XAO Technical Analysis

[nulla nulla]

Re: XAO Analysis

Here is a chart of the XAO with a top secret, super duper divergence code: that has proven to be very reliable in the past.

It basically gives an indication of how many stocks are trending up or down based on - well that's the secret bit:

You can see how it picked up divergence before the last fall after making new highs in Jan.

While it is now telling me that less and less stocks have been participating in this rally and there is some underlying weakness in the market. It is also sending a bit of a warning that more stocks could be beginning to join in which could push us higher. Due to the nature of how this indicator is constructed there can actually be a bit of lag as stocks move into a position to be counted as trending up.

I certainly would not be shorting the market here with any sort of confidence, the market is in a bit of a strange phase atm and I'm having a bit of trouble having any real conviction either way but I do favour continued strength at this stage and my best guess is a move to around 5035-5050 this month and then review things from there if we make it. There is also a chance we could go towards 5160 this quarter.

The market will probably tank now that I've made my "prediction" so load up those shorts

And the first line of support at 4500 if it turns cacky today? How much longer can resources prop up the xao?

 

[nomore4s]

Re: XAO Analysis

And the first line of support at 4500 if it turns cacky today? How much longer can resources prop up the xao?

lol, right on cue the DOW has a down night.

I would have thought the first line of support could be 4800-4850 but there is obviously more major support at 4500 but imo it is a bit early to be calling 4500 again even though we could easily bounce off resistance and head straight back down to that level.

I would ideally like to see some consolidation now around these areas before an attempt at pushing higher but at the end of the day they are only lines on a chart and whether the market respects them or not is a different matter.

 

[jonojpsg]

Re: XAO Analysis

lol, right on cue the DOW has a down night.

I would have thought the first line of support could be 4800-4850 but there is obviously more major support at 4500 but imo it is a bit early to be calling 4500 again even though we could easily bounce off resistance and head straight back down to that level.

I would ideally like to see some consolidation now around these areas before an attempt at pushing higher but at the end of the day they are only lines on a chart and whether the market respects them or not is a different matter.

Some questions that I have: at what stage does the technical side of things become self-fulfilling, eg now that there has been the back off from resistance, will traders go "right, time to sell"? How far does the index have to move down from a test of resistance to make it significant? Or will this take another test and pullback, which would make the response even stronger?

Also, how much does the weight of numbers influence things, eg are the big players more likely to trade by TA and hence look to short as resistance is proved? Is it wise to try and jump in ahead of them?

Thanks in advance

 

[nomore4s]

Re: XAO Analysis

Some questions that I have: at what stage does the technical side of things become self-fulfilling, eg now that there has been the back off from resistance, will traders go "right, time to sell"? How far does the index have to move down from a test of resistance to make it significant? Or will this take another test and pullback, which would make the response even stronger?

Also, how much does the weight of numbers influence things, eg are the big players more likely to trade by TA and hence look to short as resistance is proved? Is it wise to try and jump in ahead of them?

Thanks in advance

lol, How long is a piece of string?

I'm not sure I buy the self-fulfilling theory, maybe if everyone used the same methodology over the same time-frame but we know that is not the case.

 

[jonojpsg]

Re: XAO Analysis

OK so time frame has some bearing - but when you look at the daily, which most (if not all?) traders would have a squiz at, that's a pretty good line from which it has retreated. Surely that is going to make a percentage sit back and go, "yep, it's bounced off that resistance again"? I guess it's the size of that percentage and the weight they carry that will determine whether it drops off another few percent.

Really though, it's only resistance until it's broken, then it's support, so maybe it is really only as long as a piece of string

 

[Wysiwyg]

Re: XAO Analysis

Here is a chart of the XAO with a top secret, super duper divergence code: that has proven to be very reliable in the past.

It basically gives an indication of how many stocks are trending up or down based on - well that's the secret bit:

Greetings. Would that be the top 500, 200, 100 or 50 stocks weighting? I won't tell. Promise.

at what stage does the technical side of things become self-fulfilling

When the majority of bank rolls agree on it. Is it any coincidence that yesterdays close was within 2 points of the January 11 swing high close?

