XAO Technical Analysis

Re: XAO Analysis

Struzball said:

So let's assume this is the bottom, the companies that did well in the previous bull market probably won't do so well in the next. I would assume they'll either stagnate or dissapear. ie, all the speculative miners etc.

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I disagree with that. Banks will always be needed, and as will commodities. The raging boom for commodities has been over for a while, yes - but I do believe they will eventually recover ... not to their previous highs, perhaps not even close - but there will certainly be opportunities.

Energy will most likely be the new boom; but certain mining stocks actually are energy-focused. Uranium (which BHP has, I believe), oil (another one for BHP) - and of course alternative energies (those I believe will be the new hot spec stocks of the next boom)

Ignore me though, I'm hopped up on opiates Cough suppressants for my laryngitis ... euphoria is an apparent side-effect, explains why I decided to stay in the market for the weekend!

Shuan, although I completely agree about this not being the bottom; the issue is (as someone else pointed out) that our markets might not go through the capitulation phase; as right now we're almost entirely trailing the US markets - and once they start to recover, we will too. Capitulation, or no capitulation, I'm afraid.

... then again, I'm seeing a lot of negativity here after a pretty good rally; perhaps that stands to reinforce that a short term bottom is indeed in :

Re: XAO Analysis

It looked abit like a duck
It quacked a bit like a duck
It waddled a bit like a duck

But that rally smelt like a rat, not capitulation.

Re: XAO Analysis

shaunQ said:

Just posting a devils-advocate response and not wanting to spoil everyones joy and very happy for everyone who gained today..!

And I am probably bias because I missed out because I was working and couldn't join in, but it didn't seem like capitulation to me. More people jumping in at the magic 3200 mark as the "bottom". Although, I could imagine, if Monday did go down worse... then, we may have it as everyone is crushed.

All seemed a little too easy.

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You and Peter Schiff both...

http://au.youtube.com/watch?v=pGHODRNJqRo

Once again people laughing at him like hes crazy...

Re: XAO Analysis

skyQuake said:

Very considerate for them to squeeze the 2nd day after the ban gets lifted

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lol, I had a feeling we could see some sort of rally after the short selling ban was lifted. People would have loaded up on shorts but I just can't see the smart money shorting anything after such a strong leg down without some sort of rally first. Instead they would have been buying the stock the shorters were selling and looking to squeeze them in the next week or so.

My current take is we will see some sort of rally now. First target is around 3600-3700 and if we can gain some traction we could push up into the 4300 area but it would take some serious effort to push any higher atm imo.

Don't think this is the bottom though, some serious work to be done before we see any decent new uptrend imo.
I think we will retest 3200 again at some stage at the very least.

As for capitulation I'm not so sure we will see a strong capitulation day due to the force of this move down and the panic and fear we have already seen in the markets. In saying that today was the type of day I've been looking for and you could call it capitulation of sorts.

Re: XAO Analysis

shaunQ said:

Just posting a devils-advocate response and not wanting to spoil everyones joy and very happy for everyone who gained today..!

And I am probably bias because I missed out because I was working and couldn't join in, but it didn't seem like capitulation to me. More people jumping in at the magic 3200 mark as the "bottom". Although, I could imagine, if Monday did go down worse... then, we may have it as everyone is crushed.

All seemed a little too easy.

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Is the World Economy fixed? NOPE
Is unemployment going down? NOPE
Is REAL business confidence going up? NOPE
Do world leaders seem to have the answers to the Financial Crisis? NOPE
So, is this going to be a strong rally? NOPE
Ahh. Then this rally is really a bit of a punt? YEP

aj

Re: XAO Analysis

Aussiejeff said:

Is the World Economy fixed? NOPE
Is unemployment going down? NOPE
Is REAL business confidence going up? NOPE
Do world leaders seem to have the answers to the Financial Crisis? NOPE
So, is this going to be a strong rally? NOPE
Ahh. Then this rally is really a bit of a punt? YEP

aj

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The stock market overshoots and undershoots.

And is forward looking.

By the time the economy is fixed the bottom will have long been seen.

A once in a generation crash represents a once in a generation buying opportunity.

Don't miss it.

