XAO Technical Analysis

[SevenFX]

Re: XAO Analysis

Well... we are holding above 6700, the Hang Seng has hit new highs and the Nikki is kicking on.

Looking Good or about to burst a bubble.

Hi Whiskers.

I'm looking for 6705-6 to see which way the break will be, or push further on to 6733 where R2 will be tested.

Yes... HS seems stong on highs, but not a big day there compared to recent days...

SevenFX

 

[Nick Radge]

Re: XAO Analysis

Post #1628. The Elliott Wave count suggested two scenarios based around the 6550 level. Because its rejected, and in light of increased strength on the US indices, the recent dip was a wave-c and therefore -iv low. In turn the larger trend remains in place, for the moment at least, and that we could still be on target for an impulsive pattern off the August lows and not corrective. If that is the case then 7000 minimum is probable.

This to me is the beauty of Elliott Wave. Validate or invalidate the patterns act accordingly.

As per post #1638, I remain 100% long stocks with emphasis on Gold. There is an 89% chance Gold will have a positive November. November is also a very strong month for stocks as the Santa Claus rally gets up steam.


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.

 

[Kauri]

Re: XAO Analysis

I guess that would be akin to poking a Bear with a sharp stick. :sword:

Sydney, October 30: Writing in today"s WSJ noted Fed watcher Greg Ip states that while the market is convinced a 25 BP cut in rates by the Fed tomorrow is a near- certainty and 50 BPS is a possibility, the Fed is unlikely to give 50 BPS any serious consideration and the debate will be whether to ease 25 BPS or deliver no cut at all. Ip wrote on the weekend that the Fed was likely to cut 25 BPS in part not to disappoint the markets and in part to take out insurance in case their not so pessimistic view of the US economy is out of sync.
In this article Ip appears to be more 50/50 saying that the Fed can mitigate potential market disappointment with no cut by issuing a statement opening the door to a future cut. Ip gives further justification for the "No-change " option by saying: "The case for remaining on hold comes down to the economic forecast. While housing data has deteriorated further, there is little sign so far that it has spilled over to the broader economy. Fed officials don't appear to have significantly altered their forecast of a return to moderate growth next year. Helped by last month's rate cut, many market interest rates have come down. Stocks have recovered from their swoon two weeks ago. While inflation concerns have receded, they haven't disappeared, especially given the dollar"s drop."

 

[Whiskers]

Re: XAO Analysis

I guess that would be akin to poking a Bear with a sharp stick. :sword:

Aah now I get it.

Yeah, I wouldn't be surprised if the fed decided not to cut and appease the market by saying they will revisit it next meeting.

I guess that will also bring some cash back to the US that has been looking for higher interest return overseas or at least slow the flow to help liquidity in the US. It would stabalise the $US and bring some stability to the markets for awhile.

Fed Won't Cut Again Unless Data Worsen
By John M. Berry
Oct. 15 (Bloomberg)

... While they don't think it is going to happen, the officials remember that after a world financial crisis in the fall of 1998, the U.S. economy quickly regained its footing and the Fed had to begin raising rates again.

At the Sept. 18 meeting, the FOMC gave no hint that the 50 basis-point rate cut was the beginning of a series of cuts.

That could turn out to be the case only if the data begin to indicate that the current quarter's weakness is continuing into next year or perhaps becoming worse. So far, there are no such indications...

To contact the writer of this column: John M. Berry in Washington at jberry5@bloomberg.net

Last Updated: October 15, 2007 10:31 EDT http://www.bloomberg.com/apps/news?pid=20601039&sid=aPMkDYUptKlo&refer=columnist_berry

Wall Street Wants 50, Fed May Give Zip for Now
By John M. Berry
Oct. 24 (Bloomberg)

... At the Sept. 18 meeting of the Federal Open Market Committee, Fed officials voted to cut their target for the overnight lending rate by 50 basis points, to 4.75 percent. Some wanted 50 rather than 25 basis points in order not to create a market expectation of a series of such reductions.

``It was good policy to get out ahead and stabilize the market,'' said William Poole, president of the St. Louis Federal Reserve Bank in an Oct. 19 interview.

