XAO Technical Analysis

[sammy84]

Re: XAO Analysis

Surfziggy you may be right there. I guess one question is whether the US$ has been oversold and it due for a correction. I also note that gold is really starting to look streched (please note I'm a trend follower and don't like to pick tops here, but it is looking streched nonetheless). I wonder what reaction the US$ would have if the gold price starts to lower.

On another note, yet another fade out in the Australian markets after what was another bullish day in the US. The US finished well of their lows on a negative news day. Sooner or later either the US market has to drop or Aus has to play catch up.

 

[sinner]

Re: XAO Analysis

Surfziggy you may be right there. I guess one question is whether the US$ has been oversold and it due for a correction. I also note that gold is really starting to look streched (please note I'm a trend follower and don't like to pick tops here, but it is looking streched nonetheless). I wonder what reaction the US$ would have if the gold price starts to lower.

On another note, yet another fade out in the Australian markets after what was another bullish day in the US. The US finished well of their lows on a negative news day. Sooner or later either the US market has to drop or Aus has to play catch up.

Also worth to note while gold has been making new highs AUDUSD and USDCAD have not been making new highs (A/U) and new lows (U/C). Indicates to me gold is gaining some fundamental value. If gold and oil drops from here on USD strength there is NOTHING to hold up the commodity currency basket (of course, that is what the commodity currencies should want, cheaper currency = more competitive exports).

 

[Whiskers]

Re: XAO Analysis

Some questions for you (and my guesses - they may be somewhat oversimplified, I dont claim to be an economist!) :

1) Which way is the US$ headed?
I think stagnant or down - US surely is in no hurry to raise interest rates. One way to reduce it's large debt would possibly be to let the $ slide further.
2) Which way is the A$ headed?
up or the same by token of my last answer - that and Mr Swan says interest rates are headed up.
3) Will the US, ASX markets stay strongly coupled to the way the US$ is moving?
Probably?

So, to summarise my theory is that unless there is some kind of trigger/catalyst I think we continue the same direction we have been. Plus I saw this the other day:

http://www.minyanville.com/articles...n-socgen-pharma-minyanville/index/a/25587/p/1

Societe Generale reckons that while the retail investor is highly invested, the funds aren't:

Comments?

I was gonna post this in the Gold and AUD threads, but since you posed the perfect prompt and the bottom line will be the effect on the XAO, I'll consolidate it here.

I'm watching for the AUD to fall against the USD pretty soon fundamentally, technically it's also indicated because of an ascending wedge, some MACD divergance and a reasonable looking H&S on the hourly, which would bring it back into the .80's.

I'm also looking for the XAUUSD to peak probably below 1,200 and generally go sideways for some time based on both my alternate counts looking for a corrective wave and the 1.618 mark just above 1,200. A similar scenario with all other metals.

This would also be consistent with the USD firming particularly against the AUD which I think was bought up heavily because we didnlt go into recession and raised interest rates first and likely to pause for a bit while the rest of the world recovers.

The net effect, all other things being equal, should be better returns for our exporters a minimal (comparatively) rise in imports and a strengthening XAO.

 

[surfziggy]

Re: XAO Analysis

Surfziggy you may be right there. I guess one question is whether the US$ has been oversold and it due for a correction. I also note that gold is really starting to look streched (please note I'm a trend follower and don't like to pick tops here, but it is looking streched nonetheless). I wonder what reaction the US$ would have if the gold price starts to lower.

I guess I'm thinking of US$ being the horse not the cart. Also, although gold has had a phenomenal run, it could stilll run higher due to its scarcity, fear, inflation fears, dollar devaluation fears etc, right? It seems to me something that is very difficult to put a fair value on. I read somewhere the other day that based on the US$ fractional backed reserves that gold *should* be worth $6400 per troy oz. I'm not a gold bug and don't subscribe to the doomsday sayers. At the end of the day something is only worth what someone else will pay for it.

On another note, yet another fade out in the Australian markets after what was another bullish day in the US. The US finished well of their lows on a negative news day. Sooner or later either the US market has to drop or Aus has to play catch up.

If we're to maintain correlation, yes. Has anyone done any study of the correlation between the two markets and the ratio of the indexes and there change? It's a simplistic measure, but that's effectively what we're asking here, isn't it?

