are desperate then they will force prices lower just to exit.

Or opportunistic profit takers and short term swing traders who have picked up on the bottoms - I feel that this amplifys the volatility and stiffles any rallies

Nick Radge · 22 October 2008

Re: XAO Analysis

roland said:
Or opportunistic profit takers and short term swing traders who have picked up on the bottoms - I feel that this amplifys the volatility and stiffles any rallies

Too true Roland, which is why bear market rallies are so potent.

skyQuake · 22 October 2008

Re: XAO Analysis

roland said:
This to me always seems to be a paradox, how can there be lots of sellers in relation to buyers? For every seller, there has to be a buyer to pick it up - so buyers versus sellers must balance otherwise there would be no share trading.

Of course I understand the term really menas that the holders are willing to take less for their holdings which drives the price down.

Just be aware that there could be more sellers than buyers or vice versa. A huge seller may be dumping stock that will take 10 normal buyers to satisfy.

Indie · 22 October 2008

Re: XAO Analysis

chops_a_must said:
hello,

lots of sellers out, not many buyers, great time to be a buyer, prices crashing, interest rates going down

the sun is shining, couldn't think of a better place to be buying shares

interest rates going down, inflation going through the roof, price of debt getting cheaper

imagine the profit when interest rates go to 1%

thankyou,

chopbots

Hehehe, nice one.

I'm going long denial and short common sense investing.

chops_a_must · 22 October 2008

Re: XAO Analysis

Indie said:
Hehehe, nice one.

I'm going long denial and short common sense investing.

hello

sure, why not

it works for property with the chopbots

thankyou
chopbots

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