``If we did 25, then we would have had the market expectation of 25 at the next meeting,'' he said. ``So it was better to do 50 at once and have the market settle down.''

Nevertheless, options contracts yesterday indicated only about a fourth of investors expect the Fed to leave the target unchanged when it meets Oct. 30-31. Not quite two-thirds anticipate a quarter-point cut and 11 percent are looking for a half-point.

More bad news in the housing sector of the economy, large declines in profits at some of the largest banks in the country and a plunge in stock prices on Oct. 19 probably created these expectations.

Fed Not Gloomy

There's no indication Fed officials share the dire outlook of gloomy analysts such as Andrew Brenner, co-head of structured products at MF Global Ltd.
http://www.bloomberg.com/apps/news?pid=20601039&sid=ab01iQ2rYP6Y&refer=columnist_berry

 

[nizar]

Re: XAO Analysis

I think 25bp is factored in already.

Anything except 50bp would get a sell off IMO.

Or maybe 25bp and some nice wording for the comments we may still go okay.

 

[Gurgler]

Re: XAO Analysis

Aah now I get it.

Yeah, I wouldn't be surprised if the fed decided not to cut and appease the market by saying they will revisit it next meeting.

I guess that will also bring some cash back to the US that has been looking for higher interest return overseas or at least slow the flow to help liquidity in the US. It would stabalise the $US and bring some stability to the markets for awhile.

Also consider this viewpoint from The Economist:

Market.view

Is Merrill the tip of the iceberg?
Oct 28th 2007
From Economist.com

If so, who is the Titanic?

IS THERE such a thing as panicky resilience? That might be the best way to describe the mood in stockmarkets. The S&P 500 index ended this week up a steely 2.6%. Yet nervousness is everywhere, with the flimsiest of rumours sending share prices sky-rocketing or lurching. Markets leapt on Wednesday after someone whispered that the Federal Reserve was about to announce an emergency rate cut. It was nonsense. The next day AIG, the world’s largest insurer, tumbled by 8%, before recovering, on unsubstantiated fears that it would suffer a whopping loss on its $33 billion of subprime mortgage-related assets.

While some investors have clearly been getting carried away, the crisis in credit markets is far from over””and may be about to get worse. One depressing indication of this was a vast, $8.4 billion writedown this week by Merrill Lynch, an investment bank.

The most striking (and overlooked) aspect of this was that it involved mostly securities that only a few months ago had been considered platinum-plated: collateralised-debt obligations (CDOs), or tranched pools of mortgage-backed securities, that were not only rated triple-A, the highest level, but had also received extra credit enhancement, making them “super senior”. Until recently it was assumed that such well-protected paper could not lose its value. No longer. Worryingly, hundreds of banks, insurers and hedge funds around the world hold such securities. Fooled by false alchemy, they face a terrible reckoning.

Woefully slow at first to act, rating agencies are now falling over each other to downgrade these securities. This week Moody’s marked down a big batch of CDOs, some of them highly rated. This caused another plunge in the ABX indices, which are used to bet on subprime-backed bonds. One index of AAA-rated securities fell to just over 80 cents on the dollar. Those reflecting poorer-quality paper languish below 20 cents.


It will be very interesting to see which way the Fed jumps - any wagers?

Source: http://www.economist.com/daily/columns/marketview/displaystory.cfm?story_id=10048962

 

[Bush Trader]

Re: XAO Analysis

Whilst we’re on the discussion of rate cuts and their effects on US markets, lets all turn our eyes closer to home in the same context. OK we all know that the US FED are in a damned if they do damned if they don’t type of predicament. Cut the rates, save the loans, appease the investors, and deflate the currency, all very inflationary. Don’t cut the rates, potential market reaction, potential housing market collapse, fall in equity, adding more gearing to the already highly geared, save the currency temporarily, less inflationary, “the recession we had to have” rhetoric.

Australia. US cut rates, currency rises, we increase interest rates, and currency rises further. Then exporters profit profits slump - BHP for example loses aprox $60 million for every cent the Aus$ rises against the US.