In other words if the S&P 500 is at 1100, and the XJO is 4700 then the ratio is 4.27272727. Depending on the ratio we're either oversold or overbought to maintain correlation. You could probabtly create some kind of chart of this automatically from the two indexes and a MA?

 

[Whiskers]

Re: XAO Analysis

Could it also be the case that the big boys in the market are waiting for the turn in the AUD and fadeing out as the day goes on when it doesn't come?

Is that a reasonable H&S on the XAO? That would set up a target around 5,100 or so.

 

[surfziggy]

Re: XAO Analysis

Could it also be the case that the big boys in the market are waiting for the turn in the AUD and fadeing out as the day goes on when it doesn't come?

Is that a reasonable H&S on the XAO? That would set up a target around 5,100 or so.

I'm not sure I understand? So they were waiting for a turn in the AUD, which they in turn expect the XJO to (possibly maybe probably) fall. In advance of this they want to bid the market up, so they can go short at the best possible price? So, if this is the case would you expect there to be divergence between the price action of some of the 'names' and the rest of the market or something else? In other words how can you measure this? Does it cause a disconnect between the SPI price and the index? Perhaps a market manipulator can explain it to me?

 

[Wysiwyg]

Re: XAO Analysis

Negative divergence on the weekly MACD, signal line cross and histogram below zero, a potential head and shoulders topping pattern on the daily chart and less market exuberance (what else is there makes the XAO look ripe to drop. Weekly chart so things are happening at a comfortable pace.

 

[Whiskers]

Re: XAO Analysis

I'm not sure I understand? So they were waiting for a turn in the AUD, which they in turn expect the XJO to (possibly maybe probably) fall. In advance of this they want to bid the market up, so they can go short at the best possible price? So, if this is the case would you expect there to be divergence between the price action of some of the 'names' and the rest of the market or something else? In other words how can you measure this? Does it cause a disconnect between the SPI price and the index? Perhaps a market manipulator can explain it to me?

Essentially, if I was a big player and was confident of the AUD falling against the USD shortly, I may buy on the opens when the SPI indicated higher and sell, take small profits if the market, ie the AUD didn't fall to equate to an increase in revenue for and boost XAO listed (particularly exporting) companies as the day wore on, especially if the XAO started to loose momentum.

For me the best way to gauge this strategy is to keep a close eye on the currrencies, major indicies and the sort of stock you might buy if that were the case.

 

[nomore4s]

Re: XAO Analysis

Agreed and not at the same time. There may be selling into strength, but I would exactly call the last days price action 'strength'. There should have also been some conviction selling on down days as well to accompanying this bearishness. I really dont under these fades. The US on the other hand has happy some pretty good strength in the last 10-15 minutes of trading the last few days.

Well we're seeing some conviction today, lol.

My longer term analysis is also still in play, we need to see the down leg eventuate shortly though or it will be invalidated and I'll have to come up with a new guess.

https://www.aussiestockforums.com/forums/showpost.php?p=505591&postcount=7685
https://www.aussiestockforums.com/forums/showpost.php?p=507013&postcount=7699

Will up date my charts later tonight or tomorrow. The market has looked shaky for the last 2 weeks or so and imo was looking for a reason to sell off.

Still need to see 4500 broken to confirm a lower low after a lower high.

Also if we do get a sustained down leg here, it might put paid to the notion that we blindly follow the DOW? While the DOW was making new highs we were making a lower high?

 

[derty]

Re: XAO Analysis

Is that a reasonable H&S on the XAO? That would set up a target around 5,100 or so.

It looks like a H&S to me, though I thought a H&S pattern was an indication of an unsuccessful attempt to continue the up-trend and suggests a coming break down? Though I see we haven't cleared the neckline yet just above 4500. Carnage on the DOW tonight could see us test this on Monday.

 

[skyQuake]

Re: XAO Analysis

It looks like a H&S to me, though I thought a H&S pattern was an indication of an unsuccessful attempt to continue the up-trend and suggests a coming break down? Though I see we haven't cleared the neckline yet just above 4500. Carnage on the DOW tonight could see us test this on Monday.

The 2nd low should be higher now lower than the first low (forming the neckline). Theres a lot less validity if its already made a lower low (and this ppl would have gotten out); so when it finally breaks the neckline there is less 'ammo' so to speak of people dumping.

