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XAO Technical Analysis
- Thread starter Sean K
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professor_frink
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Re: XAO Analysis
Futures closed the evening session @ 6591, so you would expect the XJO to be at about 6560-6565 at monday's open.
Personally, I'm expecting to see some longs puking up their positions right on open monday morning, followed by a pretty quick, but savage short covering rally in the first half hour before the main trend of the day asserts itself, which could go either way. It'll be a good test for the bulls- they've run it up very hard since the August lows.
Futures closed the evening session @ 6591, so you would expect the XJO to be at about 6560-6565 at monday's open.
Personally, I'm expecting to see some longs puking up their positions right on open monday morning, followed by a pretty quick, but savage short covering rally in the first half hour before the main trend of the day asserts itself, which could go either way. It'll be a good test for the bulls- they've run it up very hard since the August lows.
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Re: XAO Analysis
The way I am looking at this, the next low in this current swing down has a good probability of being 14/15th November plus or minus a few days.
The correction that started on 16th July was a 3 wave affair. The subsequent move up since the August low has been a 3 wave affair.
In EW parlance this gives only 2 possibilities as to what may follow.
• The correction that started on the 16th July is unfinished and this is wave C of an irregular correction which will be an impulse and complete the correction.
• The other possibility is that the market is tracing out a huge “Ending Diagonal” pattern and these generally subdivide into 3 waves for 12345 and wave 4 will overlap wave 1.
If this is the case the current leg down will be deep but not lower than the last correction and will most likely result in another leg up into next year. If the “Ending Diagonal” pattern is happening, then it will probably resolve in a very fast and deep move down next year.
Now which of these 2 pattern is tracing out? Well it all depends on TIME. For the wave C of the irregular flat scenario to be playing out, then the market has to take out the August 17 low by mid November. This will in effect complete the correction that started on the 16th July. Given that it’s only 4 weeks away then it might be a very fast move down.
If the market is unable to take out the August 17th low by mid November then most likely we get another bull leg up into next year (Jan –March). If this is the case it will be a very very significant cycle point high.
So either way IMO it all comes down to TIME. The cycle point for this last high was determined at least 2 months in advance, just like the cycle point for the low 14/15th November has determined in the same way.
Just the way I see it ATM
The way I am looking at this, the next low in this current swing down has a good probability of being 14/15th November plus or minus a few days.
The correction that started on 16th July was a 3 wave affair. The subsequent move up since the August low has been a 3 wave affair.
In EW parlance this gives only 2 possibilities as to what may follow.
• The correction that started on the 16th July is unfinished and this is wave C of an irregular correction which will be an impulse and complete the correction.
• The other possibility is that the market is tracing out a huge “Ending Diagonal” pattern and these generally subdivide into 3 waves for 12345 and wave 4 will overlap wave 1.
If this is the case the current leg down will be deep but not lower than the last correction and will most likely result in another leg up into next year. If the “Ending Diagonal” pattern is happening, then it will probably resolve in a very fast and deep move down next year.
Now which of these 2 pattern is tracing out? Well it all depends on TIME. For the wave C of the irregular flat scenario to be playing out, then the market has to take out the August 17 low by mid November. This will in effect complete the correction that started on the 16th July. Given that it’s only 4 weeks away then it might be a very fast move down.
If the market is unable to take out the August 17th low by mid November then most likely we get another bull leg up into next year (Jan –March). If this is the case it will be a very very significant cycle point high.
So either way IMO it all comes down to TIME. The cycle point for this last high was determined at least 2 months in advance, just like the cycle point for the low 14/15th November has determined in the same way.
Just the way I see it ATM
Re: XAO Analysis
thanks Nick for the post.
how does your reading of the DJIA and S&P support your views. for e.g. has the DJIA stopped at 13 500 because of support or shock!! i.e. if the DJIA slides again because it closed below support will it not fall again on monday? the selling in the last 1 hour of the DJIA was heavy and fast.
i noticed that DJT did not slide as much as the DJIA. does this indicate some support or resistance to the overall move downwards.
thanks Nick for the post.
how does your reading of the DJIA and S&P support your views. for e.g. has the DJIA stopped at 13 500 because of support or shock!! i.e. if the DJIA slides again because it closed below support will it not fall again on monday? the selling in the last 1 hour of the DJIA was heavy and fast.
i noticed that DJT did not slide as much as the DJIA. does this indicate some support or resistance to the overall move downwards.