Re: XAO Analysis

Longer term analysis:

The sheer momentum of this bear market has expanded the Bollinger Bands to levels far beyond anything we've seen in recent times (save '87). When you have a squeeze on (a contraction in volatility), it is unusual but not impossible for the weekly price action to close lower then the green band as a trend takes off with gusto, and before it takes pause.

However, from a BB analysis, when we are already at an historic level of expansion such as we have witnessed these last 6 weeks, it looks like we have a capitulation of sorts with prices closing against the bands, but its more a "death by a thousand cuts" than the beheading we may have expected. There's no doubt the red 21 week band is going to move outside of the green 55 week band this week or next, suggesting that the XAO is once again at an extreme of volatility. The lower bands are all in bearish alignment and almost vertical showing the sheer strength of the market. We may go lower from here but I would suggest selling pressure could not keep the current downward momentum going for more than another fortnight.

It is important to note that the sheer expansion of volatility means that at some point there will be a necessary multi-month (>9 months) period of contraction where the likelihood is a meandering market (with a likely bias to the downside before the upper bands have all curled down enough to allow another period of expansion). Note, that large periods of expansion can allow the share price to form impressive V-style retracements contained within the bands prior to a more trendless, drifting period (look for the swings when they come).


The upper green Bollinger Band is showing early but unproven signs of curling over, whilst the lower bands are not yet wrapping around the price action. Hence, this study is not yet suggesting a longer term bottom is in.

I have included some Stochastics throwing out possible patterns, particularly the upper pane (shorter term), suggesting some upside coming now (this looks likely on the daily with the broadening formation holding). Mid term Stochs are still trying to bottom out, and longer term still need 4-5 months before the %k would cross the %D.

I'm looking into Jan for the bigger move up, and then a weakening off after this point. Lets see what the wind brings.

Re: XAO Analysis

Well that was a pretty p***-poor performance today on our market, and now the SPI down over 1.5% with Dow futures down about 0.6%.

Anyone get the feeling the market wants to go down?

Re: XAO Analysis

M34N said:

Well that was a pretty p***-poor performance today on our market, and now the SPI down over 1.5% with Dow futures down about 0.6%.

Anyone get the feeling the market wants to go down?

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Well, yes M34N, it does "want" to go down - it's in a downtrend ...

Heck, I sold the positions I bought on Friday earlier on already (modest gain ), there's no reason to hold too long on any positions in this environment ... the way the aussie economy is looking, you'll be lucky if the company you invest in doesn't go bust

Re: XAO Analysis

M34N said:

Well that was a pretty p***-poor performance today on our market, and now the SPI down over 1.5% with Dow futures down about 0.6%.

Anyone get the feeling the market wants to go down?

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I think it wants to go up, people are thinking these are bargains (again) but I predict it will plumet to new lows within a week.

Re: XAO Analysis

Nyden said:

Well, yes M34N, it does "want" to go down - it's in a downtrend ...

Heck, I sold the positions I bought on Friday earlier on already (modest gain ), there's no reason to hold too long on any positions in this environment ... the way the aussie economy is looking, you'll be lucky if the company you invest in doesn't go bust

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You know what I mean though, every rally attempt is met with so much selling, there always seems to be a reason to get pushed back down every single time, without fail. It just seems so bizarre.

I am very bearish on the market myself, and even though I know things are bad, the moves down seem a bit over the top.

Re: XAO Analysis

M34N said:

You know what I mean though, every rally attempt is met with so much selling, there always seems to be a reason to get pushed back down every single time, without fail. It just seems so bizarre.

I am very bearish on the market myself, and even though I know things are bad, the moves down seem a bit over the top.

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How can they be over the top? No one knows just how bad things could get - especially for Australia. Are our banks really that far beyond a potential collapse? Surely the public don't think so, as Rudd needed to guarantee all deposits! Why would you invest in something that could literally in a weeks time be worth zero. This sort of risk (no matter how remote) needs to be factored into the price, and rightly so.

Things only keep getting worse for Australia. A falling AUD hurts our importers, and the massive declines in commodity prices only stand to balance it for the miners. Consumers aren't spending - and Australia is a nation based on consumption - a consumption fuelled by boom-times.

Australia almost has nothing going for it at the moment; so any and all falls on our markets are entirely justifiable.

