XAO Technical Analysis

[$20shoes]

Re: XAO Analysis

Great. Way to spoil my secret trading strategy.

Haha SkyQuake...I'm using that one too!!! It thought it was my own...Damn, now the market's going to discount it, just as I was on to our generation's "Turtle Traders" road to riches...

 

[stoner]

Re: XAO Analysis

I promise, I won't wade into any more "anti-Fundamentals drive the market" discussion - at the end of the day it's whatever works for you right?

When you wake up today and switch on the news or read the web sites today you'll probably see a headline reflecting the media's analysis of what happened on the US markets last night, and you'll say "oh ok, that makes sense" or perhaps a profanity or two depending on what happened.

But make sure you understand how the headline was eventually derived.....

Hi OWG,

Totally agree with your comments here.

The media will always look for fundemental reasons to justify what the market did on a particular day. It really is just unbeleivable, and how they come to these conclusions is beyond me.

What I find very interesting though is, you may see for a example a technical pattern, be it with EW, Gann, or just any TA pattern analysis. You weigh up the probabilities, take a trade and the market does what your analysis says it has a good chance of doing. It's so strange how these TA related setups seem to coincide with news releases or events. But there is a difference, with the news, sometimes not everybody knows when they will be released or what sort of news will be handed out. The chart, everyone has access to!

There is a lot more to this than most people think

All the best

STONER

 

[MRC & Co]

Re: XAO Analysis

Media news from your local TV station or CNBC etc is hardly fundamental news by which you would take note.

Squawk box, Reuters etc, where you actually get news of which institutions trade upon and move markets is real fundamental news. GDP figures, inflation, rate announcements etc. You get it later from the other news outlets along with their BS analysis. You are always simply trying to get on the side of the paper IMO (unless you are trading squeezes or reactions), and these guys don't turn on the news of a morning and trade on what they hear there.

Fundamentals and TA intertwine on a daily basis. But no form, study or application of crowd psychology over a period of years has any usefulness IMHO. Forming global macro conclusions by those who understand it better than the average institution, now there maybe longer term credit in that.

 

[treefrog]

Re: XAO Analysis

:topic but relevant to current posts

appologies to the original author who's name has dropped from my file.

The Mars System - And Why It Wins
Back in the late 1960s I was a young commodity broker at E.
F. Hutton and Company. Our office was a brand new high-tech
office (for its time) which was considered the "flagship
office" for E. F. Hutton. In this office about thirty
brokers and as many clients shared one very large boardroom
and there were no private offices. The brokers had elegant
and expensive desks and the clients had a comfortable
seating area in the front of the office where they could
hang out and watch the tapes and monitor our state of the
art commodity "clacker board".

Sitting at my desk near the front of the boardroom I could
read my Wall Street Journal and keep track of the commodity
markets without looking at the board. By just listening to
the rhythm and tempo of the mechanical clicks as the prices
changed I could easily tell when anything important was
going on because the tempo of the clicks would increase
noticeably.

Just in front of my desk were a half dozen comfortable sofas
facing a high mahogany paneled wall with the tapes and the
"clacker board". A gallery of traders, mostly retired "old
timers" who were trading real commodities like grains and
pork bellies, lounged around on the sofas plotting their
charts and talking about life and the markets. They
typically arrived early to get a good seat in their usual
spot and then spent the day trading, exchanging commentaries
and offering unsolicited advice to one another on any
subject. For the most part they were a very sociable group
who would take coffee breaks together and greeted each other
on a first name basis. These traders enjoyed the elegant
atmosphere and treated our well-appointed boardroom as their
private men's club. (Were you aware that women were not
allowed to trade commodities back in those days? My how
times have changed!)

However, one of these "old timers" kept to himself and was
not interested in becoming a member of the friendly and
often boisterous social circle. He usually sat quietly by
himself intently watching the price changes on the commodity
board and holding an old glass Coca-Cola bottle up near his
ear. The vintage shaped Coke bottle had been emptied many
years before and now contained only a 12-inch tube of bent
and broken radio antennae which extended awkwardly out of
the top of the bottle.

Keep in mind that in the 1960s no one had yet heard of cell
phones so the purpose of this Coke bottle was a real mystery
to everyone. When the trader would talk to the bottle from
time to time all the heads would turn and the traders nearby
would try to listen to the conversation. But the trader
spoke very softly and no one was able to eavesdrop on his
conversations with the bottle.

The traders knew that the fellow with the coke bottle was a
client of mine and eventually a representative of the group
came to me and explained that they were extremely puzzled
about this guy and his Coke bottle and asked me if I knew
what was going on. I didn't know the purpose or meaning of
the Coke bottle but I was as curious as anyone was and I
promised I would find out. The next time the client came
back to my desk I promptly placed his order and then
politely asked him about the Coke bottle.

With a serious expression and no embarrassment he explained
to me that the Coke bottle was an inter-planetary
communication device that had been given to him by aliens.
He said that the aliens were very interested in our
commodity markets and they often gave him trading advice
from their various observation points on other planets. He
said that he had just had a message from Mars and they were
buying soybeans so he had also purchased soybeans. After
revealing his unique trading methodology he returned to his
seat and resumed his whispered conversations with the Coke
bottle.

