XAO Technical Analysis

wintermute · 14 January 2010

Re: XAO Analysis

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

Story of my (Trading) life TH. The number of times I've said now would be a good time to buy (or sell) but haven't actually done it is scary (all easy with hindsight of course). Things fell apart somewhat when I went back to full time work though... compounded when my Daughter was born.

I think I need to throw away my old ways and become a little more mechanical, set (and act on) realistic stops and just go for it. I've often though about swing trading, but have traditionally been a buy and hold type. I'll need to make the time though, which is the hardest part. On a few days leave at the moment and trying to get back into the swing of things

Tony.

Logique · 14 January 2010

Re: XAO Analysis

Thanks for the further info wintermute, and also to surfziggy for the link 'Ten Bold Predictions...for 2010' post on 14th Jan.

Yes that prediction number three is one of the scariest things I've read in ages, i.e. that during 2010 the Dow Jones Industrial Average (DJIA) will complete the right shoulder of a giant head-and-shoulders top on the weekly chart, and start to head south.

'...If history repeats, that puts us at around 5000 in 2010 and 1400 by January 2012, and it will feel like the end of the world-- just like the Mayans predicted...'

wintermute · 15 January 2010

Re: XAO Analysis

Well I decided to take a further look at my chart and the attached is what I came up with. If (and it's a big if) the market follows a similar pattern to the aftermath of the 87 crash, then My next prediction is a low of around 3700 about 17th Dec 2010. At that point it will hopefully bounce off the lower trend channel.... also if we see a repeat of 87 then it will probably be another month before we are at the top, which will be somewhat above 5000 it was 3% above the horizontal line in 87 which would be 5150... Lets see what happens

I'm going to start re-evaluating my holdings. Having been through a number of corrections now, and not having cashed up I've missed a lot of opportunities... I want to be ready if it happens again I am of course assuming that what I have posted pans out, and also that the stuff from surfziggy doesn't (though if it did obviously being out of everything would be a good idea!). Somehow I don't think that we are going to see a 1929 style crash, but that's just my oppinion just as the above are just my musings I'm not saying that this WILL happen, just that it is a possibility, and being aware of the possibility in advance can make the difference between being in a good position or a bad one

Tony.

Trembling Hand · 22 January 2010

Re: XAO Analysis

Whiskers said:
Logique said:

You near-term bulls, name the catalysts to spur buyers into action in January?

Click to expand...

Well if I have to pin it on one single event... I've been tipping a slightly stronger USD and weaker AUD for some time, having the effect of better returns for our large export, especially resource sector.

So far so good. I think it still has a bit to run yet.

So the miners must be having a great week as the AUD has taken a hammering lately.

Hahahahahhahahahahahah

:bananasmi

Whiskers · 22 January 2010

Re: XAO Analysis

Trembling Hand said:
So the miners must be having a great week as the AUD has taken a hammering lately.

Hahahahahhahahahahahah

:bananasmi

Context mate... I say context!

That quote was on 24the Dec and as it turned out it was quite accurate.

As for now, I'm thinking this is a minor correction prompted by a number of things abroad... and a drop in gold coinciding with a fall in the AUDUSD.

The future... I'm thinking the AUD will go lower, just starting the 'c' leg down.

POG, count not exactly sure... probably a minor wave 4 or larger wave 2... either way don't see the POG falling much below current level, certainly not below USD1,000 at least for any significant period and other metals, copper for example, while having a pretty straight line recovery and stockpiles accumulating, are getting somewhere near where I would expect prices to level out and maybe correct a little bit.

Previously I suggested 5233 as the max for this larger degree wave up. Bottom line, I'm thinking the XAO has probably about done a minor wave 4 correction. My best guess atm, is the XAO will kick closer to 5200 before a more significant larger degree correction.

PS: I'll post a chart later.

Whiskers · 22 January 2010

Re: XAO Analysis

Talking about resources boosting the Aus economy and ultimately the XAO, don't forget sugar, a significant part of the Qld and even a bit of WA and NSW economy.

The recent best prices for a decade or so will start to flow through to more economic acticity by farmers soon... since they are generally a pretty conservative lot and their payments lag the market price.

