XAO Technical Analysis

Uncle Festivus said:

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

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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.

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Dutchy3 said:

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

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Dutchy3 said:

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.

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reece55 said:

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

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tech/a said:

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.

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hacheln_mice said:

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...

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theasxgorilla said:

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?

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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.

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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.

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