XAO Technical Analysis

skyQuake · 23 August 2009

Re: XAO Analysis

trading_rookie said:
A T4-style sell-off to institutional investors at a 5% discount that was originally targeted at 497.7 million shares then increased to 683.7 million due to the sheer enthusiasm of the institutions surely isn’t a reason for what happened to the XAO yesterday. I’m upset they didn’t offer this discount to retail investors, since these shares qualify for the 14c final divie.

So have we de-coupled ourselves from the US – they take a 2% hit on weak Japanese GDP numbers while we apparently factored this in earlier and now the Dow up 2 days in a row (thus far anyway) and the XAO sliding into the red, down nearly 2% ready for a ‘told ya September is usually a bad time for stocks’ fall?

If only that DeLoren time-travel machine was real...stand to make a fortune ;-)

Wasn't really a placement, they just wanted to get rid of shares but without incurring too much brokerage. (eg prospectus, mail outs etc) so they just placed it with instos or sophisticated investors.

TLS only makes up 3.6% of the index which is relatively tiny. imo just traders and shorts getting set on Fri. Probably a few funds adjusting on the back of results.

Waiting for the Monday squeeze

Donga · 23 August 2009

Re: XAO Analysis

Screw the charts. They're great at analysing where we've been but looking through this thread I see little accuracy in future predictions especially from those preaching more doom. The bears love referring to charts though rarely commit to any numbers. Early last week I predicted, more for fun than anything else as don't consider myself a guru, we would sideways between 4200 to 4500 over the next few weeks. Well I might have been "bearish", as relish this yesterday from The Australian Business:

One increasingly convinced we are now past the dawn of a new bull market is AMP Capital's chief economist, Shane Oliver.

In a note to clients this week, he wrote: "The evidence is continuing to accumulate that shares have embarked on a cyclical recovery. Further gains are likely.

"There are still plenty of funds on the sidelines and there is still a lot of healthy scepticism about the rally. Past cyclical upswings have seen Australian shares rise an average of 132 per cent over an average of four years.

"While we are of the view that the long-term picture for US, European and Japanese shares is constrained by high debt levels and the need to reverse policy stimulus, the longer-term picture is more positive in emerging markets and Australia. Also, as we saw in the 1970s in the US or over the last 20 years in Japan, a constrained or difficult long-term trend doesn't prevent sharp cyclical rebounds."

Which means what for the local market? Well, Oliver reckons it could mean the All Ords hits 5000 by year's end.

"There is a good chance the US S&P 500 index will gain approximately 25 per cent over the next 12 months," Oliver postulates. "In this context, a rise to 5000 for the Australian sharemarket by year-end is conceivable. Investors will need to focus on a new set of signposts as to when the rally will peak. These are likely to include measures of capability utilisation and inflation and the speed with which government stimulus is removed."

So pin your ears back and enjoy the run up to the summer break. I'll stick to my 4200 - 4500 for the next few weeks despite Oliver's exuberance. Best of luck to all traders who buy first then sell later

skyQuake · 23 August 2009

Re: XAO Analysis

Screw the charts. They're great at analysing where we've been but looking through this thread I see little accuracy in future

Chris45 said:
Could this be a possible target for a Sep low?

Well Chris45 posted a pretty good chart, showing a test of resistance. Weak hands have bailed out. Shorts have gone in. Will we see a squeeze and new highs or Sept lows? Who cares, just trade it.

Similar thing a while ago testing another major level 3750s - Another chart chris45 was also kind enough to post. (do a search, i cbb)

Gordon Gekko · 23 August 2009

Re: XAO Analysis

The "Money On The Sidelines" Fallacy

http://www.zerohedge.com/article/money-sidelines-fallacy

"From the end of 2007 through Q1 of 2009, household equity has declined by 94%. Is it surprising that today's GDP number would have been a complete debacle if the consumer had been left alone to prop the U.S. economy, on whom 70% of the economy is reliant? Obama pulled a Hail Mary with the stimulus: without it there would be no debate America is in a depression right now. The only remaining question is how long can Congress and Senate extend such Subsidy programs as Cash for Clunkers before the rest of the world throws up in America's protectionist face."

A good read fi your keen.

Best

G

grace · 23 August 2009

Re: XAO Analysis

"In this context, a rise to 5000 for the Australian sharemarket by year-end is conceivable.