Who is at the biggest risk of a falling US $ and a rising Aus$ even if the China and India storey remains intact? What about interest rate effect on our own financial sector? What about our already crippled agricultural sector, which will have it’s own internal inflationary effects whilst experiencing falling export incomes and a rapidly declining terms of trade? What percentage of the XAO does this effect? Or our commodity exporters could start being paid in RMB and Rupees. That will make the brokers earn their keep.


I’m scared; tell me I needn’t be (don’t forget I earn my money from agriculture and I’ve seen the pain of a rising currency!)


Cheers


BT

 

[dhukka]

Re: XAO Analysis

Whilst we’re on the discussion of rate cuts and their effects on US markets, lets all turn our eyes closer to home in the same context. OK we all know that the US FED are in a damned if they do damned if they don’t type of predicament. Cut the rates, save the loans, appease the investors, and deflate the currency, all very inflationary. Don’t cut the rates, potential market reaction, potential housing market collapse, fall in equity, adding more gearing to the already highly geared, save the currency temporarily, less inflationary, “the recession we had to have” rhetoric.

Firstly the Fed cutting interest rates will NOT save loans, the damage has been done on that front. Nor will it prevent a housing market collapse - that is already in process and cannot be stopped by anything the Fed does. The Fed is largely irrelevant, except as you acknowledge, for it's effect on sentiment.

 

[Whiskers]

Re: XAO Analysis

Well the US Consumer Confidence number is down. The question is whether that is actually a bad thing from the fed's perspective. Will the fed see a slight fall in consumer confidence as enough of an anti-inflationary sign and not cut rates for fear that if they over cut rates, the economy might turn too quickly and they might have to increase rates again relatively soon afterwards as in 1998?

The Conference Board Consumer Confidence Index Declines Again
October 30, 2007

The Conference Board Consumer Confidence Index, which has been declining since August, fell further in October. The Index now stands at 95.6 (1985=100), down from 99.5 in September. The Present Situation Index decreased to 118.8 from 121.2 in September. The Expectations Index declined to 80.1 from 85.0.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company. The cutoff date for October's preliminary results was October 23rd.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumer Confidence posted its third monthly decline and continues to hover at two-year lows (Oct. 2005, 85.2). Further weakening in business conditions has, yet again, tempered consumers' assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead. In addition, consumers are growing more pessimistic about the short-term future and their rather bleak outlook suggests a less than stellar ending to this year."

Consumers' assessment of present conditions weakened further in October. Those claiming conditions are "good" decreased to 23.4 percent from 25.7 percent. However, those saying conditions are "bad" decreased to 16.3 percent from 17.8 percent. Overall, consumers were less upbeat in their appraisal of the job market. Those saying jobs are "hard to get" increased to 22.6 percent from 22.4 percent. Those claiming jobs are "plentiful" decreased to 24.1 percent from 25.6 percent in September.

Consumers' short-term expectations eroded further in October. Consumers expecting business conditions to worsen in the next six months rose to 13.8 percent from 11.9 percent. Those anticipating business conditions to improve declined to 13.7 percent from 15.7 percent.

The outlook for the labor market was also less optimistic. The percent of consumers expecting more jobs in the months ahead was virtually unchanged at 13.5 percent, while those anticipating fewer jobs increased to 20.1 percent from 18.7 percent. The proportion of consumers expecting their incomes to increase in the months ahead declined moderately to 19.6 percent from 20.0 percent.

Source: October 2007 Consumer Confidence Index
The Conference Board
http://www.conference-board.org/economics/ConsumerConfidence.cfm

 

[Bush Trader]

Re: XAO Analysis

Firstly the Fed cutting interest rates will NOT save loans, the damage has been done on that front. Nor will it prevent a housing market collapse - that is already in process and cannot be stopped by anything the Fed does. The Fed is largely irrelevant, except as you acknowledge, for it's effect on sentiment.

There are still more loans tittering on the edge that have not folded. I am not saying that cutting rates can repair damage already done, however it could reduce further blood letting in the sector. Investor’s perception of the cut (or no cut) will have the biggest impact on markets, whether it is Stocks, bonds, currency or real-estate.


Cheers


BT

 

[nizar]

Re: XAO Analysis

Blue skies AND A HALF i think for today.
Gold, oil, s&p, DOW.

