XAO Technical Analysis

wonderrman · 24 July 2009

Re: XAO Analysis

Also the correlation between the US stock market and US currency I can see being broken in the near future (ie stockmarket down but USD down aswell)

Could I ask why you would suggest this ... generally ...

usd appreciate, tightening of liquidity, equity markets decrease

usd depreciate liquidity is flowing into equities.

The relationship is always to the opposite, why would this change? and where would the money flow to instead?

simple line charts of usd and sp500 below.

wonder.

MRC & Co · 25 July 2009

Re: XAO Analysis

wonderrman said:
Could I ask why you would suggest this ... generally ...

usd appreciate, tightening of liquidity, equity markets decrease

usd depreciate liquidity is flowing into equities.

The relationship is always to the opposite, why would this change? and where would the money flow to instead?

simple line charts of usd and sp500 below.

If there was a fast breakdown in USD, overcapacity, further risk aversion, you could see a situation of low rates (Reserve set rates), large deficit, falling dollar too rapid to be a positive for export driven growth and hence, a breakdown in the correlation. With both a falling USD and falling equities.

Of course, this would be a mammoth breakdown, would probably push yields far too high (steepening of the curve) with a weak UST market, and a push up in gold and perhaps the Asian region (the decoupling everyone is talking of).

I doubt we will get there (considering Europe and Japan are no better off), but there is a chance, particularly in light of a 2nd stimulus package in the pipeline (anyone on this early if it does play out, could be paid off big time, with the potential to profit on both sides of traditional spreads)....

skyQuake · 25 July 2009

Re: XAO Analysis

Ivant - I'm scaling into this trade with oppies as its a this-could-totally-blow-up in-my-face-if-I'm-wrong type of trade.
SPI's high close was ideal, S&P and FTSE should either hold here or rally no more than 1 day before declining. Chop for a few days invalidates the pattern.

As for USD, the dollar index getting to crucial levels, but keeps making lower highs. Gold presently rallying; watching with great interest.

wonderrman · 25 July 2009

Re: XAO Analysis

MRC & Co said:
Of course, this would be a mammoth breakdown, would probably push yields far too high (steepening of the curve) with a weak UST market, and a push up in gold and perhaps the Asian region (the decoupling everyone is talking of).
.

Thank you MRC, thought the bloke was talking bout the near time.

I don't see this happening within the next 12 to 18 months.

within 10 years this could be a big possibility.

USD will be worthless one day, just a matter of time ....

short on time so will further comment later.

enjoy the w.e

w.

MRC & Co · 25 July 2009

Re: XAO Analysis

wonderrman said:
Thank you MRC, thought the bloke was talking bout the near time.

I don't see this happening within the next 12 to 18 months.

within 10 years this could be a big possibility.

USD will be worthless one day, just a matter of time ....

short on time so will further comment later.

enjoy the w.e

w.

No problems.

The thing is, this would only take a shift in sentiment towards Asia, and sentiment can shift in the blink of an eye (who knows with China creating their own asset price bubble, but this may go on for years as we know bubbles are generally far more resilient than expected), and a shift away from the US as a 'safe haven'.

Correlation breakdowns will often not play out, but if they do, you know clearly what the market (sentiment) is focusing on (most important part of trading IMO) and hence, it becomes easier to trade with a bias and know what you are looking for to potentially create a new correlation. This is my understanding and experience.

Though I'm not convinced on this argument that the USD will become worthless. If so, what about JPY, GBP, EUR? They will all suffer the same fate in that scenario.

haunting · 26 July 2009

Re: XAO Analysis

wonderrman said:
usd appreciate, tightening of liquidity, equity markets decrease

usd depreciate liquidity is flowing into equities.

The relationship is always to the opposite, why would this change? and where would the money flow to instead?

** interesting charts. Here's my pet conspiracy theory - a low US$ would also translate into a higher oil price (currently about $68) which could be a damper to a fragile recovering economy, hence it is in everyone's interest, ie, among the major recessionary economies to see an oil price decline, and the easiest way to achieve it is to drive up the US$. If the US$ were to rebound, it is likely to see the equity market falling back. I suspect the market is gearing up for this eventuality, see this link on short interest in NASDAQ.

CamKawa · 26 July 2009

Re: XAO Analysis

haunting said:
** interesting charts. Here's my pet conspiracy theory - a low US$ would also translate into a higher oil price (currently about $68) which could be a damper to a fragile recovering economy, hence it is in everyone's interest, ie, among the major recessionary economies to see an oil price decline, and the easiest way to achieve it is to drive up the US$. If the US$ were to rebound, it is likely to see the equity market falling back. I suspect the market is gearing up for this eventuality, see this link on short interest in NASDAQ.

I wouldn't be surprised if the US was supporting oil at about the $60 mark. Higher oil prices -> higher inflation. The higher the inflation rate the lower existing debt becomes. Deflation on the other hand is a nightmare.

