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XAO Technical Analysis

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Re: XAO Analysis

for all the bears out there.
are you hiding in the caves?
XAO just turn green after red for couple minutes.
now just breaking record high at 6490.
YES. it is almost 6500.
are we riding to a new wave of bulls?:eek:
 
Re: XAO Analysis

Nick, are you saying we are likely to get some sort of rally starting from Sep 2007?
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I'm not saying anything. My response was made to a comment that alluded to the spring equinox being a bearish event. However, the perpetrator of that comment, as usual, left it open ended so as to never be proven incorrect. (Very similar to the technique of using delayed charts to call movements in the SPI I might add)

A more appropriate comment would be:

"Following the spring equinox of September 1987 and September 1997 we may expect to see a decline/rally....blah blah blah"

What we are left is a hanging comment that will work either way.

I would also say that making a comment based on a two-sample event is quite ridiculous and proves nothing more than randomness. I only had to add 3 more decades to prove the randomness of the comment. As WaySolid has stated, good luck basing a trading strategy around it.

We could use some real stats that people can learn from:

September:
September signifies everything that can go wrong with the market and holds the title for many of the major highs as well as lows for investors. September has been the start of 3 major bear markets, including the longest in duration; 110 months from 1987 to November 1996. The combined total bear market months of these 3 declines has been 152, however what is notable are their swiftness. The peak to trough decline in 1987 is the most memorable, lasting just 5-months. 1960 lasted 2 months and 1997 lasted just a single month. The average monthly decline for these 9 solitary months is -11.67% making September a nasty period to enter the market. September has also been the absolute low of 4 bear markets (1969, 1970, 1998, 2001). August seems to offer a lead for an impending negative September. There is a 72% chance that September will be negative if August has also been negative, although this failed to alert us in 1987. The average decline after a negative August is -2.83%. The last 5-trading days of the month offer a positive respite with an average gain of +1.1% into month end.

October
One wonders about the psychological impact that 1987 has had on this generation of investors. It’s one that is most in our minds even though the worst bear market (1970 – 1974) was more devastating in terms of depth and peak-trough duration. It’s clear that the days leading into the shaky end of October still haunts investors. The broader index drops consistently from mid-month till month end, possibly a flight-to-quality dash to cash. It also seems that should no damage occur in October investors are brimming with confidence and plunge headlong back into the market come November. October is the end of the worst 6-month investment period. A positive September lead appears beneficial for October gains. There is a 71% chance that October will be follow higher after a strong September, and 8 of the last 10 positive September years have led to a positive October with the average gain being +2.05%.
 
Re: XAO Analysis

Nick Radge said:
We could use some real stats that people can learn from:

September:
September signifies everything that can go wrong with the market and holds the title for many of the major highs as well as lows for investors. September has been the start of 3 major bear markets, including the longest in duration; 110 months from 1987 to November 1996. The combined total bear market months of these 3 declines has been 152, however what is notable are their swiftness. The peak to trough decline in 1987 is the most memorable, lasting just 5-months. 1960 lasted 2 months and 1997 lasted just a single month. The average monthly decline for these 9 solitary months is -11.67% making September a nasty period to enter the market. September has also been the absolute low of 4 bear markets (1969, 1970, 1998, 2001). August seems to offer a lead for an impending negative September. There is a 72% chance that September will be negative if August has also been negative, although this failed to alert us in 1987. The average decline after a negative August is -2.83%. The last 5-trading days of the month offer a positive respite with an average gain of +1.1% into month end.

October
One wonders about the psychological impact that 1987 has had on this generation of investors. It’s one that is most in our minds even though the worst bear market (1970 – 1974) was more devastating in terms of depth and peak-trough duration. It’s clear that the days leading into the shaky end of October still haunts investors. The broader index drops consistently from mid-month till month end, possibly a flight-to-quality dash to cash. It also seems that should no damage occur in October investors are brimming with confidence and plunge headlong back into the market come November. October is the end of the worst 6-month investment period. A positive September lead appears beneficial for October gains. There is a 71% chance that October will be follow higher after a strong September, and 8 of the last 10 positive September years have led to a positive October with the average gain being +2.05%.
Click to expand...

Thanks for that.
 
Re: XAO Analysis

Just switch focus to the S&P300 index

It is clearly in BULL Confirmed STATUS

Bull Confirmed - Bull confirmed is, just as it sounds, the most bullish signal the index emits, giving traders a green light to take on multiple long positions with confidence. In the bull confirmed phase, the Bullish Percent Index has a column of X's on its right edge, and this column must have surpassed the next column of X's over to the left by at least one square. Since a market that is in bull confirmed mode is upwardly trending, directional indicators such as MACD are more appropriate than oscillators during this phase.
Bear Confirmed - Again, just as it sounds, the bear confirmed phase is the most bearish signal the index gives. In this mode, the Bullish Percent Index has a column of 0's on the far right edge of the chart, and this column must surpass the next column of 0's to the left by at least one square down. Since a market in the bear confirmed mode is trending downward, only short positions should be considered during it, and directional indicators are again the weapons of choice.

