XAO Technical Analysis

[Trembling Hand]

Re: XAO Analysis

Hi, if you measure equal distances along the x and y axes from the point of the x,y axes then that hypotenuse is at an angle of 45 °.

LOL!!

Here is the same chart with the same line on it. Ones about 45 d the other about 30 d.

Which one should I use????

 

[Whiskers]

Re: XAO Analysis

I wonder how far away that first rate rise will be in the U.S. (question for the gold fish )

Good question.

Did you know that's actually a crystall ball I'm inside!!!

Could be as much as two or three months away yet, but I expect the market will get a fair jump on a rate rise and start moving ahead of it. With their numbers still a bit fickle I think it's pretty obvious the FED will err on the side of caution and delay.

So whiskers with your mighty powers of prediction you believe the AUD/XAO correlation thats been as close to 1:1 all last year is gonna breakdown and then reverse?

Hello TH, well two points. Firstly a correlation is just that... an historic corelation. They change, break and re-align all the time.

Secondly, what comes first, or rather what drives what? Does the market stay at a certain level to stay in some 'correlation' regardless of the fundamentals or does the correlation change when there is a substantial change in the fundamentals. Surely you're not saying that correlation is a given... a golden rule?

Maybe you can eloberate on why you think it's so important and won't break down.

 

[motorway]

Re: XAO Analysis

Hi, if you measure equal distances along the x and y axes from the point of the x,y axes then that hypotenuse is at an angle of 45 °.

your x axis is static DISCRETE time intervals
your y axis is CONTINUOUS price intervals

ONLY if you keep the scale constant ON BOTH is your 45 possibly relevant

BOTH !

so many mm ( inches ) per price unit
so many mm ( inches ) per price unit

AS GANN did..

BUT that still won't work out optimally




Motorway

 

[Trembling Hand]

Re: XAO Analysis

Hello TH, well two points. Firstly a correlation is just that... an historic corelation. They change, break and re-align all the time.

Secondly, what comes first, or rather what drives what? Does the market stay at a certain level to stay in some 'correlation' regardless of the fundamentals or does the correlation change when there is a substantial change in the fundamentals. Surely you're not saying that correlation is a given... a golden rule?

Maybe you can elaborate on why you think it's so important and won't break down.

Oh they break & peter out all the time. Whenever the Global Macro boys break them. Hope your accounts big enough to handle betting against them, the bank of Britain's wasn't big enough.

 

[Whiskers]

Re: XAO Analysis

Hi, if you measure equal distances along the x and y axes from the point of the x,y axes then that hypotenuse is at an angle of 45 °.

LOL!!

Here is the same chart with the same line on it. Ones about 45 d the other about 30 d.

Which one should I use????

Excuse me for buying in here Wysiwyg, but I'm pretty stoaked on caffine atm, it's raining cats and dogs, nothing much else to do and I'm feeling pretty cocky :.

TH, you aint got equal distances on each axis!!!

With all due respect my understanding and the way I interpreted it, Wysiwyg made that reference to his chart... which to me looked near 45deg.

PS: I see Motorway has 'polietly' made the correct point/arguement... but a simple person like me saw it simply as a simple point of reference.

 

[Trembling Hand]

Re: XAO Analysis

I'm feeling pretty cocky :.

Good luck.

 

[MRC & Co]

Re: XAO Analysis

Just expanding my thinking, for me it looks like resource prices will continue to firm. The AUD/USD has had, I reckon, a corrective recovery of late and the next rally in the XAO (after a minor correction sometime soon) most likely will coincide with the next drop in the AUD/USD... ie better news out of the US.

But wouldn't continued resource strength favour continued strength in AUD? Or is AUD going to become the other side of the USD (long) trade, alongside other global currencies (Euro, JPY, GBP etc)? And the US 'recovery' story going to continue to booster resource/equity/USD strength?

Just trying to work out what angle your coming from....

 

[Whiskers]

Re: XAO Analysis

Yes MRC & Co, resource strength will favour the AUD, but having said that, I think that we're in the early stages of another shift in equilibrium and given the relative size of the economies and that the money shifting into the USD will come from a range of currencies, I'd expect comparitevly less would leave the AUD than most others because of the strength of our economy largely because of resource prices.