Trembling Hand · 22 January 2010

Re: XAO Analysis

Whiskers said:
I've been tipping a slightly stronger USD and weaker AUD for some time, having the effect of better returns for our large export, especially resource sector.

Whiskers said:
That quote was on 24the Dec and as it turned out it was quite accurate.

PS: I'll post a chart later.

In the mean time here is one of your "quite accurate" (hahahaha)24th Dec call on falling of the AUD while the XAO would go the other way.

Denial must be a wonderful thing!

Whiskers · 22 January 2010

Re: XAO Analysis

TH... I repeat, context!

TH don't you know markets don't move in straight lines, ie they trend with impulses and corrections.

Note the original question.

Originally Posted by Logique
You near-term bulls, name the catalysts to spur buyers into action in January?

Are you disputing that the 'catalyst' was a change of trend for the AUDUSD ie strengthening USD and that the XAO trend is rising and will continue to rise for the med term at least?

Maybe that's too much to ask a scalper whose length of trade is only a few minutes or hours at most! As I pointed out earlier, many people in the real economy are pretty conservative and make decisions on longer term trends :

Trembling Hand · 22 January 2010

Re: XAO Analysis

Whiskers said:
Are you disputing that the 'catalyst' was a change of trend for the AUDUSD and that the XAO trend is rising and will continue to rise for the med term at least?

You have to be kidding?? Your silly point all along is that the AUD would decline and make the exporters increase in profit and therefor share prices would rise. That is what you have been saying for months?

I have been saying that is WRONG. They are locked together. Now you are saying What? the XAO is rising and the AUD IS falling Gives us all a good laugh why don't you and post a chart of them to illustrate it.

Trembling Hand · 22 January 2010

Re: XAO Analysis

Whiskers said:
Talking about resources boosting the Aus economy and ultimately the XAO, don't forget sugar, a significant part of the Qld and even a bit of WA and NSW economy.

The recent best prices for a decade or so will start to flow through to more economic acticity by farmers soon... since they are generally a pretty conservative lot and their payments lag the market price.

Oh and while I'm at it your sugar prices are rubbish as well. That chart is in USD. Thats no good to an Aussie farmer. Sugar was about $20 AUD a ton back in 2000 now 10 years later with all the increased inputs some by 300% fuel, fertiliser etc, sugar is about $27 AUD.

Don't expect them to be celebrating or increasing their Bentley purchases.

white_goodman · 22 January 2010

Re: XAO Analysis

Trembling Hand said:
You have to be kidding?? Your silly point all along is that the AUD would decline and make the exporters increase in profit and therefor share prices would rise. That is what you have been saying for months?

I have been saying that is WRONG. They are locked together. Now you are saying What? the XAO is rising and the AUD IS falling Gives us all a good laugh why don't you and post a chart of them to illustrate it.

served and pwned

skc · 23 January 2010

Re: XAO Analysis

Whiskers said:
Talking about resources boosting the Aus economy and ultimately the XAO, don't forget sugar, a significant part of the Qld and even a bit of WA and NSW economy.

Sorry couldn't help but rub it in a bit here. Sugar is a $1.75b industry to the Aus economy. The Aus economy itself is ~$1T. Unless by significant you mean 0.175%....

http://www.dpi.qld.gov.au/26_6730.htm

http://en.wikipedia.org/wiki/Economy_of_Australia

Whiskers · 23 January 2010

Re: XAO Analysis

Trembling Hand said:
You have to be kidding?? Your silly point all along is that the AUD would decline and make the exporters increase in profit and therefor share prices would rise. That is what you have been saying for months?

I have been saying that is WRONG.They are locked together. Now you are saying What? the XAO is rising and the AUD IS falling Gives us all a good laugh why don't you and post a chart of them to illustrate it.

What is locked together... the AUD and the XAO... or profits?

Either way it's rubbish. none of them are 'locked together'.

Trembling Hand said:
Oh and while I'm at it your sugar prices are rubbish as well. That chart is in USD. Thats no good to an Aussie farmer. Sugar was about $20 AUD a ton back in 2000 now 10 years later with all the increased inputs some by 300% fuel, fertiliser etc, sugar is about $27 AUD.

Don't expect them to be celebrating or increasing their Bentley purchases.