 

[nomore4s]

Re: XAO Analysis

Greetings. Would that be the top 500, 200, 100 or 50 stocks weighting? I won't tell. Promise.

The scan is run over the All Ords and has nothing to do with weightings.

 

[Wysiwyg]

Re: XAO Analysis

The scan is run over the All Ords and has nothing to do with weightings.

Okay thanks.

 

[Whiskers]

Re: XAO Analysis

I certainly would not be shorting the market here with any sort of confidence, the market is in a bit of a strange phase atm and I'm having a bit of trouble having any real conviction either way but I do favour continued strength at this stage and my best guess is a move to around 5035-5050 this month and then review things from there if we make it. There is also a chance we could go towards 5160 this quarter.

The market will probably tank now that I've made my "prediction" so load up those shorts

Yeah, looking a bit like a weak lead to come from Europe down over 1% and probably the US too on Greek debt worries with an anouncement about revaluing the Yuan upwards to the USD expected soon.

At first thought it must make all Chinese imports more expensive and if as I suspect the markets are due for a correction this could be the trigger to give it a bit of imputus.

Anyone got an estimate/prediction on how (much) a revalued Yuan will affect the Aus economy as distinct from the XAO?

 

[nomore4s]

Re: XAO Analysis

Okay thanks.

The code isn't really top secret I was just messing around.

It is based on a system/method I use to trade but I don't post much of it on ASF so it would mean nothing to most people and I couldn't be bothered trying to explain it. Those who have discussed my trading with me and know the method I use would probably have a fair idea of how it is constructed.

 

[nulla nulla]

Re: XAO Analysis

The code isn't really top secret I was just messing around.

Yes it is a secret, however nomore4s passed it on to the chatters in the ASF Chat room one afternoon after he had a good day and was celebrating early. For a small contribution of alcohol, the other chatters will pass on the details of his secret and very successful system.

It is based on a system/method I use to trade but I don't post much of it on ASF so it would mean nothing to most people and I couldn't be bothered trying to explain it. Those who have discussed my trading with me and know the method I use would probably have a fair idea of how it is constructed.

Remember, for a small contribution of alcohol, you too could share the "nomore4s secret system" and be on your way to riches and early retirement.

 

[nulla nulla]

Re: XAO Analysis

On an unrelated matter, the djia finished up 29.5 points today on the strength of a rally in financial stocks. It will be interesting to see whether this transposes as a lead in todays action in the finacial sector on the xao.

http://www.marketwatch.com/story/fi...n-greece-debt-fears-2010-04-08?dist=bigcharts

 

[Trembling Hand]

Re: XAO Analysis

with an anouncement about revaluing the Yuan upwards to the USD expected soon.


Anyone got an estimate/prediction on how (much) a revalued Yuan will affect the Aus economy as distinct from the XAO?

Don't count on it. Not being smooth anyway. They are stuck big time on this one. They need to do it eventually but how? Many small gradual moves is a signal to every hedgie to front run the Yuan/HKD and cause some real problems. It becomes a sure thing with unlimited trade size.

But if they do it in one big step back to somewhere around "real value" that will cause lots of problems inside China. Then outside the benefits of their extra purchasing power to buy our rocks will be upset by the extra cost of their products.

Very sticky situation. This could be a biggie

 

[nomore4s]

Re: XAO Analysis

I certainly would not be shorting the market here with any sort of confidence, the market is in a bit of a strange phase atm and I'm having a bit of trouble having any real conviction either way but I do favour continued strength at this stage and my best guess is a move to around 5035-5050 this month and then review things from there if we make it. There is also a chance we could go towards 5160 this quarter.

We have hit the 5035-5050 area this morning.

I want to see how the next few days play out now, especially today. There is a fair chance we will continue to get dragged higher due to the strength around atm.

I will up date the charts tonight.

 

[Whiskers]

Re: XAO Analysis

Don't count on it. Not being smooth anyway. They are stuck big time on this one. They need to do it eventually but how? Many small gradual moves is a signal to every hedgie to front run the Yuan/HKD and cause some real problems. It becomes a sure thing with unlimited trade size.