As soon as I revealed my discovery of the meaning of the
Coke bottle to the other traders, all attention was
immediately focused on the Coke bottle trader and the
soybean market. The soybean market proceeded to go the
wrong way and the trade from Mars was eventually closed out
at a loss. The other traders had no sympathy and were
quick to begin ridiculing the trader and poke fun at his
beliefs. The next trade however turned out to be a big
winner and the Coke bottle trader went from sofa to sofa
telling his story and pointing to the clacker board while
waving his Coke bottle and bragging about the profitability
of his most recent message from outer space. Because he was
making money now his previous critics had to endure his
bragging about his success on the current winning trade.

As time went on and a few winning and losing trades later a
clear pattern of behavior began to emerge. The Coke bottle
trader was ridiculed unmercifully on his losing trades but
was able to get his revenge and the last laugh during the
winning trades. This trader might have been a little bit
crazy but he wasn't stupid. He soon learned that his only
defense against ridicule was to hold on to winning trades as
long as possible and to quickly get out of his losses. As
long as he was sitting on his sofa with a winning trade no
one could tell him he was crazy and make cruel jokes about
his messages from Mars. In fact while he was winning he was
quick to wander around the room and ridicule the methods of
the other traders who were not making as much money as he
was. He displayed the profits in his trading account as
hard evidence of the validity of his methods and offered
copies of his statements as irrefutable proof that he was
getting valuable advice from his alien contacts. Who could
argue when his advice from other planets was obviously
working?

As a young broker this experience and the first hand
observation of the Coke bottle trader who suddenly became
profitable gave me my first important lesson about the
importance of exits. I knew the entry signals had nothing
at all to do with his success. His batting average was not
any better than that of any other trader. However, this
crazy old trader seemed to be able to make money
consistently while other traders with more "sanity" and more
valid entry methods were losing. Before long I was able to
recognize that this man had become a successful trader
simply by his efforts to avoid ridicule. He knew that he
was vulnerable during his losing trades so he closed them
out very promptly. His winning trades became his shield
against the ridicule of the other traders and he kept his
winners much longer than before his unorthodox methods were
revealed.

In the many years since this experience I have encountered
many claims of success for entry methods that probably have
even less validity than the Coke bottle messages. I have
learned to look only briefly at the entries of winning
traders and to examine their exit strategies very carefully.
I am very fortunate that more than thirty years ago I
learned from the Coke bottle trader that success in trading
depends on our exits and not our entries.

 

[stoner]

Re: XAO Analysis

Some interesting Elliott Wave Theory patterns in progress intraday OWG and other wavers.

Really looks like it's out of the textbooks I have reading, and hopefully these patterns will continue subdividing upward in the days ahead. The key date was 30th October and the low came in one day earelier than expected. Let's see if this pattern continues to surprise the bears, if anything for at leats the next week.




All the best

STONER

 

[Whiskers]

Re: XAO Analysis

Haven't marked EW on the hourly but those who can will see.

Getting up against the top of the bollinger and stochastic.

Another rise in base and precious metals is needed to keep her going though I think.

 

[treefrog]

Re: XAO Analysis

Some interesting Elliott Wave Theory patterns in progress intraday OWG and other wavers.
Let's see if this pattern continues to surprise the bears, if anything for at leats the next week.
All the best
STONER

this bear won't be surprised - day charts threatening to break from wedgie along with momentum break so will be expecting more than an intraday trade if it confirms

 

[OzWaveGuy]

Re: XAO Analysis

Some interesting Elliott Wave Theory patterns in progress intraday OWG and other wavers.

Stoner, the current upward thrust appears to be dying. The thrust into the early afternoon looks like a ending diagonal. I suspect the zig-zag 5-3-5 correction is now complete. In addition, 5 small waves down + an a-b-c correction look complete. The index should turn down from here in the next corrective phase (but not to new lows). Looking for a shorting entry (with a close stop)

 

[stoner]

Re: XAO Analysis

Stoner, the current upward thrust appears to be dying. The thrust into the early afternoon looks like a ending diagonal. I suspect the zig-zag 5-3-5 correction is now complete. In addition, 5 small waves down + an a-b-c correction look complete. The index should turn down from here in the next corrective phase (but not to new lows). Looking for a shorting entry (with a close stop)

Let’s see what “time” brings OWG. I suspect something else might be brewing here, and the rally will persist for longer than expected. Today possibly had the hallmarks of a developing 3rd wave of minor degree, but we will know soon if that is right or wrong.

The low in the SP500 and DJIA on 10th October ended a major cycle, as such I will hang onto my longs for a few more days possibly even another week

All the best

STONER

 

[OzWaveGuy]

Re: XAO Analysis

Let’s see what “time” brings OWG. I suspect something else might be brewing here

I still believe there needs to be a leg down, whether we see more upside tomorrow is another story. Never found a suitable entry to short today, but 5 waves up now look completed at end of trade today. Hourly indicators look oversold or have bearish divergence.