Re: XAO Analysis
Exactly,the psychology of the market-fear and greed.
.
But the question to be answered is which one will be the stronger on Monday.
Will the momentum of the market be replaced with doubt?Perhaps we may have a repeat of August-down one day,up the next.
Will our correction be insignificant because,as David Iron(equity director,ABN AMRO)said on Thursday,"We've got a pretty strong economy,we've not got the exposure to the sub prime and we've a really significant boom in resources."Will decoupling have an effect?
There is a concensus among some economists in America that valuations have crept above the level associated with the top of a bull market.This upward trend is an indicator that the bull cycle is trending into a bear cycle.
This time the fear of economic uncertainity is coming to be the major driving factor in the American markets.Will the contagion spread here?
Exactly,the psychology of the market-fear and greed.
.
But the question to be answered is which one will be the stronger on Monday.
Will the momentum of the market be replaced with doubt?Perhaps we may have a repeat of August-down one day,up the next.
Will our correction be insignificant because,as David Iron(equity director,ABN AMRO)said on Thursday,"We've got a pretty strong economy,we've not got the exposure to the sub prime and we've a really significant boom in resources."Will decoupling have an effect?
There is a concensus among some economists in America that valuations have crept above the level associated with the top of a bull market.This upward trend is an indicator that the bull cycle is trending into a bear cycle.
This time the fear of economic uncertainity is coming to be the major driving factor in the American markets.Will the contagion spread here?
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Re: XAO Analysis
nikki,
The patterns in the DJIA and S&P are slightly different but point to the same conclusions, that is, we should test the August lows again with a reasonable probability. The ASX pattern is called a 'running flat' which is where wave-(B) runs above the prior high. The US indices show a standard 'flat' pattern where wave-(B) makes a double top with the prior high. They both point to a return to the start of wave-(A) which was the August lows.
An important element of this scenario is what we witnessed back at those lows which was extremely high volume and complete rejection. This is clear background strength that will not go away. There is a very high chance that those buyers back then will step up to the plate again at the same levels.
Nick
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
nikki,
The patterns in the DJIA and S&P are slightly different but point to the same conclusions, that is, we should test the August lows again with a reasonable probability. The ASX pattern is called a 'running flat' which is where wave-(B) runs above the prior high. The US indices show a standard 'flat' pattern where wave-(B) makes a double top with the prior high. They both point to a return to the start of wave-(A) which was the August lows.
An important element of this scenario is what we witnessed back at those lows which was extremely high volume and complete rejection. This is clear background strength that will not go away. There is a very high chance that those buyers back then will step up to the plate again at the same levels.
Nick
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
>Apocalypto<
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Re: XAO Analysis
So have you been shorting the market Nick, are you short now?
I know wavepicker is the only member to have been warning of this since October 5th, if this is going to test the lows.
Wavepicker called this on the 5th of the month so hats off to you Wavepicker well done on your call.
So have you been shorting the market Nick, are you short now?
I know wavepicker is the only member to have been warning of this since October 5th, if this is going to test the lows.
Wavepicker called this on the 5th of the month so hats off to you Wavepicker well done on your call.
>Apocalypto<
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Re: XAO Analysis
Sassa,
when that support broke last night the range i had was also busted. So this is a new correction.
Like Bob pointed out there could be a fast counter on the cards soon. I am looking to add to my trade and sell the rallies.
Monday could see a fast panic break down in the morning madness, where and how fast the market can find buyers will tell us something. but personally i am really unsure of what Monday will bring.
we will know soon.
Sassa,
when that support broke last night the range i had was also busted. So this is a new correction.
Like Bob pointed out there could be a fast counter on the cards soon. I am looking to add to my trade and sell the rallies.