 

[sassa]

Re: XAO Analysis

Blue skies AND A HALF i think for today.
Gold, oil, s&p, DOW.

What gives with our market?1.30p.m. and only 50 points up.One would have thought we would be over the 1% mark.Perhaps 6850 may be achieved by day's end.It looks like 7000 is out of the picture for a while.

 

[Temjin]

Re: XAO Analysis

What gives with our market?1.30p.m. and only 50 points up.One would have thought we would be over the 1% mark.Perhaps 6850 may be achieved by day's end.It looks like 7000 is out of the picture for a while.

As someone has said already, the market has already factored in a 25 bps cut. Volatility will only occur on no cut or 50bps cut. No real surprise move this time. Just another confirmation that the Feb will sacrifice their dollars and try to save their houses.

Got gold anyone? (getting fond of this line now)

 

[sassa]

Re: XAO Analysis

As someone has said already, the market has already factored in a 25 bps cut. Volatility will only occur on no cut or 50bps cut. No real surprise move this time. Just another confirmation that the Feb will sacrifice their dollars and try to save their houses.

Got gold anyone? (getting fond of this line now)

With the cut factored in,why aren't we seeing sideways movement?I still wonder if our market would be where it is if there hadn't been a sub prime problem and hence no rate cuts to give the market what I term an artificial boost.

 

[Whiskers]

Re: XAO Analysis

With the cut factored in,why aren't we seeing sideways movement?I still wonder if our market would be where it is if there hadn't been a sub prime problem and hence no rate cuts to give the market what I term an artificial boost.

Sassa, I'm inclined to think our market may have been even stronger, but for the subprime problem. I think gold was going up anyway and our dollar would not be so strong against the $US resulting in stronger profits for our exporters.

I note the fed made a fairly strong statement not to expect any more rate cuts. I wouldn't have been surprised if they had decided not to cut, because there were conflicting signals out there in the US economy.

I think clearly our biggest problem is the strength of the $A relative to commodity prices. It may be that the $ exchange rate will not change significantly for awhile, but we may get some benifit from cheaper imports and production costs over time.

I'll bet the US is exploiting some advantage of the realignment of currencies. It remains to be seen how quickly Aus can exploit some advantage from the current situation.

 

[sassa]

Re: XAO Analysis

So what happens today?The market has regained some ground from its early lows.Will the pattern be the same as the Dow-up and down in small troughs before a bigger selloff before the end of trade?Or will our market show that it is not really affected by the troubles in America as a lot of analysts and economists put it,and at the end the day have only a moderate loss?

 

[Gurgler]

Re: XAO Analysis

So what happens today?The market has regained some ground from its early lows.Will the pattern be the same as the Dow-up and down in small troughs before a bigger selloff before the end of trade?Or will our market show that it is not really affected by the troubles in America as a lot of analysts and economists put it,and at the end the day have only a moderate loss?

The latter, I feel. The BBC/CNN market analysis we hear in Asia says that Aust. is dancing to a different drum economically. Chinese manufacturing is up, see attached:

Chinese Manufacturing Sector Running Smokin' Hot
FN Arena News - November 01 2007

By Rudi Filapek-Vandyck


They must have been gazing with their mouth open, the economists at CLSA. Only two months ago things seemed so clear: the global economy was slowing down and so would Chinese exports. With a central bank on a continuous tightening path surely the only way forward was for a gradually slowing in overall activity?


Imagine the faces all around when the data for October were being assessed… CLSA’s China Purchasing Manager’s Index surged to its highest level in 31 months in October.


Along with it, input inflation showed up at its highest level in sixteen months, while supplier lead times experienced their sharpest increase in 37 months.


CLSA economist Eric Fishwick points out the survey revealed signs of stresses emerging in the supply chain with a reported lack of capacity in transport and some supply side bottlenecks. Output prices increased in October, but this is more a response to spiralling input prices than any margin enhancement, he believes.