But having said that the US can absorb and will attract a lot of cash when those rates start to rise, but I think their economy is a bit further away from demanding huge amounts of resources, ie their growth will be slower, and looking further into my crystal ball, based on their growing incapacity to pay their way, I suspect they will have a modest recovery before they fall again on a lower standard of living and fade further as the predominate world economy.

Assuming the US lowers their standard of living as I expect they will, their market will not 'crash' again, a year or two down the track rather tend to slide away a bit relative to Aus and China for example.

But getting back to the near future, a matter of finding/feeling the equilibrium, Aus can mine a relatively huge amount, export it to China to produce more than it's growing domestic market can consume and export the balance to other countries including the US where the net effect will be greatly in favour of Aus and China, ie probably just enough to sustain the US while they think about their debt and standard of living for a year or two.

 

[Wysiwyg]

Re: XAO Analysis

The daily chart looks less convincing today, have to wait until tommorrow to see if a evening star pattern forms

Well the evening star pattern didn't eventuate. Thought it was a chance anyway.

 

[Wysiwyg]

Re: XAO Analysis

Good question.
Did you know that's actually a crystall ball I'm inside!!!

The upside down crystal ball is exactly what I was thinking. == (laughs + ROF())

No it's all good from my point of view Whiskers. I read your posts (gawd knows why ).

I might give scalping on coin flips a go.

 

[Trembling Hand]

Re: XAO Analysis

I might give scalping on coin flips a go.

Isn't that something else you already failed @ :

 

[nulla nulla]

Re: XAO Analysis

Isn't that something else you already failed @ :

Is that the same as playing two-up at the casinos?

 

[wintermute]

Re: XAO Analysis

As unpopular as my XAO posts seem to be, I've returned I've been virtually inactive in the market since Mid 2007 (and my losses reflect that). My problem is I predict stuff then fail to act on it.

First I want to attach a screenshot of a post from another site which I made in Sep 2008. Why? because the chart I'm going to post is based on the one in that chart (which was in turn based on the one that I used for predicting a market crash towards then end of 2007/early 2008 around 10 months before. It probably gives me little extra credibility but I feel compelled to blow my own trumpet so to speak What did I say in that post? That I predicted we would not see the XAO return to 5000 until early 2010... I also felt that it would bounce off it and head back down again. Note that the prediction about the market bottom was out a bit but not by a long way date wise (about 3 weeks) the actual drop was much more severe than I expected though, more rapid and deeper hence the failure to pick the date and the value.

Well I've updated that chart and have some new thoughts on it. so the second chart is the current one (or at least at a week or so ago, since it is monthly it makes no difference).

Here were my Musings on it that I made a few weeks ago (on the second chart) at another forum I post at (note I haven't been posting anywhere for some time, having a now two year old has kept me somewhat busy )

**********************************************************
I've been basically an ostrich lately and only occasionally looking at my stocks only to find not much has changed (ie they still suck and I've still lost lots of money). I decided to pull out my trusty old long term voodo chart of the XAO once again.... interestingly it is still holding up. This is an evolved version of the one one I have posted here quite a few times in the past. Is it really voodoo? Probably.. but I look for patterns nothing more... I tend to agree with the comment from the OP about 5000 being important (if for no other reason that it being a psychological point) but see below for some hypothesizing on it.

Anyway attached is my long term graph with some horizontal lines which correspond to the points where the XAO fell back below the long term upper trend line, in 1987 and in 2008. Note that after the 87 crash the XAO blipped above that point (approx 1500) about 21 months after the level was broken. Also consider that the 1987 crash was much quicker and steeper than the 2007/2008 one, so they can't be directly compared (the first glaring difference in this comparison is that the bottom trend line wasn't hit in the intital fall in 1987)...

Now the next horizontal line is at 5000 which is the point that the XAO dropped below the upper trend line again in Aug 2008. it is now 17 months later and we are approaching that line. The interesting thing is that it took 6 years before the XAO went above and stayed above that fateful 1500 mark.

Can we expect something similar again this time around? My guess is we will bounce off (perhaps briefly piercing it) that 5000 line and head back towards that bottom trend channel. Maybe not rapidly, but I think we will quite probably bounce between the 5000 mark and that lower trend line for a few more years. I hope I'm wrong, but I really don't think that the world is out of the woods yet! and our markets recovery (my stocks excluded) has been a little faster than I would have expected.