Trembling Hand · 26 July 2009

Re: XAO Analysis

ivant said:
As you know i am heavily short atm, but i am a little worried about the lack of selling pressure at these highs. Rarely do I get worried about my positions. About 3 times in my life. To be honest, this is not a normal situation. We are having platypus scenarios all the time, which is making this scenario very difficult to deal with, much like all the others over the last few months. Irregular is the normal it seems. Eg, crude oil's illogical moves. Up down then up again, then down and up, and constantly overshooting the logical levels.

this is not a normal situation.

Thats one way of looking at it.

Or

You could throw away the idea that the markets are not acting "normally" and start at the sensible assumption that ALL traders will become out of sync with the market action and therefore to protect yourself from the inevitable you SHOULD start using correct MM and position sizing.

Are you not $85,000 offside on 1 trade - about 25% of capital?

MRC & Co · 26 July 2009

Re: XAO Analysis

Two more interesting points haunting and CamKawa, cheers.

85k offside on 1 trade, sheeeesh. That would be painful!

Aussiest · 26 July 2009

Re: XAO Analysis

MRC & Co said:
85k offside on 1 trade, sheeeesh. That would be painful!

The thing is Ivan, what are you going to do if the SPI moves up another 200 points? That would be another $100k you'd be out.

ivant · 26 July 2009

Re: XAO Analysis

Haha woot woot, we are back to discussing me again . I thought we were discussing XAO and slightly touching on the economy? Interesting to see how the GDP numbers come out on the 31st...

Aussiest · 26 July 2009

Re: XAO Analysis

Nahh, we're just concerned about you Ivan! :

I'm personally worried as i have shorts . Haha, we'll see what happens tomorrow and more importantly Tuesday and Wednesday, because if it builds momentum, it could rally up > 4200. But then again, you've never been wrong, just a few days or weeks ahead of your time, lol.

beamstas · 26 July 2009

Re: XAO Analysis

Gambling is a little different to trading, Ivan. You claim on your blg that you are a professional trader, but you throw positions around like a cowboy.

You are taking a total beginners attitude, that is, instead of closing out of a trade and accepting a small loss, you wait and wait until the trade turns around.

What will you do if the SPI continues upwards and it wipes out your whole account?

I'm not having a go at you, im concerned about you. You take on alot of risk for a big reward, but one day that reward just won't be there and you'll find yourself without any capital.

Just take it easy, and be careful. If im right you're only young, like me. Use compounding to grow your capital, not excessive risk.

Im certain that one day you'll be a great trader, you seem to make some very good calls. Just take it easy on the risk side of things..

Regards
Brad

Aussiest · 26 July 2009

Re: XAO Analysis

beamstas said:
Gambling is a little different to trading, Ivan. You claim on your blg that you are a professional trader, but you throw positions around like a cowboy.

You are taking a total beginners attitude, that is, instead of closing out of a trade and accepting a small loss, you wait and wait until the trade turns around.

What will you do if the SPI continues upwards and it wipes out your whole account?

I'm not having a go at you, im concerned about you. You take on alot of risk for a big reward, but one day that reward just won't be there and you'll find yourself without any capital.

Just take it easy, and be careful. If im right you're only young, like me. Use compounding to grow your capital, not excessive risk.

Im certain that one day you'll be a great trader, you seem to make some very good calls. Just take it easy on the risk side of things..

Regards
Brad

This is actually one of the best posts i have read on ASF

johnnyg · 26 July 2009

Re: XAO Analysis

I think one of the best in regards to Ivant was by T/H. And in regards to taking 350K out and putting it aside (savings/whatever) and seeing if he could repeat the process with the 50K he would use for trading.

nomore4s · 26 July 2009

Re: XAO Analysis

Aussiest said:
But then again, you've never been wrong, just a few days or weeks ahead of your time, lol.

What's the difference in this game?

Ivant has just been using his large capital base to continue to average into the trades and hold them open long enough to come back far enough to reduce his loses or produce a winner. Dangerous game imo. Virtually taking on unlimited risk hoping for another big winner but market conditions and sentiment have changed substantially from the market that produced his huge winner.

tech/a · 27 July 2009

Re: XAO Analysis

nomore4s said:
What's the difference in this game?

Ivant has just been using his large capital base to continue to average into the trades and hold them open long enough to come back far enough to reduce his loses or produce a winner. Dangerous game imo. Virtually taking on unlimited risk hoping for another big winner but market conditions and sentiment have changed substantially from the market that produced his huge winner.

If thats the case he would be well advised to have a good look at Duc's exercise back a few years ago which focused on similar BUT without averaging down.
Had he done so he would have failed even more spectacularly!

https://www.aussiestockforums.com/forums/showthread.php?t=2829

Trembling Hand · 27 July 2009

Re: XAO Analysis

The Aussie casino, oh sorry, market is building up a head of steam here. Just about everything is Kermit to start the week. A push above todays highs over the next couple of days will create a hook higher pattern.

That will have the punters that like chasing squiggly lines very jumping on the long side. even on a decent pull back.

Trembling Hand · 28 July 2009

Re: XAO Analysis

Squishy squeeze today.

Stronger for longer anyone??

Whiskers · 28 July 2009

Re: XAO Analysis

Trembling Hand said:
Stronger for longer anyone??

Yep.

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XAO Technical Analysis

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