XAO Technical Analysis

[nizar]

Re: XAO Analysis

This is more of an 'investment' approach though, Niz, and not a very short term trading approach such as buying on breakouts to all time highs. Different courses for different horses.

Just my impressions.

Why do you consider buying on breakouts or all time highs to be a very short term trading approach?
Some long-term trend following systems eg. average trade length 1yr, use such an entry, or is 1yr very short term for you?

Theres an article i posted (originally posted by Nick) in the thread titled "Initial stop -- Is it required". Its a good read and highly recommended.

 

[Trembling Hand]

Re: XAO Analysis

Ah yes,

But there is the "what". ASX is a resources market predominantly. If "they" are buying tech, for e.g., it won't show up in the ASX etc.

Just to stick with my annoying posts I would have to again disagree about the "ASX is a resources market predominantly".
% of market Cap
Financials 38.7%
Fin-x-Property 30.3%
Materials 19.7%
Industrials 8.7%
Property Trusts 8.5%
Consumer Staples 5.8%
Consumer Discret 5.5%
Energy 4.8%
Teleco Services 3.5%
Health Care 2.4%
Utilities 2.0%
Info Technology 0.5%

True though that they have an unusual weighting in our market. The S&P 500 is around 14% for energy and materials and a lot of their materials sector aren't miners.

 

[CanOz]

Re: XAO Analysis

The correlation to the US is interesting. You will find that Australia has tended to move away from the US moves over the recent years unless the US moves >1%. The correlation jumps to 92%.

Friday was greater than 1%, yes? So we have a 92% chance that the XAO/XJO will follow.

Cheers,

 

[Sean K]

Re: XAO Analysis

Why do you consider buying on breakouts or all time highs to be a very short term trading approach?
Some long-term trend following systems eg. average trade length 1yr, use such an entry, or is 1yr very short term for you?

Theres an article i posted (originally posted by Nick) in the thread titled "Initial stop -- Is it required". Its a good read and highly recommended.

Thanks, I'll check it out.

I'd consider longer term to be 3-5 years, what do you? You're probably right about long term technical traders buying on breakouts to all time highs, and there's probably long term fundamental investors who buy on dips into undervalued territory. Maybe there's managers who do both? Personally, I do both, depending on the stock.

I know very little about 'system' following, I pretty much just make it all up as I go , following some loose guidelines I've established over the years. I have a written plan for every stock which I update along the way. I'll get around to developing something more robust one day, hopefully before I lose Rach's house.

 

[Sean K]

Re: XAO Analysis

The US following a rumour on the Chinese trading floor is only a very recent anomoly.

Hmmmm, I'm not sure about this in retrospect. Maybe it's not an 'anomaly' and there's a changing paradigm, or the US has always moved to global events? What happened during the Asian financial crisis a few years back?

 

[Trembling Hand]

Re: XAO Analysis

Here is why I think the reaction to the overseas moves is not that great of an idea. Since January 05 the SPI (with the XJO/XAO the open is always the same as the previous close so I have to use the SPI day session data as a proxy for the XJO/XAO) has gained a sum total of only 241 points during the day trading session. While the market has gone up 2500 points!!! All of the gain has come in the overnight gaps. If you are getting bullish/bearish on an intraday basis, based on the overnight moves in the US you would be placing bets that are baked into the market right on the open. Most of the day moves are filling and fading around the general trend i.e. Bullish since January 05.

If you are a longer term trader reacting to overseas moves is going to just shake you out of the trend and make you place bets anticipating a short term move that is not going to play out during that day. So don't flip your trades if the longer-term trend is in your favor.

Two other points from this data if you trade intraday the opening movement is no great indication as to the way you should trade during the day.

If you are a long-term trader you get rewarded for the added risk of holding overnight.

Will have a post on my blog tomorrow with the data and further analysis.