The latest data suggest Chinese manufacturing production rose for a twenty-third successive month in October. Furthermore, CLSA highlights, the rate of expansion quickened to the fastest pace since April 2004. Output was driven higher by a further strong rise in incoming new orders, with the latest increase only marginally weaker than September’s two-and-a-half year high. CLSA believes the main strength of demand again came from the domestic market, as growth of new export orders remained relatively modest.


Also, the economists believe a portion of the latest rise in new business was met through the depletion of warehouse stocks of finished goods, which fell for the seventh month running in October, and at a solid pace.


Surely, CLSA’s latest assessments must be like music in the ears of those experts who believe a slow down in the US economy does not necessarily spell trouble for China.


CLSA’s PMI surged to 55.2 in October, up from 55.0 in September.

 

[sassa]

Re: XAO Analysis

The latter, I feel. The BBC/CNN market analysis we hear in Asia says that Aust. is dancing to a different drum economically. Chinese manufacturing is up, see attached:

Chinese Manufacturing Sector Running Smokin' Hot
FN Arena News - November 01 2007

By Rudi Filapek-Vandyck


They must have been gazing with their mouth open, the economists at CLSA. Only two months ago things seemed so clear: the global economy was slowing down and so would Chinese exports. With a central bank on a continuous tightening path surely the only way forward was for a gradually slowing in overall activity?


Imagine the faces all around when the data for October were being assessed… CLSA’s China Purchasing Manager’s Index surged to its highest level in 31 months in October.


Along with it, input inflation showed up at its highest level in sixteen months, while supplier lead times experienced their sharpest increase in 37 months.


CLSA economist Eric Fishwick points out the survey revealed signs of stresses emerging in the supply chain with a reported lack of capacity in transport and some supply side bottlenecks. Output prices increased in October, but this is more a response to spiralling input prices than any margin enhancement, he believes.


The latest data suggest Chinese manufacturing production rose for a twenty-third successive month in October. Furthermore, CLSA highlights, the rate of expansion quickened to the fastest pace since April 2004. Output was driven higher by a further strong rise in incoming new orders, with the latest increase only marginally weaker than September’s two-and-a-half year high. CLSA believes the main strength of demand again came from the domestic market, as growth of new export orders remained relatively modest.


Also, the economists believe a portion of the latest rise in new business was met through the depletion of warehouse stocks of finished goods, which fell for the seventh month running in October, and at a solid pace.


Surely, CLSA’s latest assessments must be like music in the ears of those experts who believe a slow down in the US economy does not necessarily spell trouble for China.


CLSA’s PMI surged to 55.2 in October, up from 55.0 in September.

I note there is a disclaimer in the report in the second last paragraph.It has particular overtones of MarketWatch,Bloomberg,Wallstreet and Fed reports.If a slowdown in the largest consumer of all does not necessarily spell trouble for China,then it will spell the next-a loss of markets.Not only the U.S.but those countries connected to the same problem(aka,those in Europe).The IMF has issued a warning on the slowing of global growth.

 

[GreatPig]

Re: XAO Analysis

XAO currently moving into a rising wedge. The yellow line is the top of the channel it's been in, and always corrected from, since early 2003.

Will it correct from there again, or will the new rising trend line hold for a channel breakout? It's also showing a bit of bearish RSI divergence though.

At least it looks reasonably positive for Monday, along with the US holding last night.

Cheers,
GP

 

[Sean K]

Re: XAO Analysis

Hmmm, I was expecting a positive day today....

MACD has been looking dodgy for a bit.

1053 [Dow Jones] S&P/ASX 200 down 1.1% at 6620.9 on fears of slide on Wall Street, losses accelerating after Citigroup confirmed additional US$8 billion-US$11 billion writedowns. Break of support at 6648.4 targets 6542.9. Resources initially rose after commodity price gains, but BHP now leading market down with 2.0% fall. Rio up 0.7%, but well off its high. Woodside near flat as surging crude oil might hurt economic growth. Newcrest up 1.2% after testing record high on gold price surge. CBA leading banks down with 1.7% fall, with expected RBA tightening undermining yield attraction. Macquarie Group down 3.5%, Babcock & Brown down 3.6% as U.S. peers should suffer again tonight. Nufarm resumes trade at 0025 GMT after confirming bid from CemChina-Blackstone consortium. (DWR)