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XAO Technical Analysis

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Re: XAO Analysis

Temjin said:
Is there a case for big crash?
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I actually expected a bigger fall today that what we got. It's almost like the market goes limit down, as opposed to free fall. Perhaps markets are actually becoming more efficient these days?
 
Re: XAO Analysis

theasxgorilla said:
I actually expected a bigger fall today that what we got. It's almost like the market goes limit down, as opposed to free fall. Perhaps markets are actually becoming more efficient these days?
Click to expand...

Same.

Tomorrow is going to be a key day in my opinion. We have a lot of key stocks sitting on key support levels; a lot of stocks bumping the bottom of their long term trend lines and the major indexes at a key level.


I think we already have a bear market in the financial sector, and rightly so!! What we will know tomorrow, and probably more clearly by the end of the week, is if the materials and energy sectors can de-couple themselves from the financials. As so far, I can see no reason why materials should have matched the falls of financials, and in a lot of cases have fallen further.

Personally, I expect a bounce. It could perhaps be the bottom of a short ABC correction, perhaps not. But am more than prepared for the converse outcome. Either way, it is going to be a very busy day tomorrow for me on the markets I think...
 
Re: XAO Analysis


I mentioned the above before and stand by it. Investors are more savvy and less risk averse, therefore the market bounces longer and stronger from each correction.

This doesn't mean that economic Armageddon won't come, but I believe it will come out of leftfield and when we least expect it...we need a few more bear to turn bullish before it will happen

'Speculate to Accumulate' is the norm these days and not just for the minority.

Feel free to throw eggs at me!
 
Re: XAO Analysis


Dow futures are up half a percent as we speak

Futures

North/Latin America

INDEX VALUE CHANGE OPEN HIGH LOW TIME
DJIA INDEX 13,339.00 73.00 13,216.00 13,349.00 13,216.00 07:08
S&P 500 1,453.40 10.40 1,439.50 1,454.40 1,434.00 07:17
NASDAQ 100 1,949.75 10.25 1,933.50 1,952.75 1,931.00 07:09
 
Re: XAO Analysis


US Futures up on some cautious optimism returning to the financial sector.

'Meanwhile, UBS upgraded Merrill Lynch to buy from neutral, saying the fallout from the mortgage and credit businesses is mostly discounted in the broker's valuation. Merrill Lynch shares rose 1.8% in pre-open moves while TD Ameritrade , also upgraded by UBS, rose 3%.
In addition, Merrill Lynch reiterated a buy rating on Deutsche Bank , noting that the stock of the German bank now trades on a premium to Wall Street peers.' (Quoted from US website Market Watch article 'US Futures rise amid Merril Lynch upgrade').

Sounds a bit like some mutual back slapping but the Dow went down on Friday on the back of a downgrading of Bear Stearns and a mild weakening in the US employment figures so this could give the Dow a piggy back over night. Some good news for the financials at the very least.

PS: Bear Stearns still will report a profit for July despite the two hedge funds collapsing. Does this mean one of the chief protaganists have 'contained' the sub prime damage. Has been a real barometer for this correction so far.
 
Re: XAO Analysis

The initial catalyst for this was mortage defaults.. these are not going to stop overnight, and in fact may pickup in the next few months.. so there will still need to be caution for a while to come.

Looks like some internal pumping going on.. amazing what words from a few of the majors can do to the market.
 
Re: XAO Analysis


Not may, will
 

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Re: XAO Analysis

dhukka said:
Not may, will
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It's not what happens, it is whether the impact matches the markets expectations of what will happen. The key to the news on Merryl's is ' the fallout from the mortgage and credit businesses is mostly discounted in the broker's valuation'. So it is the impact that is not discounted in the valuation that will cause the next fall. Sub prime has been floating around for sometime now.

My reading of it anyway.

Wonder if the US markets have factored in rate neutral decision or a rate fall for Benanke's first big call. I suspect it is a rate neutral decision.
 
Re: XAO Analysis

dhukka

Can you explain the graph?
 
