XAO Technical Analysis

[Sean K]

Re: XAO Analysis

A little bit bearish? Megaphone top forming on the weekly and hang man on the daily?

The expanding triangle, which is also known as a broadening top, usually consists of three peaks, each higher than the previous peak, and two valleys, the second lower than the first.

We've had 3 peaks each slighly higher (or was the second higher? - pretty similar), and two valleys, second lower.

Uncle, what's the target from such a formation? The distance between the large end of the triangle to the downside? I get 6000? Matches support. What's the fib retractment there? Interesting.

 

[tech/a]

Re: XAO Analysis

Aget is giving a couple of counts.

The more aggressive is the First Chart with a wave 3 rather than a wave 5.



I actually prefer THIS to the second possible count as the wave 4 pattern seems to abrupt in its formation in the second chart below--ie To short relative to wave 1

This is the count for a completed wave 5 this leg--Note the short wave 4 and wave 1




So I'm confident now that unless 6170 is breached that there is further steam in the XJO this leg is nearing completion however if the low of 6170 is intact and a new high is made first target is 6610 then 6850.



Again from a pattern view I dont think this is completed yet. Although just to confuse the short term pattern "Could be complete" as a wave 5 of 5 at the arrow.(From my own count of this wave 5) and this is now a complex correcive move part of the wave 4 correction.

Im sure others could have variations to these counts.
Bottomline not over yet till 6170 breached,and not continuing until another higher high is in place.

From a pattern perspective and Ive been looking more closely at these since Moggie and Waves pointed out their importance.

This being a terminating WAVE 3 makes the most sence.
Looking for a wave 4 corrective move before a wave 5 completion.

 

[Dutchy3]

Re: XAO Analysis

With the Dow off 158 I'd doubt too many of us would expect the ASX to rally on Monday .... Indeed I've been watching momentum fall away now for a few weeks .... I can't see 6400 taken out before 6200 has another visit.

This being said 6200 will have to be an absolute rock .... else I see not 6400 but back to 6000ish ...

Not overall bearish at this stage (LONG oilers my exposure of choice at the mo) still picking the right sector and stocks within will now be even a greater sought after skill

 

[reece55]

Re: XAO Analysis

With the Dow off 158 I'd doubt too many of us would expect the ASX to rally on Monday .... Indeed I've been watching momentum fall away now for a few weeks .... I can't see 6400 taken out before 6200 has another visit.

This being said 6200 will have to be an absolute rock .... else I see not 6400 but back to 6000ish ...

Not overall bearish at this stage (LONG oilers my exposure of choice at the mo) still picking the right sector and stocks within will now be even a greater sought after skill

Absolutely Dutchy, couldn't have said it better myself.....

No matter what your view, EW, Gann, etc, we are still in a bull market, even if we head back to 6000 IMO. I mean, we really haven't had any sideways action for so long, I favour a sidewards for a while before we get a break in a new trend, be that bullish or bearish.

It will be a stock pickers environment, you just have to be on your toes and tighten the stops......... Trading on the assumption of a correction is a losers game - trade in the sectors that show strength on the long side and sectors that show weakness on the short side. At the moment, the XJM's and XEJ's are hot, the XHJ's and XFJ's are not.....
Cheers

 

[Dutchy3]

Re: XAO Analysis

Hi R55

Hasn't it been amazing ... I had a look at the weekly XJO since 2003 and the run has been spectacular .... I agree with the overall bull market comments ...

If Bond yields to click up towards the end of the year I can see the Financials stall and expect that we might then see the old demarcation between resources and the balance of our market reappear ...

Really we see it now in daily news ... families in NSW and VIC scratching around and asking what boom ... here in the WA it's all quite mental.

 

[reece55]

Re: XAO Analysis

Hi R55

Hasn't it been amazing ... I had a look at the weekly XJO since 2003 and the run has been spectacular .... I agree with the overall bull market comments ...

If Bond yields to click up towards the end of the year I can see the Financials stall and expect that we might then see the old demarcation between resources and the balance of our market reappear ...

Really we see it now in daily news ... families in NSW and VIC scratching around and asking what boom ... here in the WA it's all quite mental.

Hi Dutchy....

Yep, obviously there are sectors in the market I think are just stupidly overvalued (i.e. most of the smaller miners that are not producers with a sniff of U!!), but overall what everyone has to remember is that these are trading conditions that come up one in every 2 decades or so. Instead of saying how expensive it is, you need to relish it and make your $$, because in my humble opinion, it's reasonably easy to do so at present. I have just had a ball in the last couple of weeks here on the ASX.