Here's yesterday's chart of what I think is occurring. We were close to 4000 today, so a leg down would be the preferred next step...

 

[MRC & Co]

Re: XAO Analysis

Personally, and this is just a feeling based on viewing supply and demand intraday all day, but only in the SPI.

I think someone has been capping the SPI for quite some time now, institutions needing to bail out of positions. It was happening again today, but some global indices are showing some strength and some bigger players came out to show they wanted in as the day progressed. Still a bit shaky, but positive signs no doubt.

Short-term bottom? I think so.

 

[Kauri]

Re: XAO Analysis

capping, corking, decanting, point scoring.. whatever... I seem to find it more benificial to my account to just quietly trade away... or maybe that should be fade away...

Cheers
...........Kauri

 

[MRC & Co]

Re: XAO Analysis

Yep agreed, all my trading is done intraday these days, so whatever will be will be. As long as volatility remains high for years to come.

But I must admit, I don't like to see new lows being pushed for by traders (or perhaps even just one trader), with no institutions there to defend it. It is brutal to watch (and take part in).

 

[stoner]

Re: XAO Analysis

I still believe there needs to be a leg down, whether we see more upside tomorrow is another story. Never found a suitable entry to short today, but 5 waves up now look completed at end of trade today. Hourly indicators look oversold or have bearish divergence.

Here's yesterday's chart of what I think is occurring. We were close to 4000 today, so a leg down would be the preferred next step...

Thanks for your analysis and opinion there OWG. Your count seems quite plausible and I will certainly take it on board and consider whilst this trade progresses.

Do you use Elliott Waves in isolation or do you use other indicators/methods to help you quantify them?

Given that there are quite a few scenarios possible, I try not to rely 100% on Elliott waves namely because I am not yet that experienced, but also I think it’s important to have a number of good methods that compliment each other in the tool box.

When I have used Elliott in isolation previously, I found that some of my trades would fall over due to the number of possibilities out there. After combining with other analysis, I found this a major improvement in terms of distinguishing which was the best count I should be working with. That way I could dispense with a lot of the alternates.

Another attribute that has helped me is that I have developed a mindset that does not assume the market has to always unfold in terms of Elliott Waves(even though it probably is, it’s difficult to see sometimes). That way I only focus on easily distinguishable patterns and forget the rest.

All the best

STONER

 

[MRC & Co]

Re: XAO Analysis

After combining with other analysis, I found this a major improvement in terms of distinguishing which was the best count I should be working with. That way I could dispense with a lot of the alternates.

What other methods do you combine with EW to experience major improvements?

 

[tech/a]

Re: XAO Analysis

$20 shoes

Spot on.

MRC & co

For me its VSA.
Wait for Elliott to signal a possible beginning or end of a move(Wait for the trade to come to me) and then use VSA to confirm and to set entry and or exits.

Oz and stoner
Some good discussion.

 

[OzWaveGuy]

Re: XAO Analysis

Do you use Elliott Waves in isolation or do you use other indicators/methods to help you quantify them?

Given that there are quite a few scenarios possible, I try not to rely 100% on Elliott waves

Really good question. I use Elliott to understand possible Market action over a period of time (depending on the degree I want to trade into). I always like to get an idea of the most reasonable or common possibilities that could occur with elliott. Using RSI, MACD divergences, trendline breaks for trade setups which help confirm waves and impending market change.

For the short term stuff I'm finding the 60/15/5min charts pretty good - as waves can be hidden if the timeframe is too large.

Fibonacci is also good at predicting where waves could start/finish, but not a guarantee. For example today's leg up finished exactly on 38% retracement of the b wave down on the chart I put up earlier - so I'm looking for a direction change tomorrow.

There are other indicators i'll use from time to time Double inside days, stochastics and a few others depending how i'm feeling

Wave C's and wave 3's are good to trade as they usually have great price movements, sometimes wave 5's after wave 4 triangles.

I don't like taking a hit on bad trades, as it means the analysis was all wrong - so i'll get out reasonably quickly.

I also like the really long term outlook as well, as it give prior warning to impending 'disasters' - hence all investments were turned to cash a little over 18months ago, probably a little early, but the XAO wave structure wasn't all that clear.

Anyone else want to share?

 

[chops_a_must]

Re: XAO Analysis

I also like the really long term outlook as well, as it give prior warning to impending 'disasters' - hence all investments were turned to cash a little over 18months ago, probably a little early, but the XAO wave structure wasn't all that clear.

Funny that.

I could have sworn you were short gold from about 700 and oil from about 80.

 

[shaunQ]

Re: XAO Analysis

Ok, so commodities are up tonight, the US GDP released tonight of -.3% and US unemployment around the expected level, it seems good. Hopefully another increase in the DOW.

Up and up tomorrow? or up and down, down, down?

 

[stoner]

Re: XAO Analysis

MRC

I am not going to delve into this just now. FWIW IT has nothing to do with Fundamental Analysis or announcements, therefore would be of no interest to you.

Chops are must

What’s the point you trying to make? This is the XAO Analysis thread isn’t it?

STONER