Shane Oliver also predicted at the beginning of 08 (we were probably 20% or so down from the high), that the market would recover to 7000 by the end of 08.

I take what he says with a grain of salt. In fact, if he's bullish, I'm definitely bearish!

Donga · 23 August 2009

Re: XAO Analysis

grace said:
Shane Oliver also predicted at the beginning of 08 (we were probably 20% or so down from the high), that the market would recover to 7000 by the end of 08.

I take what he says with a grain of salt. In fact, if he's bullish, I'm definitely bearish!

So Grace give us your best shot, as again these sentiments are soo loose. Likewise skyQuake re chris45 "good chart showing a test of resistance..." C'mon guys let's see some real predictions instead of talking down the market.

Remember I'm not with Oliver with his 5000 as I predicted sideways for the next few weeks 4200-4500. However on the basis China can and will continue spend its way out of the recession and our mining (economy) will continue to recover, I believe the worst is over and we are in recovery mode towards something more sensible than the 4000s after being in the 6000s nearly two years ago.

And Grace, with the help from oversold BUY and recent MMR hopeful plus some assistance from the positive guys in ASF (big thanks HappyTown), I've thrashed the ASX % growth with my play fund since you sold out at 3850.

micksof · 23 August 2009

Re: XAO Analysis

grace said:
Shane Oliver also predicted at the beginning of 08 (we were probably 20% or so down from the high), that the market would recover to 7000 by the end of 08.

I take what he says with a grain of salt. In fact, if he's bullish, I'm definitely bearish!

He is an Economist, not a market technician. Economists have poor records of forecasting markets. Trying to predict market movement based on funementals does not always work out.

grace · 23 August 2009

Re: XAO Analysis

Donga said:
So Grace give us your best shot, as again these sentiments are soo loose. Likewise skyQuake re chris45 "good chart showing a test of resistance..." C'mon guys let's see some real predictions instead of talking down the market.

Remember I'm not with Oliver with his 5000 as I predicted sideways for the next few weeks 4200-4500. However on the basis China can and will continue spend its way out of the recession and our mining (economy) will continue to recover, I believe the worst is over and we are in recovery mode towards something more sensible than the 4000s after being in the 6000s nearly two years ago.

And Grace, with the help from oversold BUY and recent MMR hopeful plus some assistance from the positive guys in ASF (big thanks HappyTown), I've thrashed the ASX % growth with my play fund since you sold out at 3850.

Hey, don't get too defensive. I sold 25% then, so now I'm 50% cash. I'm a fundamental investor. I haven't done that badly either by the way.

I guess I did sell 25% as a technical/fundamental trade. I got that wrong. Missed quite a bit. I just don't think we are out of the woods yet.

Real1ty · 23 August 2009

Re: XAO Analysis

Donga said:
Screw the charts. They're great at analysing where we've been but looking through this thread I see little accuracy in future predictions especially from those preaching more doom.

From memory, i think Frank pretty much predicted where we would get to a bit over a month ago.

nunthewiser · 23 August 2009

Re: XAO Analysis

Donga said:
I've thrashed the ASX % growth with my play fund since you sold out at 3850.

and you are happy to post the statements here ?

otherwise ya just another dreamtrader in my book

have a lovely day my dreaming friend

trainspotter · 23 August 2009

Re: XAO Analysis

My prediction is that it will rain. My prediction is that the market will go above 4000. If you look at my previous posts I also sold out all of my shares on the Thursday 13th August 2009. The market had a sideways slip down town shortly afterwards. Good opportunities for the purchase for furthermore when the "blood runs in the streets". Going hard at property at the moment. My prediction is that there will be a strong upsurge in trends towards the 5000 mark by 19th December 2009.

ThingyMajiggy · 23 August 2009

Re: XAO Analysis

trainspotter said:
My prediction is that the market will go above 4000.

You're right!!

Donga · 23 August 2009

Re: XAO Analysis

GG - no offence taken and just wish you were right on my body parts, but you're about 40 years too late . Grace - sorry if came across defensive, just wishing to see some real predictions and not more talk downs. NTW - not dreaming and don't intend posting my investment details on this forum.