It has been an incredible transformation for our country, specifically WA, but now even here in SA we are really reaping the benefits. We can't keep up with the work that is available for newly listed mining entities, it's just incredible........ And realistically, it is well overdue. Specifically in the mining industry, we had major underinvestment, and now the balance is shifting the other way.....

Cheers

 

[Dutchy3]

Re: XAO Analysis

Ahhh ... I'm an avid navy fan and SA have been kicking goals ... what with the ASC and now the AWD I'd love to work in those industries ... I'm in Health and I can tell you just how hard it is to compete with the resource industry for my support staff positions ... 10 years in the resource industry prior to this so I know what the attraction can be ..

 

[zuluwarrior08]

Re: XAO Analysis

Absolutely Dutchy, couldn't have said it better myself.....

No matter what your view, EW, Gann, etc, we are still in a bull market, even if we head back to 6000 IMO. I mean, we really haven't had any sideways action for so long, I favour a sidewards for a while before we get a break in a new trend, be that bullish or bearish.

It will be a stock pickers environment, you just have to be on your toes and tighten the stops......... Trading on the assumption of a correction is a losers game - trade in the sectors that show strength on the long side and sectors that show weakness on the short side. At the moment, the XJM's and XEJ's are hot, the XHJ's and XFJ's are not.....
Cheers

Ill second those thoughts.
Fundamentals havent changed much, and I dont think any of our listed financials had too much to do with the hedge fund woes in the US, That said in the little time Ive been learning, or market seems to be like a little puppydog following the DOW. Here's a question, how much do you think an interest rate rise in the US would have on us over here?

I think the CPI figures released soon will have a huge impact as volatility seems to have increased over the last 3-4 months, and investors are reacting to news/events more violently than last year. do you agree?

 

[nizar]

Re: XAO Analysis

Aget is giving a couple of counts.

The more aggressive is the First Chart with a wave 3 rather than a wave 5.



I actually prefer THIS to the second possible count as the wave 4 pattern seems to abrupt in its formation in the second chart below--ie To short relative to wave 1

This is the count for a completed wave 5 this leg--Note the short wave 4 and wave 1




So I'm confident now that unless 6170 is breached that there is further steam in the XJO this leg is nearing completion however if the low of 6170 is intact and a new high is made first target is 6610 then 6850.



Again from a pattern view I dont think this is completed yet. Although just to confuse the short term pattern "Could be complete" as a wave 5 of 5 at the arrow.(From my own count of this wave 5) and this is now a complex correcive move part of the wave 4 correction.

Im sure others could have variations to these counts.
Bottomline not over yet till 6170 breached,and not continuing until another higher high is in place.

From a pattern perspective and Ive been looking more closely at these since Moggie and Waves pointed out their importance.

This being a terminating WAVE 3 makes the most sence.
Looking for a wave 4 corrective move before a wave 5 completion.

6850?
I like

 

[hacheln_mice]

Re: XAO Analysis

The past week saw us very strongly, and as long as we don't retrace too much of it, we should have a launch pad set for a possible blowoff style move. I suspect the next move up might be on fumes though because the market internals are just so horrible (see Advance-Decline for all ords-blue line). Notice how the XAO is flirting with all time highs yet the A-D is still bumming around near the bottom of its range...

Advance-Decline Chart courtesy of http://sttc.net.au/~stever/ad_aord.html.

That said, I'd like to reiterate my view that I still think the long term bull still has a lot of puff left. It's just that I'm not as optimistic about the medium term.

 

[theasxgorilla]

Re: XAO Analysis

The past week saw us very strongly, and as long as we don't retrace too much of it, we should have a launch pad set for a possible blowoff style move. I suspect the next move up might be on fumes though because the market internals are just so horrible (see Advance-Decline for all ords-blue line). Notice how the XAO is flirting with all time highs yet the A-D is still bumming around near the bottom of its range...

Cool chart Hacheln. As you say, it makes this move out of the June 13 low look rather suspect. I get the impression from looking at some of the Sector and individual ASX20 constituent share charts that money has been pouring into Energy (Oil, Gas???) and Materials (RIO, BHP and a host of mid-small caps) and WES creating a divergence of sorts with the banks, TLS, WOW etc. which are all down well off their highs.

I agree that those that have broken out and are racing right now (RIO, BHP, WES, WPL) will probably, eventually pull back into line with broader market weakness and when they do we can expect the XAO to reflect this. What the AD line isn't showing is the market cap of the issues being compared and hence the raw money flow into the big issues that have had massive moves recently like RIO, BHP, WES and WPL. Money flowing out of the many into the few?