Bull Correction - The bull correction mode, following only a bull confirmed phase, is a sideways market or a market experiencing a correction after a bull confirmed phase. The chart features a column of 0's on the right edge that has yet to pass the last 0's column. Long positions should be taken with caution because a bull correction can reverse into a bear confirmed. During the bull correction mode, look to oscillators like stochastic for insight into timing trades.

Bear Correction - A market in the bear correction phase, following only a bear confirmed phase, is also a sideways market, and it is experiencing a correction from bear confirmed. A bear correction features a column of X's on the right edge of the chart that fails to surpass the last column of X's. Again, use short positions with caution, and use oscillators instead of directional indicators with the charts.

Bull Alert - The final two phases of the Bullish Percent Index involve overbought or oversold conditions. On the Bullish Percent chart, readings above 70% are considered overbought, and readings below 30% are considered oversold. The bull alert phase is simply a reversal into a new column of X's from below 30% on the chart, and it indicates that the index is oversold and due for a bounce. As soon as the index signals a bull alert, traders can take long positions with caution until the X's cross back above the 30% line.
Bear Alert - A bear alert is simply the opposite of a bull alert, except to signal a Bear Alert, the index must be crossing below the 70% line with a column of 0's. It is important to remember that for a bear alert to signal, the column of 0's must actually cross back below the 70% line. During a bear alert the market is overbought and due for a sell-off. Take short positions with caution until the market reverts back to bull confirmed. During Alert phases it is a good idea to take quick profits (10-15%) because there is a good chance the market will reverse.
Click to expand...

I have also overlaid the Bullish% chart on the Daily bar chart

It tells a nice story
The interaction of various aspects of trend, position, and volume.

(Three of Wyckoff's four qualities, The fourth being time as in duration).

What Do We use P&F for.... Many reasons

But one is to set tests that market behavior must pass
(unlike a Bar chart it is a pure (smoothed) wave chart)

Tests and responses...

In the current bull trend there has never been such a loss of confidence..

This is very significant.... And Yet We are back to new highs So soon after a classic selling climax.... P&F will set new tests and We will have new responses....

The volume spikes are important..


The trend will sustain itself by reaction and rotation.

motorway
 

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Re: XAO Analysis

motorway said:
The volume spikes are important..
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Motorway

I'm never that sure how much credence to give to a derivative induced volume spike. As a large amount of that volume is unwinding of arbitrage positions.

I would think the if you take out the futures roll over the volume on that chart would have been in decline the last two weeks.
 
Re: XAO Analysis

Point taken

Still We have had more that a short covering rally
and the subsequent action and the subsequent volume
will clarify...

What happens to demand now ...

Does it dry up and price reacts back
Start to rotate
(focus on relative strength)
keeps chasing the resource story..

That could be said (derivatives) about earlier Volume spikes as well...

What matters in deciding if any of that volume was "good buying"
is the subsequent response..


Point taken though...

Cap weighted indexes are in some way suspect.

The Bullish% chart (and those like it) give another view.

Every Stock in the universe has equal weight.

Bullish% is a market breath indicator associated with Chartcraft .. (A.W. Cohen)...

It is a class of chart designed to be a "trend barometer" .
And I see many similarities to other "position sheets" like Richard Wyckoff's and
Alexander Wheelan's

It is a bottom up "inductive" analysis....

In Bullish% method.... on the 13nov06 the B% was in very overbought territory. It then traced out a "topping pattern" and was signalling bear confirmed well before the index turned down...


It is now in a very strong position.............

Bullish% while related to Wyckoff"s position sheet is simpler
and much simpler than Wheelan's (study Points in Point and Figure)


We may, if we wish, employ the reverse of this procedure, namely,
the inductive method of reasoning from the particular to the
general. That is, we may form our conclusions by first analyzing the
positions of individual stocks. Then by classifying these
individual issues under their proper group headings, we can
determine the position and trend of the various groups. Next, after
we have decided whether the balance of probabilities in the groups
is bullish or bearish, we are able to forecast the trend of the
market as a whole.

Either approach is good by itself, though reasoning from the
particular to the general requires the exercise of more skill and
judgment and takes a little more time. It is best to employ both
methods if possible, for then one will serve to check the other.

Richard D Wyckoff
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Every stock is either in a Bullish or Bearish position on a 2%x3 P&F chart
(can make it more or less sensitive ie 1% or .5%, But You must work with Your data set, and in keeping with Your needs)

When we combine all the individual stock positions
We have Our Barometer...