Don't get me wrong, out of all of the markets in the world, I think ours is probably in one of the strongest positions, but me thinks it is too early to be hoping for another bull market.

Anyway just my musings

Tony.
**********************************************************

So feel free to ignore, but I thought I'd put it out there

Tony.

 

[Logique]

Re: XAO Analysis

Interesting analysis wintermute. Very close on the low last year.
I take it you see 5000 as a psychologically significant barrier, such that the current up leg wouldn't proceed to your upper channel at ~ 5700. Certainly the index would have run a long way in a single leg if it did reach that level this time.

 

[surfziggy]

Re: XAO Analysis

http://www.minyanville.com/articles...r-minyanville/index/a/25839/from/25839?page=2

 

[wintermute]

Re: XAO Analysis

Hi Logique, yes my thinking is that the 5000 mark will be a psychological barrier, but also that the market tends to react in the same ways over and over again, I'm basing the bounce off 5000 (and it could well be a bit above that) on what happened after the 87 crash, simply looking at patterns and trying to predict based on what has happened before. The two crashes are quite different however in the way they played out so it is difficult to say with any certainty or accuracy what will happen (at least with the methods I am using, a mathematician or statistician may be able to do a more accurate analysis).

Starkler at TS posted this link http://www.tradersnarrative.com/the-aftermath-of-secular-bear-markets-2893.html after my post which seems to show that what I was predicting is somewhat typical in the aftermath of a bear market.

As with anything whether or not it plays out that way only time will tell! But I personally don't believe in efficient markets and do believe that there are patterns (mostly caused by over-reactions)..... One thing I've yet to decide though is how much (if at all) charting and technical analysis tends to re-inforce those patterns. That is whether those patterns are there because people look for them and act on them (ie technical traders) or whether it is simply the way it is and the act of observing the patterns (and perhaps acting on them) has a minimal effect on the market at large.

Fat lot of good it has done me, as I've never been confident enough in my own predictions to act on them, if I had have been I probably would have made a tidy profit

edit: and yes I'm thinking we won't see that upper trend channel line hit for some time yet possibly a few years, but I'm certainly hoping I'm wrong!!

Tony.

 

[Trembling Hand]

Re: XAO Analysis

One thing I've yet to decide though is how much (if at all) charting and technical analysis tends to re-inforce those patterns. That is whether those patterns are there because people look for them and act on them or whether it is simply the way it is and the act of observing the patterns (and perhaps acting on them) has a minimal effect on the market at large.

Or what about because of the myriad of TA patterns known to traders they will always be able to back fit the past and therefor fool themselves into thinking that they are predicting the future ?

 

[wintermute]

Re: XAO Analysis

Or what about because of the myriad of TA patterns known to traders they will always be able to back fit the past and therefor fool themselves into thinking that they are predicting the future ?

Yep agree, all too easy to do, however if you look at my original post from Sep 2008 I think I did pretty well (or perhaps I just fluked it) in both predictions of the bottom being in 1st April 2009 (was actually about 3 weeks earlier because it fell off a cliff a little more than I anticipated) and that we would not see 5000 again until early 2010 (and we have hit 4950 in the first couple of weeks of January 2010). This all using a VERY long term graph, and what appears to stand up as a long term channel that is the normal range in which the market stays.

There is no doubt that between the first time I posted this chart in 2007 (or perhaps late 2006) and was predicting an 87 style crash, and NOW I have adjusted the trend channel to fit to the current conditions, until we had that low in March 09 I didn't have a recent reference point with which to get the trend channel positioned accurately, It was like a giant lever with small adjustments making very big differences to where it sits in the current day.

Do you think I'm fooling myself?

Tony.

 

[Trembling Hand]

Re: XAO Analysis

Do you think I'm fooling myself?

Tony.

Well done mate. Maybe next time step up and throw a dollar or two at it.

 

[wintermute]

Re: XAO Analysis

http://www.minyanville.com/articles...r-minyanville/index/a/25839/from/25839?page=2

I don't like his prediction no 3 at all!! but at least it is the DJIA.. I do personally think the US is a time bomb, but I like to (perhaps foolishly) think that if it does explode, our market will not follow them all the way into oblivion. The H&S he talks about does show up (kindof) on a weekly chart, but not if you use a log scale as I prefer to for long range charts. My personal feeling is a non-log chart over a long time period gives a very distorted picture.

Tony.