XAO Technical Analysis

Re: XAO Analysis

Julia said:

Undoubtedly true, but I suspect many retirees who have been following advice to "hold on, it will all be fine" may have reached the stage where they no longer have any faith in that suggestion and would have cashed out anyway.

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Not sure about this. Most self funded retirees live on dividend and interest payments. Why would you sell up now when fully franked dividend yields are high to put the money into cash with a falling interest rate and no franking credits?

Re: XAO Analysis

Ferret said:

Not sure about this. Most self funded retirees live on dividend and interest payments. Why would you sell up now when fully franked dividend yields are high to put the money into cash with a falling interest rate and no franking credits?

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... because those dividend payments may be greatly reduced

Re: XAO Analysis

Nyden said:

... because those dividend payments may be greatly reduced

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... or in a worse case, cancelled. I suspect many small / medium companys are going to be slashing dividends (even cancelling dividends in a few instances) over the coming months. I wouldn't be surprised to see the odd major reduce its divvy payouts either.

Re: XAO Analysis

Looking at Dow and SP500 chart from last night.
Alhough the falls out of this triangle look massive, in actual fact market has not moved out of the flag/triangle as most moves do. It looks like it's taking it's time.

From the day of the top, counting 377 calendar days forward( 377 is in the fibonacci sequence) we hit 10th October, which was the low at 7800 on the dow and 840 on the SP500.

In a conventional move out of a triangle the target would be 7200 in the Dow. I cannot see this happening now, in fact the low made on the 10th October will stand and the Neely forecast of an ENDING TRIANGLE looks like it might happen. Monday will be the decider and possible the last day of selling pressure which to me seems to be easing in this down move compared to the big in leading up to 10th October.

STONER

Re: XAO Analysis

The distribution of data points is not normally distributed; rather, they are log-normally distributed. Are you able to re-present this graph on a log scale and apply linear trends? That would be more appropriate. Of course the two may converge when exponentiated, but analyzing the data in log-linear is more valid.

MS+Tradesim said:

Green range here we come.

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Re: XAO Analysis

Here's an update of my chart on semi-log. Looks like it's just broken down from a descending triangle.

GP

Re: XAO Analysis

GreatPig said:

Here's an update of my chart on semi-log. Looks like it's just broken down from a descending triangle.

GP

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Hi GP.

So, from the break, anyone's guess into the uncharted zone?

Any prediction on Monday's close?




aj

Re: XAO Analysis

lucifuge said:

The distribution of data points is not normally distributed; rather, they are log-normally distributed. Are you able to re-present this graph on a log scale and apply linear trends? That would be more appropriate. Of course the two may converge when exponentiated, but analyzing the data in log-linear is more valid.

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Just for you, though the same trends are clearly observable on the standard chart...

Anyways, I don't believe any analysis is especially meaningful under the current situation. This is a breakdown of a credit induced super cycle. I present these charts merely for interest's sake. I am completely out of the market.

Re: XAO Analysis

so long as people are looking at charts, charting patterns will have some influence!

Re: XAO Analysis

Thanks for that.

I have to agree with your "lack of meaning" comment under the current situation. Even so, I remain in the market as I'm holding for the long term.

Personally I think the Dow will be testing 7500 before long and then possible 7100. So whatever these equate to in our market.

MS+Tradesim said:

Just for you, though the same trends are clearly observable on the standard chart...

Anyways, I don't believe any analysis is especially meaningful under the current situation. This is a breakdown of a credit induced super cycle. I present these charts merely for interest's sake. I am completely out of the market.

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Re: XAO Analysis

Although this chart isn't the XAO, the S&P500 probably contains the strongest and clearest Elliottwave patterns (in addition to the Nasdaq) that shows where the market is heading over the short term.

There's some interesting observations in this chart should the triangle formation be confirmed as discussed below.

If the wave iv triangle builds out over the coming days/weeks then this is a good indicator on the next market action. Usually the width of the widest point of the triangle is a good indication on the future action. In addition, I've added some points on the chart - the most interesting is that by estimating the width of the possible triangle, it has given us some possible targets. Both targets correspond almost exactly to a Fibonacci relationship of wave i.

One rule of impluse waves is: if wave iii is the extended wave, then wave i and v should be equal or a Fibonacci relationship of 61%. It's also interesting to note that wave iii is just over 161% of wave i - another Fibonacci relationship for impulse waves.

In summary, the waves on the S&P500 appear to be tracing out a almost perfect elliottwave pattern with the default fib relationships of price. If the market operates within the boundaries set below, then a break of the triangle's b-d support line (currently estimated) to the downside then wave v will be underway.