A barometer is an instrument used to measure atmospheric pressure. It can measure the pressure exerted by the atmosphere by using water, air, or mercury. Pressure tendency can forecast short-term changes in the weather. Numerous measurements of air pressure are used within surface weather analysis to help find surface troughs, high-pressure systems, and frontal boundaries.
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On the market it measures buying and selling pressure.
Sunny days can only last so long
And a storm can not blow hard for ever..

Tension builds and is released
When markets are very oversold or overbought
It is time to be especially aware of the divergences and convergences.
We would like to see where the smarter money might be.

to help find surface troughs, high-pressure systems, and frontal boundaries.
Click to expand...


motorway
 
Re: XAO Analysis

powerkoala said:
6503.....
no need to say anything:eek:
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Please call tomorrow and rub it in when the index reaches new heights???Pre-market reports from America say that the dim outlooks of consumer confidence and August home sales COULD raise the threat of recession.The CNN headline was-"Consumer Woes Hit Wall Street."
We know that pre-market reports are leaked and the market futures are down.The European markets are down but there is still time to rally before opening of the NYSE and plenty of time if the leaked reports were hot air.
 
Re: XAO Analysis

powerkoala said:
6503.....
no need to say anything:eek:
Click to expand...

If it was over 6500 at closing, I would've seriously consider dumping my bear suit. It looked a little fizzled this afternoon though, and finished at only 6490. It has gone up 29.8 points but more than 20 points were solely from BHP, so it looks very worrying for me - apart from the Olympic Dam rumour, the market hasn't gained much at all.

For now, I'll remain cautious, and sit out for a little bit longer (apart from some day trades). The European market is down around 1% at the moment, and it appears that the US open might be down as well. But then again, there is still plenty of time to make up lost ground. In the worst (best) case, I'll just put the bear on a bbq.
 
Re: XAO Analysis

motorway said:
Cap weighted indexes are in some way suspect.

The Bullish% chart (and those like it) give another view.

Every Stock in the universe has equal weight.
Click to expand...

Motorway, that's a terrific chart you've posted where the index is super-imposed together with the the bullish%. Reveals the difference (and divergences) between the cap-weighted measures and attempts to do likewise across the broader market.

Cap-weighted indexes are suspect in a sense...but the implication is that it typically takes more money flow (force in VSA??) to move those top end stocks, so there for it makes some sense that they should have greater effect on the outcome of the index. On the other hand it helps to keep that in perspective if you're holding stocks from a lesser-cap portion of the index...particularly if your stocks are going nowhere or down...I suppose :)

Thanks for sharing.

ASX.G
 
Re: XAO Analysis

powerkoala said:
6503.....
no need to say anything:eek:
Click to expand...
PK, you probably could say a little more.....Why do you think we're hitting all time highs when US recession is highly probably? And for that matter, why has the US recovered so quickly to support our market?
 
Re: XAO Analysis

Awesomandy said:
If it was over 6500 at closing, I would've seriously consider dumping my bear suit.

For now, I'll remain cautious, and sit out for a little bit longer (apart from some day trades). In the worst (best) case, I'll just put the bear on a bbq.
Click to expand...

Bear in mind not in action is probably a straight jacket not a bear suit.

I would thing there are stacks of people on the side lines here. Just waiting for "confirmation" that we are not going to crash 87 style. Just to sucker them in closer to the top than a good bottom.
 
Re: XAO Analysis

kennas said:
PK, you probably could say a little more.....Why do you think we're hitting all time highs when US recession is highly probably? And for that matter, why has the US recovered so quickly to support our market?
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this is worrying me, kennas.

xao at record high due to metal prices bounce back strongly and oil price dip below $80, but it appears only few "bluechip" sp got bulls. we know BHP and RIO are the major contributors, but both of them due to "rumors" such as BHP is sitting on the most biggest gold deposit and RIO takeover from BHP.
yesterday, all europe markets end up in red area, as well pre market from us.
but us market bounces up strongly at close.

so are we in the new bull trend or "few" ppl trying to make us think we are (the ppt maybe) ? :eek:
 
Re: XAO Analysis

powerkoala said:
this is worrying me, kennas.

so are we in the new bull trend or "few" ppl trying to make us think we are (the ppt maybe) ? :eek:
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No matter what the fundamentalist economists tell us about the market, the charts are saying we are in a long term bull market trend. So, they are either wrong, or they are wrong.... ;)

I don't understand the fundamentals of the market enough to comment in detail, so while it's going up, I'm fully invested and learning to hedge my position. Fine principle when you got in a few years ago perhaps....
 
Re: XAO Analysis

kennas said:
No matter what the fundamentalist economists tell us about the market, the charts are saying we are in a long term bull market trend. So, they are either wrong, or they are wrong.... ;)

I don't understand the fundamentals of the market enough to comment in detail, so while it's going up, I'm fully invested and learning to hedge my position. Fine principle when you got in a few years ago perhaps....
Click to expand...

well, i can't agree 100% for sure.
still jitters about us recession though.
we will see how aussie will go from here.
regards.
 
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