 

[theasxgorilla]

Re: XAO Analysis

Two other points from this data if you trade intraday the opening movement is no great indication as to the way you should trade during the day.

If you are a long-term trader you get rewarded for the added risk of holding overnight.

Will have a post on my blog tomorrow with the data and further analysis.

Interesting insight TH...I'll be looking out for that post.

ASX.G

 

[Edwood]

Re: XAO Analysis

Here is why I think the reaction to the overseas moves is not that great of an idea. Since January 05 the SPI (with the XJO/XAO the open is always the same as the previous close so I have to use the SPI day session data as a proxy for the XJO/XAO) has gained a sum total of only 241 points during the day trading session. While the market has gone up 2500 points!!! All of the gain has come in the overnight gaps. If you are getting bullish/bearish on an intraday basis, based on the overnight moves in the US you would be placing bets that are baked into the market right on the open. Most of the day moves are filling and fading around the general trend i.e. Bullish since January 05.

cheers for that Trembling Hand - interesting stats!

 

[Edwood]

Re: XAO Analysis

if you trade intraday the opening movement is no great indication as to the way you should trade during the day.

Hi again TH, just a comment but if you're talking SPI (and associated products like XJO etc) the opening movements often set the tone for those products for the day, imo

 

[Trembling Hand]

Re: XAO Analysis

Hi again TH, just a comment but if you're talking SPI (and associated products like XJO etc) the opening movements often set the tone for those products for the day, imo

Just posted a worked example on my blog but bottom line no. A gap down is still 50/50 each way for the rest of the day.

Here’s the meat of the post;
If the market gaps down you would expect that it would work in your favor to trade short that day but the SPI has gaped down on the open more than 0.3% 133 times since January 05. It has closed that day higher than the open 67 times (50%), if you got bearish on an overnight gap down and were intraday position trading by the end of the day you would be at a loss 50% of the time. If you take a gap of 0.5% down on the open which has occurred 78 times it has again closed higher than the open 40 times being again about 50%.

 

[Edwood]

Re: XAO Analysis

Just posted a worked example on my blog but bottom line no. A gap down is still 50/50 each way for the rest of the day.

Here’s the meat of the post;
If the market gaps down you would expect that it would work in your favor to trade short that day but the SPI has gaped down on the open more than 0.3% 133 times since January 05. It has closed that day higher than the open 67 times (50%), if you got bearish on an overnight gap down and were intraday position trading by the end of the day you would be at a loss 50% of the time. If you take a gap of 0.5% down on the open which has occurred 78 times it has again closed higher than the open 40 times being again about 50%.

Hi TH - interesting stuff, will take this over to the SPI thread,

Ed

 

[wavepicker]

Re: XAO Analysis

As per posts #603 and 662, indices getting smashed as expected.
Correction should carry at least to base of the consolidation range.

Was a classic EW setup for a short, got shaken out on the repeated retest early on but went short again last night as pattern looked too convincing.

There are way too many bulls in market at present!!!. How significant is this correction??. It might be the most significant for the year. Overseas indices such as FTSE and DAX have classic EW termination patterns (Ending Diagonals). But if it ends up being shallow, then I have a very significant cycle termination of 15- 22 August. For the current move down we may get some support(not sure how significant yet) in time coming in the next 2 days however.

Cheers

 

[Edwood]

Re: XAO Analysis

As per posts #603 and 662, indices getting smashed as expected.
Correction should carry at least to base of the consolidation range.

Was a classic EW setup for a short, got shaken out on the repeated retest early on but went short again last night as pattern looked too convincing.

There are way too many bulls in market at present!!!. How significant is this correction??. It might be the most significant for the year. Overseas indices such as FTSE and DAX have classic EW termination patterns (Ending Diagonals). But if it ends up being shallow, then I have a very significant cycle termination of 15- 22 August. For the current move down we may get some support(not sure how significant yet) in time coming in the next 2 days however.