Once wave v completes, there should be a correction that takes the index up for a period of time.

Re: XAO Analysis

stoner said:

Certain Elliott Wavers on this board saying we are in triangle wave 4’s at present with wave 5 now in progress. Others saying pennants etc…..

The SP500 and Dow are also showing triangle patterns with EW gurus abroad touting that another wave 5 selloff is on the cards.

Although I am a novice at EW, I have briefly looked at Mastering Elliott Wave by Neely and some of the work of the late Zoran Gayer whom based his work on that of Neely.

On top of the conventional EW patterns in Elliott wave Principle by Frost and Prechter these guys are also working with some additional patterns. In the case of the SP500 and DJI presently , which looks like a conventional wave 4 triangle, they also talk about ENDING TRIANGLES, which is basically a failure of the wave 5 to occur. This would be akin to a bottom and then minor degree waves 1 and 2 to the upside(such a pattern also look like a triangle!!

Just another possibility before to consider before assuming a wave 5 always will occur…….


STONER

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Stoner - not sure I follow you on this thread - are you referring to ending Diagonals? An ending Diagonal occurs in wave 5 or c positions. However, if you are referring to a 5th wave failure, then by design, the fourth wave will still need to complete (which may indeed be a triangle). You may want to elaborate.

Neely, i've read and seems to be the most concise material on elliottwave that I have seen.

Re: XAO Analysis

Captain G said:

Some are saying that the bottom has been found or a bounce along, but it will be very interesting once the Fed/ Media finally states that the US is actual in a recession. When the "Fat Lady" has finally sung, that's the time when we'll see the real bottom.

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the media seems to be saying everything and anything. CNN said "the financial crisis was over" after the bounce on the 10th. I checked my calendar to make sure it wasn't April 1st and turned to more intelligent viewing with a re-run of the Simpsons.

Re: XAO Analysis

treefrog said:

"Re: The Elliott Wave Analysis Thread
All my EW skills come from the old school - Prechter's classic EW. Combined with the simplicity of Miner's style.
I heard there is another school that is based around Glenn Neely teachings. Is it any worth to read his book? I am content around the classic style but I try to keep and open mind to any new idea."

quite true tech, but which one??

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Neely, extends Elliott's teachings with finer methods. Most people (as shown in this forum) get cranky with elliott because the count was wrong or it was a impulse when it should have been a correction etc. Neely undertakes some very useful techniques around all of types of waves esp corrections - which are the main culprits for most people. Worth the outlay. You'll need to read it several times as there is a stack on content

Re: XAO Analysis

OzWaveGuy said:

Stoner - not sure I follow you on this thread - are you referring to ending Diagonals? An ending Diagonal occurs in wave 5 or c positions. However, if you are referring to a 5th wave failure, then by design, the fourth wave will still need to complete (which may indeed be a triangle). You may want to elaborate.

Neely, i've read and seems to be the most concise material on elliottwave that I have seen.

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Hello OWG,

Not referring to ending diagonals, contracting triangles, or any of those commonly known Elliott patterns.

Zoran Gayer who built on Neely's work discovered another pattern called an ENDING TRIANGLE or triangle truncation. These patterns occur all over the place especially in intraday currency markets. The low of 2003 in the SP500 was an ENDING TRIANGLE. Do you remember that? Prechter and his boys were waiting form a 4th wave to build and got sh.fted missing the whole bullmarket of 5 years. Great Elliott call that was huh? Their problem was they were too bearish and negative sentiment had reached an extreme. Strangely the low was reached just 3-4 months after his book "Conquer The Crash" was released which in itself is an expression of negative sentiment, one of the very tools he uses to measure the market!

Just also alerting you to the chance that your wave count may well be wrong because you have not covered all the possible wave scenarios here. Re the SP500 and DJIA another possibility there is that a low may already be in place and that the current wave count action was an impulse up on the rally that started after the 10th October, followed by an complex correction that we have had to date. This is especially true if viewing these patterns in an hourly chart. That is what I am working with presently.

I am not an Elliott Wave expert yet, although I have picked up many facets up quickly over the last 2 years. I still need to learn to the application of Elliott because that is what is important. Theory is just theory, and assuming this is a 4th wave after a fourth we have to get a fifth, then sorry but you are missing out on all the possibilities. From what I have absorbed in my studying, there can be up to three or four possibilities in terms of wave counts as your alternates. Ideally the prime count and most alternate counts should be pointed in the right direction in the timeframe you wish to trade OR you find other means/methods to validate your wavecount. I like using Fibonacci as can be seen from the chart posted earlier.