 

[Uncle Festivus]

Re: XAO Analysis

Cool chart Hacheln. As you say, it makes this move out of the June 13 low look rather suspect. I get the impression from looking at some of the Sector and individual ASX20 constituent share charts that money has been pouring into Energy (Oil, Gas???) and Materials (RIO, BHP and a host of mid-small caps) and WES creating a divergence of sorts with the banks, TLS, WOW etc. which are all down well off their highs.

I agree that those that have broken out and are racing right now (RIO, BHP, WES, WPL) will probably, eventually pull back into line with broader market weakness and when they do we can expect the XAO to reflect this. What the AD line isn't showing is the market cap of the issues being compared and hence the raw money flow into the big issues that have had massive moves recently like RIO, BHP, WES and WPL. Money flowing out of the many into the few?

I sense something like this happening too. I have been looking at some data at http://www.rba.gov.au/Statistics/Bulletin/ , specifically the F07 report.
I have struggled to create some charts with Open Office from this data (maybe someone with Excel can do a better job) but I think the main thrust of the data is that there has been an allocation of funds to one sector, in this case Banks, & an under allocation to others eg resources.

The charts date from Dec 1979. What is also apparent is that maybe there is still a lot more scope for relative adjustment between the sectors ie a pullback in the banks and continued strength in resources, with each balancing the other so a flat XAO? Banks & resources seem to take turns in taking the market up or down, with increased volatility and daily range.

Another observation is the parabolic nature of total market cap & the banking indices. Is this in itself sustainable at this rate? Does it even mean anything?

 

[hacheln_mice]

Re: XAO Analysis

Margin call anyone?
------------------------
Despite the ugliness of the fall, we're still in a trading range.

 

[CanOz]

Re: XAO Analysis

LOL! Thank god all i lost was my own money...I just opened up a short on the mini Aust 200 to hedge tomorrows losses.....a sure way to get the market to go the other way!

Cheers,

 

[theasxgorilla]

Re: XAO Analysis

Significant support at 6200/6210 level...although neither the XAO or S&P500 have broken their previous major low, it don't look good

The range of today's down bar was pretty aggressive, combined with a close right down on the low. All eyes on the US tonight...although it hasn't broken the lows of 7th/8th of June, 4 of the last 5 bars have been very weak.

 

[Awesomandy]

Re: XAO Analysis

Ok.. I don't have access to the technical data at the moment, so I'll just have to go with my gut feeling...

With the .HSI down only 98 points, and the .N225 down 217 points, I'm not worried at all at this stage. I don't think the index will crash tomorrow, as I don't seem to be able to find any news that would trigger such an action (although I can be wrong). I would say that some bargain hunters might start hanging around their brokers tomorrow morning, so the market may actually regain some of today's losses.

And, as for margin calls... I'll start worrying about it when it drops another 25%.
(But then, if the market drops so much, a margin call probably won't be the first thing on my mind).

 

[Dutchy3]

Re: XAO Analysis

Dojo day today cover LONG. Not a signal to go short at this stage yet surely this is the oomph run out of our little corner of the world, and with interest rates remaining on hold ....

 

[CanOz]

Re: XAO Analysis

hmmm, yeah not much of a day really was it? Telecomm and materials were the place to be, but energy got trashed despite firming support in oil.

The DOW is looking bullish now, maybe theres just no liquidity coming into the market yet this F'Year?

Cheers,

 

[gfresh]

Re: XAO Analysis

I'm fairly new to the whole technical analysis thing.. however looks like convergence forming. Tomorrow should be another fairly neutral day like today for the XAO I have a feeling.

DJO move into strong positive territory after the traders return relaxed after their Independence day tomorrow? have had some time to digest getting over the subprime jitters, and some positive news earlier in the week. Should follow through to a nice rise here on Friday?

Will be good to break 6400, but strong resistance there so far.. Chief CBA economist Craig James predicts a 6600 XAO by end of 2007 year, and more usual growth next 12 months.

Couple of quotes:

With the Australian and global economies in good shape and valuations still favourable, we expect the sharemarket’s bull run to continue over 2007/08. But returns are expected to be more “normal” at around 15 per cent, a step down from the experience of the past four years.

and

We retain a “soft” target for the Australian sharemarket of 6,600 by the end of 2007. While the target appears easily achievable, the concern is that total returns on shares are continuing to grow well above longer-term averages,
pointing to the risk of a correction. A target of 6,600 implies total returns on shares near 20 per cent and an unprecedented fifth consecutive year of above-normal returns. The All Ordinaries and ASX 200 indexes are expected to reach 7,000 points by June 2008.

 

[hacheln_mice]

Re: XAO Analysis

Since the last big drop, there was no lower low in this broadening formation, as such my opinion of the market is now less bearish...of course, if we don't make a higher high, then we could be in for a symmetrical triangle formation.