Monday could see a fast panic break down in the morning madness, where and how fast the market can find buyers will tell us something. but personally i am really unsure of what Monday will bring.
we will know soon.
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Re: XAO Analysis
Thanks Joseph,
It took an extra 3/5 trading days(SP500/XAO) than we first anticipated and had me scratching my head there for a while but looks like producing the goods now.
We have had a pretty good run with the movements indices since July and when the "Master Of Time" - Magdoran re emerges we will have even more resources from which draw from. But for now, we are looking at mid November as the next important date and then Feb-March 2008 thereafter.
Cheers
Thanks Joseph,
It took an extra 3/5 trading days(SP500/XAO) than we first anticipated and had me scratching my head there for a while but looks like producing the goods now.
We have had a pretty good run with the movements indices since July and when the "Master Of Time" - Magdoran re emerges we will have even more resources from which draw from. But for now, we are looking at mid November as the next important date and then Feb-March 2008 thereafter.
Cheers
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Re: XAO Analysis
Personally, I'm not so sure if this will be as strong this time round. In August, there was a lot of greed around. People think that they should take advantage of the drop to buy into the market. If we head back into this range, I think that there will be a lot of fear that, perhaps the bull is really ending. But then, if there are enough buyers to form a double bottom for the indices, we would all be more than happy to join in.
In a way, I think this is how it will play out in real life as well. Say, the markets will keep moving down for a couple of weeks. Will the Feds come in to cut rates again?
If they do, then we'll probably see another rally. Then there's Xmas holiday period, New Years, and then the Chinese New Years in Feb, and it would be around late Feb/early March when people start sorting out the mess.
If the Feds don't cut rates, the markets will drop at a very quick rate. Sanity hits, and there will be a period of consolidation. Then, in a few months time, people will most likely start thinking "America is ill, but the rest of the world is still pumping along rather nicely." I would think that, at this time, the more stable/established and resource-heavy markets will start to recover.
Well, that's my
on a Saturday night (so, read with caution).
Personally, I'm not so sure if this will be as strong this time round. In August, there was a lot of greed around. People think that they should take advantage of the drop to buy into the market. If we head back into this range, I think that there will be a lot of fear that, perhaps the bull is really ending. But then, if there are enough buyers to form a double bottom for the indices, we would all be more than happy to join in.
In a way, I think this is how it will play out in real life as well. Say, the markets will keep moving down for a couple of weeks. Will the Feds come in to cut rates again?
If they do, then we'll probably see another rally. Then there's Xmas holiday period, New Years, and then the Chinese New Years in Feb, and it would be around late Feb/early March when people start sorting out the mess.
If the Feds don't cut rates, the markets will drop at a very quick rate. Sanity hits, and there will be a period of consolidation. Then, in a few months time, people will most likely start thinking "America is ill, but the rest of the world is still pumping along rather nicely." I would think that, at this time, the more stable/established and resource-heavy markets will start to recover.
Well, that's my
on a Saturday night (so, read with caution).
>Apocalypto<
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Re: XAO Analysis
Hi Reece,
Thanks, yeh I am glad this one went to plan was squeezed out on a couple prior attempts!
I took two on Thursday night took profits on one Friday and holding the other, stop on break even.
The break on the Dow was a big surprise.
How are you going? you been in the markets much? That was a great move up just massive! (from last bottom)
This is the IGxjo chart you can see the set up very well here.
1. Main trend finished.
2. Price action chewed up time suggesting that was it.
3. Price made a near vertical thrust, failed at a new high confirmed a lower high also shows trend line as resistance.
4. Now, that support area has been broken.
Looking to sell the next rally.
Good trading to u Reece.
Hi Reece,
Thanks, yeh I am glad this one went to plan was squeezed out on a couple prior attempts!
I took two on Thursday night took profits on one Friday and holding the other, stop on break even.
The break on the Dow was a big surprise.
How are you going? you been in the markets much? That was a great move up just massive! (from last bottom)
This is the IGxjo chart you can see the set up very well here.