Well TH, I came from a cane farming background and live in a significant cane growing area and I can assure you farmers do track the sugar price in USD since their market is export and the international market price is quoted in USD. Furthermore they also note the AUDUSD trend re any further gain or loss through currency conversion. The price rise of the last year or so has lifted farm incomes from generally breakeven to a healthy return again.

Fertiliser costs peaked early 09 and Potassium in particular has fallen back quite a bit since. Costs are continually being minimised through efficiency and competition, eg a lot are growing peanuts in rotation instead of small crops to increase soil organic nitrogen in a crop cycle while still getting a cash return.

To illistrate that the XAO and AUDUSD don't travel in unison or 'locked together' as you seem to be suggesting, the following charts with the more recent highs and lows of the XAO marked on the AUDUSD chart clearly shows some significant trend opposition.

What I'm suggesting is the AUDUSD peaked mid last Nov, but I'm not convinced the recent high of the XAO is a peak yet.

Whiskers · 23 January 2010

Re: XAO Analysis

skc said:
Sorry couldn't help but rub it in a bit here. Sugar is a $1.75b industry to the Aus economy. The Aus economy itself is ~$1T. Unless by significant you mean 0.175%....

http://www.dpi.qld.gov.au/26_6730.htm

http://en.wikipedia.org/wiki/Economy_of_Australia

Hi skc, firstly those QDPI figures are about 18 months old... and no doubt you noticed the 'Service' sector is the largest by GDP, but mining and agriculture are about 2/3rds of our exports.

Probably the most significant thing to note here is the Service sector relies on the Primary sector, mining and agriculture, and to some extent the Manufacturing sector (what's left of it) for a significant amount of their work.

A poor primary and manufacturing sectors = the Aus economy suffers through higher unemployment and lower income, savings and investment = starved service sector.

A couple of exceptions to this formula are entertainment and education. But while they are both rising industries in AUS they too suffer if the primary production sector stumbles.

PS:Sugar and agriculture in general are the backbone of much of rural Qld and while I don't have the numbers at hand is more labour intensive than mining which is more capital intensive and consequently every agriculture dollar translates into a higher proportion of $'s injected straight back into the local community.

Wysiwyg · 23 January 2010

Re: XAO Analysis

Whiskers said:
Probably the most significant thing to note here is the Service sector relies on the Primary sector, mining and agriculture, and to some extent the Manufacturing sector (what's left of it) for a significant amount of their work.

Noticeably less hey. Much goods are manufactured in other countries now as Australia's cost to manufacture goods is excessive (especially wages) in comparison to other countries. However processing raw materials and energy sources has boosted significantly this century and will continue to be an employment strength in the future. The raw materials just have to be drilled, blasted, excavated, end-loaded and trucked or railed to port or to a processing plant for refinement.

What's your thoughts on the possibility of there being a see-saw effect with Chindia and USA? Like one goes up and the other goes down and both can't have high economic growth together. Now that would be a super bull market but unlikely to happen.

Logique · 23 January 2010

Re: XAO Analysis

Whiskers said:
Note the original question.
Are you disputing that the 'catalyst' was a change of trend for the AUDUSD ie strengthening USD and that the XAO trend is rising and will continue to rise for the med term at least?

Hi Whiskers. The $USD is certainly showing strength in early 2010 after the downtrend through 2009. And who knows, it may well follow through during this year. The Aust gold stocks index has been pulverised in the last couple of days, and is down on the year, while inversely the $USD index vs basket of currencies has been up. No question in my mind that commodity prices respond to the $USD.

I find that a lower Australian dollar vs $USD - favourable impact on exporters profits - seems to occupy investors minds more at company reporting time.

The $USD strength does indeed seem to have been a major catalyst in the new year, so this was a good call. Add into that in recent days President Obama's call for stricter controls on US banks, which caused the US market to tank, and again overnight, which we'll see here on Monday. And a third factor, the fear of the Chinese economy overheating during 2010.

..that the XAO trend is rising and will continue to rise for the med term at least?