Re: XAO Analysis

Nyden said:

How can they be over the top? No one knows just how bad things could get - especially for Australia. Are our banks really that far beyond a potential collapse? Surely the public don't think so, as Rudd needed to guarantee all deposits! Why would you invest in something that could literally in a weeks time be worth zero. This sort of risk needs to be factored into the price, and rightly so.

Things only keep getting worse for Australia. A falling AUD hurts our importers, and the massive declines in commodity prices only stand to balance it for the miners. Consumers aren't spending - and Australia is a nation based on consumption - a consumption fuelled by boom-times.

Australia almost has nothing going for it at the moment; so any and all falls on our markets are entirely justifiable.

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Nyden great to see you on the right side of the market

Re: XAO Analysis

Nyden said:

How can they be over the top? No one knows just how bad things could get - especially for Australia. Are our banks really that far beyond a potential collapse? Surely the public don't think so, as Rudd needed to guarantee all deposits! Why would you invest in something that could literally in a weeks time be worth zero. This sort of risk (no matter how remote) needs to be factored into the price, and rightly so.

Things only keep getting worse for Australia. A falling AUD hurts our importers, and the massive declines in commodity prices only stand to balance it for the miners. Consumers aren't spending - and Australia is a nation based on consumption - a consumption fuelled by boom-times.

Australia almost has nothing going for it at the moment; so any and all falls on our markets are entirely justifiable.

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Well, selling because we might get some bad news, yeah it's risk aversion, but why is it that the US markets can rally, but ours doesn't? That's the part I don't get, if we follow the Dow so religiously, then why don't we go up when the US does, but instead go down again?

Again I agree with what you're saying, but my point still remains about the majority of rallies here being met with even MORE resistance and stronger selling, and end up lower again. That's the part I don't understand so well!

Re: XAO Analysis

Looking at a few stocks, there seems to be more sellers than buyers. So why would it go up? It (consistently) goes up when there are (consistently)more buyers than sellers.

I remember reading a couple of years some guy saying that it will crash "soon" but his rider was that it was going to be different and was doubting if it would recover at all. Certainly hope it doesn't do that. General consensus seems to be forget 2008 and wait 'til 2009 for it to bottom - early to mid.

There's a lot of sorting to be done in the financial world before confidence comes back. Picture don't look like a bottom.

Re: XAO Analysis

M34N said:

Well, selling because we might get some bad news, yeah it's risk aversion, but why is it that the US markets can rally, but ours doesn't? That's the part I don't get, if we follow the Dow so religiously, then why don't we go up when the US does, but instead go down again?

Again I agree with what you're saying, but my point still remains about the majority of rallies here being met with even MORE resistance and stronger selling, and end up lower again. That's the part I don't understand so well!

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Perhaps it's because the American markets actually have more than 2 industries (finance and miners ... I jest); not to mention the far higher volumes can amount to far higher volatility.

The US markets may rally at the drop of a hat, but when they fell 10% in one session - I think we only fell 5? So, it does cut both ways ... I'd certainly love to see a fall of 400pts in one day, but so far it hasn't happened.

Re: XAO Analysis

Well, if we think about it, this crisis started from lehman brothers so it is the financial sector that is being hit hard. Also the commodity prices are falling so the resourse sector is hit hard as well. And that's what ASX is made up of and that's why we are dropping while US is going up.

Re: XAO Analysis

...our banks collaspe?

in an economy forcasting growth?

Australian industries are in a better position that the US, now and for future prospects. I think the US automotive industry is under abit of question but the AU resources, im sure that will make it through.

has the dow even breached the 50%?

Re: XAO Analysis

Nyden said:

not to mention the far higher volumes can amount to far higher volatility.

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Are we seeing far higher volumes?

Also, the boom times were fuelled by consumption, not the other way around.

Re: XAO Analysis

MRC & Co said:

Are we seeing far higher volumes?

Also, the boom times were fuelled by consumption, not the other way around.

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I mean the US markets have higher volumes in comparison to ours ...

Aussie based consumption was not the cause of our boom; I am of course referring to Australian consumer spending. When everyone is making fantastic paper gains on their super, portfolios, and RE investments - they spend. Now that everyone is losing / has lost money, they're no longer spending. Perhaps it's the chicken and the egg