BTW, I don't see an impulse down from the 07 peak yet. Maybe I am just not proficient in the use of Elliott yet, but I see a zigzag with wave A being an abc, wave B boing an expanded flat with minor wave c of that upward correction being and ending diagonal. Wave C down looks to possibly have been an impulse but too early to tell.

Not sure I follow the logic in waves i and ii of the chart you have posted as the position of wave ii is wrong. It should be at the earlier peak in August, but then what do you do with the wavelet that you have currently marked ii? There is a wave missing here in the count. It maybe where you have ii that needs to be a lower degree wave. Need to think this over, will post my version of this later. Every wave needs to be accounted for in order ofr the count to be valid.


All the best

STONER

Re: XAO Analysis

Cripes! Some intelligent, respectful, EW discussion. Flabbergasted! Nice change, ty. Kennas

Re: XAO Analysis

stoner said:

Hello OWG,

Not referring to ending diagonals, contracting triangles, or any of those commonly known Elliott patterns....

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Hi Stoner. Yes I understand what you are referring to. Using Neely's methods, he described situations where in a double or triple flat or zig-zag corrections the last pattern was a triangle, before the market would reverse. The whole structure looks like an impulse pattern, and most would get it wrong.

This very same phenomenon can be seen on the UK100 futures chart today. The leg up from 2003 to the recent high is a corrective B wave with a ending triangle. The following c wave actually starts lower than the ending B high and is driving down in impulse waves - So it should be a massive flat (3-3-5) correction.

I don't believe this ending triangle situation is with us on the XAO at the moment, as like the S&P500, the XAO is driving down in impulse waves.

Re the missing wave you mentioned in wave ii. Wave ii is an expanded flat with a c wave failure.

Cheers OWG

Re: XAO Analysis

one thing about Eliott-wave is that it always presents a perfect pattern in retrospect, ie once the full count is completed, but rarely - such as right now - anything more than fairly precise measured possibilities & probabilities in either direction ... at least in the immediate, short term.

I found Stoner's reference to "Prechter & his boys" quite amusing. at the time I got the same impression, but did not want to appear rude & criticize the masters of EW. because basically I believe in it, but with aforesaid limitations.

various analysts whom I respect, are completely undecided about the current market, this is with ref both to the Dow & consequently the XAO. they are waiting to see which way it will break-out, up or down before committing themselves to any prediction or target. but now for some interesting comment from Money and Markets:

Burning Question: Won't This All Be Inflationary?
by Jack Crooks

Dear Subscriber,

It's a popular notion when the financial winds are blowing unfavorably:

Money is being printed uncontrollably ... inflation is the only option ... fiat currencies are doomed.

The thing is, if you're buying into this idea, you're mostly perpetuating a misconception. Actually, inflation isn't as simple and certain as it's cracked up to be..... ....

he then goes on to draw comparisons with the stagnant environment in Japan etc etc. for inst he sees nothing wrong with the strength of the USDollar! leaving one wondering about the dollar, gold, and the market overall. my own conclusion: it might be a good idea to stay cashed up for a little while longer, until the smoke clears ... and wave-5 makes up its mind.

Re: XAO Analysis

kennas said:

Cripes! Some intelligent, respectful, EW discussion. Flabbergasted! Nice change, ty. Kennas

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lol, thanks, we aim to please!

Re: XAO Analysis

Until proven wrong ( 99% chance of this actually), I'll continue to play Devil's advocate and suggest we are at a major low right here on the weekly charts.
No point trying to pick the bigger trends on the dailys right now.

XAO
The left hand pic (weekly XAO) shows that we have pushed down to an extreme level on the Bollingers, and at the same time the Stochastics will spend the next few weeks bottoming out, suggesting some possible basing.

The Bollingers are not suggesting a bottom is in. However the last two weeks have put in definite inverted hammers, suggesting a bullish bottom reversal.

The right hand pic suggests the Head & Shoulders objective has been met right here at this level.

I have placed a longer term view of the weekly RSI since '87.
i) you will notice that at (0), the RSI has failed to reach its lower trendline (may still), so a divergence is possibly forming. It is reaching a low it has never seen since and including '87.
ii) A Descending wedge at (1) suggests we are about to sharply correct back up from an oversold level we have never known since and including '87.

US indices
I also post the formation of high wave candles on the US indices, being put in far below the bands - Suggesting a possible loss of trend (certainly a loss of momentum).
You can see what an extreme level they are at right now in relation to the weekly bands. Once again the Bands are not suggesting a bottom is in, but a powerful move down from here is unlikely unless we see a type of capitulation we have never historically witnessed. Stochastics both winding within a symmetrical triangle, and will perhaps do so into early December, when the next direction might be clearer.