Yes I'll get onboard with that proposition, but I don't expect it to be a straight-line increase. Near term I would not be surprised to see XAO retrace to within range 4500 - 4600.

skc · 23 January 2010

Re: XAO Analysis

Whiskers said:
Hi skc, firstly those QDPI figures are about 18 months old... and no doubt you noticed the 'Service' sector is the largest by GDP, but mining and agriculture are about 2/3rds of our exports.

Probably the most significant thing to note here is the Service sector relies on the Primary sector, mining and agriculture, and to some extent the Manufacturing sector (what's left of it) for a significant amount of their work.

A poor primary and manufacturing sectors = the Aus economy suffers through higher unemployment and lower income, savings and investment = starved service sector.

A couple of exceptions to this formula are entertainment and education. But while they are both rising industries in AUS they too suffer if the primary production sector stumbles.

PS:Sugar and agriculture in general are the backbone of much of rural Qld and while I don't have the numbers at hand is more labour intensive than mining which is more capital intensive and consequently every agriculture dollar translates into a higher proportion of $'s injected straight back into the local community.

Not sure about all these double counting and secondary flow on effects. We will be debating about the size of industries and what's more important until the cows come home. Not saying the sugar industry isn't important or doing a great job... I love my sugar. But the bottom line is... <0.2% just doesn't fit the general understanding of being significant.

And since this is the XAO thread, I'd go out on a limb and say.. if they say the sugar industry will treble in size in the next 12 months, I doubt it will light a fire under the XAO.

Back to topic.

satanoperca · 23 January 2010

Re: XAO Analysis

Hi,

Lots and lots of commentary on the XAO.

Some things to add.

1) Weekly Chart
2) MACD, ROC, RSI, SKOL indicators - your choice
3) Type A Bearish Divergence across all the indicators
4) False breakout from sym triangle
5)Apex of triangle drag price towards it
6) Fridays Dow close, ouch

The next leg is down, the uptrend is exhausted.

Hold onto your hats.

Cheers

Whiskers · 23 January 2010

Re: XAO Analysis

Wysiwyg said:
What's your thoughts on the possibility of there being a see-saw effect with Chindia and USA? Like one goes up and the other goes down and both can't have high economic growth together. Now that would be a super bull market but unlikely to happen.

Haven't factored India into my equation very much yet Wysiwyg. Probably because of all the political and social factional friction... they don't seem to be able to get their act together as effectively as China has done.

But certainly if they can get it together while China is charging and the USA still has a bit of a sting, It would be a Super Bull. But, I can't see that happening any time soon.

skc said:
And since this is the XAO thread, I'd go out on a limb and say.. if they say the sugar industry will treble in size in the next 12 months, I doubt it will light a fire under the XAO.

Back to topic.

By 'significant' I don't mean large, but significant in the sense that it's the foundation or backbone of most of coastal queensland. It has been there for decades and has been the foundation on which other industries like mining and tourism have been able to build upon more effectively, ie much of their infrastructure and 'Service Industry' has been built up and supported by sugar over the decades while mining projects come and go and tourism waxes and wanes.

But your right, sugar alone isn't going to light up the XAO... all I am suggesting is that when the foundation of a community is solid and healthy it lends extra strength and confidence for the community the Service Sector and other industries when they thrive.

Whiskers · 23 January 2010

Re: XAO Analysis

Logique said:
Yes I'll get onboard with that proposition, but I don't expect it to be a straight-line increase. Near term I would not be surprised to see XAO retrace to within range 4500 - 4600.

Indeed, it will be a testing time ahead.

As you mention, the Obama effect is going to be important. He has been critised for too much talk and little action. Wall streets initial reaction certainly hasn't taken kindly to his tighter finance industry controls or health care... but I suspect the rest of the world and the general public will embrace tighter controls and a more empathetic US.

I reckoned that the world financial crisis would have been substantially mitigated if Bush had followed through with his rhetoric, and I suspect that Obama has concluded that if the US doesn't do it now it risks an encore and going down the tube altogether with the wrath of the rest of the world. Better to muzzle things a bit to stay in the game a bit longer than risk getting replaced altogether.

I'm thinking the tighter Chinese lending controls is also a good thing in the longer term. A bit of a double whammy both coming together, but I'll wait and see for a couple of days as to whether a more significant reversal has started... ie I'll let Wall street have a day or two to get over their chokeing cough and let reality settle back in.

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