Stock market wiz ain't me, just an average businessman with a few runs on the board though new to forums, and guess it shows. Feel good about where we are, and heading on the basis of China and overall recovery. In awe of those who see the falls coming and capitalise but suggest there are too many folk in here who are tilting at windmills when we're just getting over one of those rare major corrections. Thanks TS for your numbers, especially for someone who is big on property. Best wishes all

nomore4s · 23 August 2009

Re: XAO Analysis

Donga said:
Screw the charts. They're great at analysing where we've been but looking through this thread I see little accuracy in future predictions especially from those preaching more doom.

rotflmao, you quite happily bag the chartists out but then quote a guy like Oliver who has a terrible record predicting the market.

There were plenty of chartist who have been spot on with this rally & market - FrankD, TH and others. Maybe read through the thread.

Donga · 23 August 2009

Re: XAO Analysis

Thanks nomore4s I've seen your postings and have liked the way you use the charts to predict your numbers. It doesn't seem to be the norm though I'll take your advice and look for more of them. I've already had a lesson from the geos on PRW I understand Oliver is going to talk up the market in his capacity at AMP however it is typical of the increasing sentiment in the media, the same media that panicked when the correction went too far IMO. Rightly or wrongly the market tends to follow these sources more than the chartists and as stated I admire those that pick the correction to sell, particulalry if they buy back before the recovery goes too far north again.

Sunder · 23 August 2009

Re: XAO Analysis

Temjin said:
Numbers do not lie here. To bring that PE ratio down to a more reasonable level would ultimately mean a massive increase in their earnings back to pre-bust level. i.e. the peak of the credit boom

On the contrary, the numbers do lie. Two things for you to ponder.

1. Remove any outliers that are more than 2 standard deviations from the mean, and see what that graph looks like. A single large bank with an "Infinite" P/E (i.e. making a loss) could skew those numbers every way to Sunday.

2. If I said totally hypothetically, that I had an investment that would return you nothing in the first year, (Infinite PE) but would give you $10 every year after that, with a AA rating. How much would you pay for it?

Think about what I'm getting at. The value of a stock is not a multiple of the next dividend or earning.

trading_rookie · 23 August 2009

Re: XAO Analysis

@skyQuake, I agree – that’s why I was quizzing why a ¼ sell-off of TLS shares by the FF is being speculated by some as one of the catalysts for the XAO falling nearly 2% on Fri.

If anything their decision is based on crappy profit results from TLS and the uncertainty TLS will play in the NBN.

Well, Oliver reckons it could mean the All Ords hits 5000 by year's end.

Oliver would have to be the ultimate bull – the world financial markets were crashing and Oliver as ever was overly enthusiastic about a quick recovery. I guess as a economist with a big ego and public profile he’d have to be otherwise he could end up like poor ex-ANZ chief economist Saul Estlake who got threatened by a former Federal treasurer for talking the economy down.

From memory, GSJBW’s is predicting it’s best-case scenario of 6400 by Christmas 2010. I can’t see that happening so soon.

dhukka · 24 August 2009

Re: XAO Analysis

Gordon Gekko said:
The "Money On The Sidelines" Fallacy

http://www.zerohedge.com/article/money-sidelines-fallacy

"From the end of 2007 through Q1 of 2009, household equity has declined by 94%. Is it surprising that today's GDP number would have been a complete debacle if the consumer had been left alone to prop the U.S. economy, on whom 70% of the economy is reliant? Obama pulled a Hail Mary with the stimulus: without it there would be no debate America is in a depression right now. The only remaining question is how long can Congress and Senate extend such Subsidy programs as Cash for Clunkers before the rest of the world throws up in America's protectionist face."

A good read fi your keen.

Best

G

Ahh yes, the old cash on the sidelines meme. John Hussman describes this well. The whole article is well worth a read:

There's No Such Thing as Idle Cash on the Sidelines

There was a farmer who harvested his field of corn. He sold all but 100 bushels. A few weeks later, he lent the 100 bushels of corn he had saved to a cereal maker, who gave the farmer an IOU that said “100 bushels of corn,” made a big box of corn flakes, and sold it. The next year, a famine struck. People looked hopefully at the farmer, seeing the note that said he had 100 bushels of corn. All that corn, just sitting on the sidelines! If only the farmer would put that corn on the sidelines to work, they thought, then everything would be fine...