1. Main trend finished.
2. Price action chewed up time suggesting that was it.
3. Price made a near vertical thrust, failed at a new high confirmed a lower high also shows trend line as resistance.
4. Now, that support area has been broken.
Looking to sell the next rally.
Good trading to u Reece.
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Re: XAO Analysis
Trade_It,
It certainly is a great call by Wavepicker. No doubt about it. The evidence of a wave-(B) failure has been in place for numerous months. My own analysis looks at price patterns and their alternates as I'm sure Wavepickers' does as well. Until wave equality was met off the August lows then there has always been a risk of another significant leg down. Agree I don't attempt to pick it to the day, but the opportunity for shorts has been in place for several weeks once we started seeing minor overlapping.
Am I short. No. That's not part of my trading plan. I operate many strategies the core of which is longer term trend following. So yes, I am long and yes, I will take some pain come tomorrow. However, I also understand and more importantly accept that these excursions will occur from time to time. My trading plan suits me and my requirements and will keep me in goos stead for the rest of my life. Thats all that interests me.
I do not use time as Wavepicker does. I use seasonals which i personally find to be the most robust way of applying time to the markets. This is not to say what Wavepicker does is not appropriate - because clearly it has shown itself to be right here. However, it does not sit well with me. Gold is a very good example where seasonals showed the way forward when others were unable. Gold has always performed very strongly into and out of September. As Wavepicker will attest to from private mailings, I have been very long Gold since August.
FWIW, if Gold has a positive October then there is an 89% chance of having a positive November.
Awesomandy,
You may well be right. I've put my view on the table for all to see. The drive into the August lows was not greed. It was panic. Nothing else drives prices like that except fear and panic. However, that panic was met by strong buying, the Smart Money if you like. They do not go away in a flash.
The Elliott Wave patterns suggest a return to those lows and then a reversal (unless we're going into a long term secular bear market). Secondly the volume shown back then is called background strength and usually it will contonue to hold.
Away from the technicals we cannot overlook other issues. The business cycle still has some time to run before peaking. Secondly, the China and India demand for our resources will not go away any time soon and whilst the Republicans let the dollar slide there will be continued demand for commodities. Lastly November is the start of the strongest 6-month period for stocks around the globe. The seasonal pattern has been around for over 50-years. The timing of the technicals and these secondary issues is the basis of my thinking.
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
Trade_It,
It certainly is a great call by Wavepicker. No doubt about it. The evidence of a wave-(B) failure has been in place for numerous months. My own analysis looks at price patterns and their alternates as I'm sure Wavepickers' does as well. Until wave equality was met off the August lows then there has always been a risk of another significant leg down. Agree I don't attempt to pick it to the day, but the opportunity for shorts has been in place for several weeks once we started seeing minor overlapping.
Am I short. No. That's not part of my trading plan. I operate many strategies the core of which is longer term trend following. So yes, I am long and yes, I will take some pain come tomorrow. However, I also understand and more importantly accept that these excursions will occur from time to time. My trading plan suits me and my requirements and will keep me in goos stead for the rest of my life. Thats all that interests me.
I do not use time as Wavepicker does. I use seasonals which i personally find to be the most robust way of applying time to the markets. This is not to say what Wavepicker does is not appropriate - because clearly it has shown itself to be right here. However, it does not sit well with me. Gold is a very good example where seasonals showed the way forward when others were unable. Gold has always performed very strongly into and out of September. As Wavepicker will attest to from private mailings, I have been very long Gold since August.
FWIW, if Gold has a positive October then there is an 89% chance of having a positive November.
Awesomandy,
You may well be right. I've put my view on the table for all to see. The drive into the August lows was not greed. It was panic. Nothing else drives prices like that except fear and panic. However, that panic was met by strong buying, the Smart Money if you like. They do not go away in a flash.
The Elliott Wave patterns suggest a return to those lows and then a reversal (unless we're going into a long term secular bear market). Secondly the volume shown back then is called background strength and usually it will contonue to hold.