Cheers

parked itself for the moment WP but prob not for long. what indicator/s are you using to say there are too many bulls?

 

[theasxgorilla]

Re: XAO Analysis

parked itself for the moment WP but prob not for long. what indicator/s are you using to say there are too many bulls?

Lol, I wondered the same thing. Sounds awfully subjective to me. Nothing wrong with that though.

 

[wavepicker]

Re: XAO Analysis

No indicators, just general observations and bullish comments by financial media. Market has more downside testing to do before "unparking itself".

If this is not the most significant turn for the year and we get another leg up, then the next high expected in the 3rd week of August should be significant

Cheers

 

[Edwood]

Re: XAO Analysis

yeah fair enough if it works WP. you could be right has put in lower high, will be watching that trend line today & take it from there, decent gap down for the open

 

[wavepicker]

Re: XAO Analysis

Lol, I wondered the same thing. Sounds awfully subjective to me. Nothing wrong with that though.

I forgot ASG, you did mention before that you had much trouble interpreting EW and found it subjective. Well I agree with you EW is subjective, except these EW patterns, to me they are not subjective they were high probability. If anything, they pointed to a correction of at least a few days, later on anything can happen, and we might continue bullishly for another leg. But for now take it one pattern at a time, and the market falling. Once again support in time is 25/7/-26/7, this might be minor support or major support, but based on the patterns alone (FTSE, SP500, DJI) we should get some further downside testing before any rally starts.

Good Luck

 

[tech/a]

Re: XAO Analysis

Waves.
When in your view can you say that wave 5 has completed for the DJIA?
I felt comfortable that the XJO had infact passed resistance at around 6440 by enough to warrent the continuation of bullish pricing in that Index.

It is possible that any correction could be short lived.But rather than analysis thats a guess.
Unless 6170 is taken out convincingly--I cant say with any confidence that anything is over or changed.
So I'm still a BULL.

 

[wavepicker]

Re: XAO Analysis

Waves.
When in your view can you say that wave 5 has completed for the DJIA?
I felt comfortable that the XJO had infact passed resistance at around 6440 by enough to warrent the continuation of bullish pricing in that Index.

It is possible that any correction could be short lived.But rather than analysis thats a guess.
Unless 6170 is taken out convincingly--I cant say with any confidence that anything is over or changed.
So I'm still a BULL.

Hello Tech,

Depends which wave 5 you are talking about. If it’s a supercycle target then I estimate it could trend as high as 14550 if it extended. It could also finish right now!!
We have been in the “zone” IMO for a reversal of some type for a while now, that is why I have been cautious in taking up longer term long positions in stocks.

All the long term cycles are “very mature” in terms of cresting ATM. Much more in fact than we had at the 87 peak. Most pundits are looking at this bull market climb in terms of % in comparison to the 87 top saying we are nowhere near the % rise of 1987. Nothing can be further than the truth and IMO they are not measuring it correctly, as Magdoran says this market an aberration, and I would say I have to agree with him.
This last high might be quite significant as it meets the minimum requirements in terms of various cycles long and short coming together at approximately the same point in time. (Interesting that both Mag and I using 2 different TIME based methodologies have come up with this last peak date of 16Th July for the SP500). To me that says a lot. I would be more confident with the August 10-22 zone however but this may or may not happen. This time period should be a high of some type, but whether it is a higher high or lower high I don’t know. Then again it probably doesn’t matter too much does it??? It’s only 3 -4 weeks away!!! So now is a time for caution IMO.



Cheers

 

[Trembling Hand]

Re: XAO Analysis

The open is going to stink if you are a bull but the more important news today could well be the CPI at 11:30. If it's high it could really stink things up today, if its friendly we could bounce and as Tech/a pointed out until we print a break of the recent uptrend its still in tacked. Just a look ahead its not uncommon for the US to rally the next day from these kind of big falls especially in earnings season. A classic wall of worry keeping the Bearish levels high.