 

[Wysiwyg]

Re: XAO Analysis

The 2nd low should be higher now lower than the first low (forming the neckline). Theres a lot less validity if its already made a lower low (and this ppl would have gotten out); so when it finally breaks the neckline there is less 'ammo' so to speak of people dumping.

Well that is interesting. I have not read anywhere that it is a prerequisite to be sloping up. There is mention of generally up sloping but can be sloping down also, even horizontal. I guess we all have different interpretations.

 

[skyQuake]

Re: XAO Analysis

Well that is interesting. I have not read anywhere that it is a prerequisite to be sloping up. There is mention of generally up sloping but can be sloping down also, even horizontal. I guess we all have different interpretations.

Someone who has traded a lot more than me explained it; the H&S works because it provides a setup where a lot of people dump the stock due to a change in the trend.
If a lower low is already made, a few players would be looking to sell out, not to mention the stop losses below the last swing low. Thats some sellers taken out already. When it finally breaches the sloping down neckline a lot of the sellers are bailed out already, and the move won't be as explosive - thus more instances of pattern failure
But then again I don't really use H&S as u don't see many good ones around :\

 

[nulla nulla]

Re: XAO Analysis

It looks like a H&S to me, though I thought a H&S pattern was an indication of an unsuccessful attempt to continue the up-trend and suggests a coming break down? Though I see we haven't cleared the neckline yet just above 4500. Carnage on the DOW tonight could see us test this on Monday.

Looking at the shoulders in your graph, the November shoulder is higher than the October shoulder. It would appear to indicate that the xao will go above 4800 if it can bounce before 4500. If it doesn't get support above 4500 then the next level of support appears to be 4400.

Although the Dow fell 150 last night it is still above 10,000. The banks in the U.S so far have indicated that they have neglible exposure to Dubai (as have the Australian banks) but the market is wary of the impact of indirect exposure.

A significant impact has already been felt in the Commercial Property sectors. It appears the market is expecting some of the Dubai properties to come onto the market at significant discounts to market value, dragging down the rest of the property values as properties are sold to raise capital to invest in the Dubai bargains.

This could also partially explain the pull back in the Australian Dollar, funds being converted out of the Aud$ to be used for buying into Dubai if there is a sell off of assets to reduce debt.

And the wheels go round and round

 

[sammy84]

Re: XAO Analysis

Assuming today’s strength holds, then we have a higher swing low. Combined with the lower swing high, the XAO could be forming a symmetrical triangle. Santa Claus rally still in play....

 

[Kryzz]

Re: XAO Analysis

Any comments re the gap? last few gaps on the index were filled and were followed by an immediate sort of push?

 

[skyQuake]

Re: XAO Analysis

Any comments re the gap? last few gaps on the index were filled and were followed by an immediate sort of push?

The staggered open screws things up. You have to find a chart that adjusts for the staggered open (called the XJO gap chart).. Haven't seen a reliable vendor of those for agessss.

There was a thread about this I think involving whiskers and TH a while ago, maybe in this thread?

 

[Wysiwyg]

Re: XAO Analysis

Fairly basic pattern is the symmetrical triangle. The narrowing of swing range is between 70 points now so I believe a breach of these (imaginary) boundaries will happen soon. An alternative is the swing boundaries being extended and hence breaking down the triangular pattern. Christmas cash-in may have begun.

 

[nomore4s]

Re: XAO Analysis

The XAO is starting to show signs of distribution imo, but unfortunately the only way we will know if this is distribution or not is when we break either up or down from this trading range.

The first chart shows 5 pushes up that have been met with selling with higher vol then in the preceding bars. Also the decline after the 3rd push up has increased volume and you could probably say increased spread - compare this to the 3 wave decline in June.

The second chart is just a bit of an overview of the increased volume we are seeing at the tops.

I will admit that I have a somewhat bearish bias atm so take want you want from this, but I'm pretty much on the sidelines waiting for confirmation one way or the other as this sort of market doesn't really suit my trading. Confirmation is either a break down through 4500 or up through 4900.

I think we could just meander in this range till after the New Year now but you never know what could set the market off.

 

[Synergy]

Re: XAO Analysis

I feel the coming days may give a clearer picture of the direction we're about to take leading into Christmas.

ps: are we in a wave 4 EW'ers?