Away from the technicals we cannot overlook other issues. The business cycle still has some time to run before peaking. Secondly, the China and India demand for our resources will not go away any time soon and whilst the Republicans let the dollar slide there will be continued demand for commodities. Lastly November is the start of the strongest 6-month period for stocks around the globe. The seasonal pattern has been around for over 50-years. The timing of the technicals and these secondary issues is the basis of my thinking.
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
Re: XAO Analysis
anyone have thoughts on this: i noticed that the DJIA broke the second line (below 13800) of support just at its close! i have no idea how to put a chart up!
it did this towards the end of the close of the market on friday!!
is this a natural sign that the DJIA will slip to its next support which seems very dangerous and far away. will this not be fueled with the 4-5% drops in the markets in asia which we will probably see tommorrow - followed by 2-3% in europe.
anyone have thoughts on this: i noticed that the DJIA broke the second line (below 13800) of support just at its close! i have no idea how to put a chart up!
it did this towards the end of the close of the market on friday!!
is this a natural sign that the DJIA will slip to its next support which seems very dangerous and far away. will this not be fueled with the 4-5% drops in the markets in asia which we will probably see tommorrow - followed by 2-3% in europe.
Re: XAO Analysis
Yes, congratulation wavepicker, on having the courage to stay with the call after it did not first go as thought by 5/10 and of course for making the call in the first place.
You and Magdoran must be an awesome combination whenever you get together.
Yes, congratulation wavepicker, on having the courage to stay with the call after it did not first go as thought by 5/10 and of course for making the call in the first place.
You and Magdoran must be an awesome combination whenever you get together.
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Re: XAO Analysis
Nikki
I'm a little confused about which support level you are referring to - but then maybe I'm looking at the wrong chart (or looking at it incorrectly - I'm a very much new to this!).
Here's my chart. Talk me through the support you are seeing broken. Perhaps you meant 13500?
Nikki
I'm a little confused about which support level you are referring to - but then maybe I'm looking at the wrong chart (or looking at it incorrectly - I'm a very much new to this!).
Here's my chart. Talk me through the support you are seeing broken. Perhaps you meant 13500?
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Re: XAO Analysis
Hello Nick, How’s things?
Well done on the Gold position and hope it continues favourably.
I did not take Gold long position this time around instead opting to trade domestic stocks. The world seems to be “all the same market” these days as almost everything seems to be rising in unison because of liquidity in the form of credit that has flooded the markets over the last 5 years.
As far working with TIME it really depends on your market goals and the type of trading one aims to conduct. Both Magdoran and myself trade derivatives where timing is paramount and as such Seasonal tendencies may not be as effective at times.
What I use has nothing to with seasonalities, but rather uses pattern analysis, and fixed time cycles. The end cycle points are not merely time points, they are the actual terminations of Elliott Waves and these can be determined from a very long way back in terms of time but not necessarily price or pattern(yet). I am sure there are very few who know of, or are using this approach.
I am fairly new at time analysis and certainly not in the league as Mag from whom I have learnt much. I have not seen anyone who has timed the market with such consistency as he has, and his methodology is by far the best I have seen to date in terms of working with time and price.
It is not merely Mclaren applied, because I feel that Mclaren has not released the entirety of his knowledge for public consumption. Mag has pioneered his approach and taken it to a completely new level IMO.
Both our methods are different to each others, both have advantages and both have disadvantages. We have recently partnered to study both our methods in greater depth and hopefully fuse them together into a superior approach in the months ahead.
I had studied and battled with price level for years. This has been a drag on me. Pattern analysis in the form of EW was a great boost, but finally coming to the realization that the X axis is the easier on superior axis to use, has given tremendous confidence. Having said that, this approach is not for everyone, and requires adopting a completely different mindset to that of the traditional TA player. For starters, forget about moving averages, indicators, even traditional trendlines as they are more a distractions and will cause you to make errors when using our type of approaches.
Having said all that, it does not matter how good analysis one has, if they lack the correct psychological makeup or have not developed the traders midset which is much more important, everything else means jack!
Cheers
Hello Nick, How’s things?