But if they do it in one big step back to somewhere around "real value" that will cause lots of problems inside China. Then outside the benefits of their extra purchasing power to buy our rocks will be upset by the extra cost of their products.

Very sticky situation. This could be a biggie

Yeah, seems to be little head way on US pressure to revalue the Yuan, but with growth still strong but inflation slowing a bit in China there might be at least some slowing of USD's into china if China decides not to further increase or even for-shadows a decrease in interest rates at a time when the US must be getting close to a token increase.

China at 5.31% India 5.00, Brazil 8.75 and Aus 4.25 are stand outs compared to the rest of the world, although I'm not sure how closely these others are correlated to bank deposit and loan rates.

I think the RBA probably got a bit ahead of themselves with rate increases and needs to put it on hold for awhile and let the US and Europe catch up a bit and one would expect China to pull back it's stimulus a bit soon too. Regardless of the Yuan peg this should start to tip the flow of cash back to US.

Probably, not the best time to be talking about any dramatic shift in monetary policy anyway, regardless of what the US wants, until the world comes back to some stability and eqilibrium.

As you suggest, it will have a significant impact on world markets in the calmest of times without risking calamity to appease the US atm.

 

[nomore4s]

Re: XAO Analysis

We have hit the 5035-5050 area this morning.

I want to see how the next few days play out now, especially today. There is a fair chance we will continue to get dragged higher due to the strength around atm.

I will up date the charts tonight.

Updated chart with the indicator on it.

The second chart is marked up with some areas to keep an eye on.
I would be expecting a pullback to at least 4900-4940 area (red circle) and maybe as far as 4800 area (blue square) but I still think we are a chance for 5160ish this quarter as well.

It will be interesting to see how it all plays out from here, for continued strength a pullback and then consolidation around 4900 is my favoured play before heading to 5160ish. For a more bearish view a drop below 4800 would indiacte we have well & truly dropped back into the range and means we could re-test 4500.

 

[Sean K]

Re: XAO Analysis

Follow the charts, always, imo.

But beware of the false economy we have driving asset prices.

0% interest rates and encouragement to borrow, is not the cure.

Troubling times.

Trying to post chart but the internet I am stealing is crapo.

 

[nomore4s]

Re: XAO Analysis

While I'm updating charts I thought I would update my long term analysis that I posted a while ago.

Now while it has not played out to the exact pattern I was looking at (surprise, surprise) we are now nearing the major target zone I first flagged. This actually ties in a bit with my target of 5160ish. It will be interesting to see if that area does prove to be a key area.

Of course a retest of 3700 seems unlikely now, while not impossible it is unlikely at this stage. I would expect a retest of 4400-4500 at some stage though, maybe as far as 4000.

As a not there is quite strong divergence on the weekly which is interesting but I have not done any testing on that indicator on the weekly time-frame so it might mean absolutely nothing.

 

[Sean K]

Re: XAO Analysis

Now while it has played out to the exact pattern I was looking at (surprise, surprise) we are now nearing the major target zone I first flagged. This actually ties in a bit with my target of 5160ish. It will be interesting to see if that area does prove to be a key area.

Massive, MASSIVE, resistance area between 4800 and 5200. Massive. Could chop around here for some time perhaps.

 

[nulla nulla]

Re: XAO Analysis

While I'm updating charts I thought I would update my long term analysis that I posted a while ago.

Now while it has not played out to the exact pattern I was looking at (surprise, surprise) we are now nearing the major target zone I first flagged. This actually ties in a bit with my target of 5160ish. It will be interesting to see if that area does prove to be a key area.

Of course a retest of 3700 seems unlikely now, while not impossible it is unlikely at this stage. I would expect a retest of 4400-4500 at some stage though, maybe as far as 4000.

As a not there is quite strong divergence on the weekly which is interesting but I have not done any testing on that indicator on the weekly time-frame so it might mean absolutely nothing.

At this point the market would need to fall more than 10% to retrace to the support levels of 4500. With China's growth accelerating despite the governments brake being applied there would have to be another major international crisis to take it lower than that.