One of the hurdles in thinking properly about the financial markets is to understand the idea of “equilibrium” – that all securities issued must be held; that savings must equal investment; that every share bought by someone must be sold by someone else.

… and that there's no such thing as “idle cash on the sidelines.”

dhukka · 24 August 2009

Re: XAO Analysis

Donga said:
Screw the charts. They're great at analysing where we've been but looking through this thread I see little accuracy in future predictions especially from those preaching more doom. The bears love referring to charts though rarely commit to any numbers. Early last week I predicted, more for fun than anything else as don't consider myself a guru, we would sideways between 4200 to 4500 over the next few weeks. Well I might have been "bearish", as relish this yesterday from The Australian Business:

One increasingly convinced we are now past the dawn of a new bull market is AMP Capital's chief economist, Shane Oliver.

In a note to clients this week, he wrote: "The evidence is continuing to accumulate that shares have embarked on a cyclical recovery. Further gains are likely.

"There are still plenty of funds on the sidelines and there is still a lot of healthy scepticism about the rally. Past cyclical upswings have seen Australian shares rise an average of 132 per cent over an average of four years.

"While we are of the view that the long-term picture for US, European and Japanese shares is constrained by high debt levels and the need to reverse policy stimulus, the longer-term picture is more positive in emerging markets and Australia. Also, as we saw in the 1970s in the US or over the last 20 years in Japan, a constrained or difficult long-term trend doesn't prevent sharp cyclical rebounds."

Which means what for the local market? Well, Oliver reckons it could mean the All Ords hits 5000 by year's end.

"There is a good chance the US S&P 500 index will gain approximately 25 per cent over the next 12 months," Oliver postulates. "In this context, a rise to 5000 for the Australian sharemarket by year-end is conceivable. Investors will need to focus on a new set of signposts as to when the rally will peak. These are likely to include measures of capability utilisation and inflation and the speed with which government stimulus is removed."

So pin your ears back and enjoy the run up to the summer break. I'll stick to my 4200 - 4500 for the next few weeks despite Oliver's exuberance. Best of luck to all traders who buy first then sell later

Be careful following Advice from Dr Oliver, the guy has been tragically wrong numerous times. Consider this call in July 2007:

Market is just correcting itself

AMP Capital Investors chief economist and head of investment strategy Shane Oliver expects investors to have a rough ride for the next few months but says the long-term direct impact of the downturn will be minimal.

"However, the main risk is if the crisis leads to a further slump in the US credit and share markets," he says.

"The US sub-prime mortgage crisis will get worse before it gets better.

"Total losses could be high - up to $US100 billion ($A116 billion) - but this is small relative to the US mortgage market overall.

"We don't believe it is enough to trigger a US recession."

Mr Oliver says over the next six to 12 months the market will continue to rise, as the $US100 billion loss represents only 1 per cent of the total outstanding mortgages in America.

Despite yesterday's almost 3 per cent fall to 6082.9 points, Mr Oliver is forecasting that the benchmark ASX 200 index will reach 6700 points by year end and break 7000 points in the first quarter of next year.

"There will a rough patch for the next few months but the market will rally hard in the last few months of the year," he said.

Seriously, if you were trying to be wrong, you'd have been hard pressed to be this wrong.

Chris45 · 24 August 2009

Re: XAO Analysis

Re: chart posted in message #7219 on p361:
A few curious date things to ponder:
April high (start of upper trend line of almost parallel channel) was 17th
May high was 11th
June high was 12th
Average of 17 & 11 & 12 = 13.3
August high was 14th

March low was 10th
July low was 8th
Average of 10 & 8 = 9
09/09/09 (bin laden would like that date) is six months low to low from 10/03/09

Looking at the chart I posted in message #6885 on p345:
Wave 5 ran about 200% x wave 1 so we may have just completed a primary Wave 1 of our new bull market.
The 09/09/09 forecast low could be wave A of an ABC wave 2 correction.
A 50% retracement of primary wave 1 would take us back to 3815.
The January high was 3817.9 which presumably would be a support level for wave C.

However, I think it’s probably all too simple to be of any significance and I don’t really believe it’s going to amount to anything but it’s interesting to speculate.

XAO Technical Analysis

skyQuake

Donga

skyQuake

Gordon Gekko

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Donga

micksof

grace

Real1ty

nunthewiser

trainspotter

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nomore4s

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Donga

Sunder

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