Well done on the Gold position and hope it continues favourably.
I did not take Gold long position this time around instead opting to trade domestic stocks. The world seems to be “all the same market” these days as almost everything seems to be rising in unison because of liquidity in the form of credit that has flooded the markets over the last 5 years.
As far working with TIME it really depends on your market goals and the type of trading one aims to conduct. Both Magdoran and myself trade derivatives where timing is paramount and as such Seasonal tendencies may not be as effective at times.
What I use has nothing to with seasonalities, but rather uses pattern analysis, and fixed time cycles. The end cycle points are not merely time points, they are the actual terminations of Elliott Waves and these can be determined from a very long way back in terms of time but not necessarily price or pattern(yet). I am sure there are very few who know of, or are using this approach.
I am fairly new at time analysis and certainly not in the league as Mag from whom I have learnt much. I have not seen anyone who has timed the market with such consistency as he has, and his methodology is by far the best I have seen to date in terms of working with time and price.
It is not merely Mclaren applied, because I feel that Mclaren has not released the entirety of his knowledge for public consumption. Mag has pioneered his approach and taken it to a completely new level IMO.
Both our methods are different to each others, both have advantages and both have disadvantages. We have recently partnered to study both our methods in greater depth and hopefully fuse them together into a superior approach in the months ahead.
I had studied and battled with price level for years. This has been a drag on me. Pattern analysis in the form of EW was a great boost, but finally coming to the realization that the X axis is the easier on superior axis to use, has given tremendous confidence. Having said that, this approach is not for everyone, and requires adopting a completely different mindset to that of the traditional TA player. For starters, forget about moving averages, indicators, even traditional trendlines as they are more a distractions and will cause you to make errors when using our type of approaches.
Having said all that, it does not matter how good analysis one has, if they lack the correct psychological makeup or have not developed the traders midset which is much more important, everything else means jack!
Cheers
Re: XAO Analysis
sorry gurgler. i am wrong. it broke 13645 which seemed like a weakish support anyway.
for some reason i thought it had broken 13489 which appears like a strong support line.
if it breaks that i think 13335, 13182 are the next supports. after that, god help us all
sorry gurgler. i am wrong. it broke 13645 which seemed like a weakish support anyway.
for some reason i thought it had broken 13489 which appears like a strong support line.
if it breaks that i think 13335, 13182 are the next supports. after that, god help us all
Re: XAO Analysis
My take on the (XAO) is to still take a bullish outlook, UNTIL the wave structure is confirmed as a corrective Wave A,B,C advance. Therefore, this will be confirmed, only when the current wave (4), breaks through the top of the extended Wave (1), being at 6358. The likelihood of this occuring has increased somewhat after Wall Street's horrid Friday session so the retracement tommorow will be important. I am personally looking for support tommorow at 6570, being the typical Wave (4) 38.2% retracement level. If this hold's, who know's, but it is a good level to go off.
If the market can bounce straight off these levels it will be very bullish, however if it doesnt and continues falling, the 6358 level must be watched like a hawk. The three retracement lines are the 38.2%, 50% and 61.8% of the Wave (3) advance.
My take on the (XAO) is to still take a bullish outlook, UNTIL the wave structure is confirmed as a corrective Wave A,B,C advance. Therefore, this will be confirmed, only when the current wave (4), breaks through the top of the extended Wave (1), being at 6358. The likelihood of this occuring has increased somewhat after Wall Street's horrid Friday session so the retracement tommorow will be important. I am personally looking for support tommorow at 6570, being the typical Wave (4) 38.2% retracement level. If this hold's, who know's, but it is a good level to go off.
If the market can bounce straight off these levels it will be very bullish, however if it doesnt and continues falling, the 6358 level must be watched like a hawk. The three retracement lines are the 38.2%, 50% and 61.8% of the Wave (3) advance.
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Re: XAO Analysis
Hi Lachlan,
I'd say 6440-ish is a key support as well, being resistance for so long.
Hi Lachlan,
I'd say 6440-ish is a key support as well, being resistance for so long.