Re: XAO Analysis

UPKA said:
Hey Dhukka, js wondering where u got that graph from? cheers
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Stole it from the BIG PICTURE. Barry Ritholtz got it from Credit Suisse. You can see the name partially cut-off at the bottom of the graph.

Edit: Sorry Ritholtz got it from this blog which got it from Paul Lamont of Lamont Trading Advisors Inc. who got it from Credit Suisse.
 
Re: XAO Analysis

tech/a said:
dhukka

Can you explain the graph?
Click to expand...

Fairly self-explanatory isn't it? The bottom axis represents months until certain classes of mortgages reset. The 'You Are Here' refers to May when the post was first written. So you need to move down between month 7 and 9 to see where we are now. From this graph November 07 will be the peak.

This data was put together in January whilst sub-prime and Alt-A mortgages were still being sold by the bucket-load. So expect the right-hand side of the graph to be a little understated.
 
Re: XAO Analysis

Anyone prepared to bet that it dosen't hold 6000 points on the 4:15 close as the bounce trade exit for the night?
 
Re: XAO Analysis


A couple of points:

I don't follow Merril Lynch. I have no idea if their current share price reflects it's intrinsic value. You've cited one analysts opinion who says the effect of the current credit crisis is already reflected in Merril's valuation.

Noone really knows how deep this credit squeeze will go or for how long it will last. We do know it has just begun and it will get worse. To be making the call at this point in the game that the problems in credit markets are reflected in Merrils price IMHO is premature.

Remember the first estimates of potential losses in a credit crunch are usually the kindest.
 
Re: XAO Analysis

Here is an interesting chart. It's the 10 day average of gainers minus losers for the ASX. Because of XAO/XJO are so dominated by 10 or so Big Caps the charts don't always show the true momentum in the market.
As you can see on balance there has been more stocks going down than up since Mid April. After the melt down we had in February things never really got going again. Yes we had a snap back rally in most stocks but they soon stop rising as we continued to make new highs in the indexes. As you can see in the chart the momentum peaked on April the 16th then each push higher was with less and less stocks rising. Not only that each swing lower was making a lower low on the momentum chart while the XAO/XJO was rising

The period from the start of May to the meltdown last week was a distribution rather than another consolidation, IMO. The Divergence between this and the XAO is quite amazing. Since this chart peaked on the 16th of April the XAO continued to add some 280 points while broad momentum turned very negative. This was hidden in the XAO because of a select couple of Big caps holding up (BHP, RIO, CBA etc). As we now know the smart money have been selling with volume this market for a while now. What S$#+'s me is I used to keep track of this chart when I was Swing trading but as I now only intraday trade I let this one go.
 

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Re: XAO Analysis

nice chart TH - looks as tho we could be near a bottom?

here's a longer term chart to put things in perspective, that weekly 50ma has acted pretty well as support in the past, wonder if it will hold now


 
Re: XAO Analysis

Amazing chart TH and a sound analysis. How did you generate that?
 
Re: XAO Analysis

juw177 said:
Amazing chart TH and a sound analysis. How did you generate that?
Click to expand...

Thanks juw177,

I have a Database of all the EOD prices for the ASX. I can scan a query for most things after I stuff around with it for a while c: . I run a adv/dec query for each day and feed the results into a spreadsheet for the chart. I only use stocks with 3 letter codes just to eliminate a lot of the rubbish. Bit of stuffing around really but I think it always pays to look a bit deeper than a couple of standard charts.
 
Re: XAO Analysis

Interesting information TH, You can also get A/D ratio(Breadth) info at www.bigcharts.com if you have use for this sort of info.

Whilst this is interesting information in that it gives you an idea that the market is slowing, that's all it does. Despite the momentum slowing this can be deceiving in that the market can hold up for quite a long time before moving in your desired direction of speculation. So how one goes about perfoming precision swing trades and timing using such indicators and other lagging indicators in isolation is beyond me. Whilst I think that this is interesting information it could also be better utilized when used with other methods. IMO the three most important factors in order are as follows:-

-Pattern
-TIME
-Price Level

Cheers
 

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